(The following story by Gregory Richards appeared on the Florida Times-Union website on February 5.)
JACKSONVILLE, Fla. — CSX Transportation Inc. did not overcharge one of its main customers by boosting coal shipping rates 45 percent, a federal agency ruled Wednesday. The decision could make it easier to increase rates in the future, an analyst said.
But the ruling was not a total victory for Jacksonville-based CSXT, which runs one of the country’s largest railroads. The Surface Transportation Board, which oversees the railroad industry’s commercial matters, said while the rate increase was fair, it questioned whether it should have been phased in over time.
CSXT raised rates 45 percent on Jan. 1, 2002, to deliver coal to three power plants owned by Duke Power Co. in North Carolina and South Carolina, said Tom Williams, a Duke Power spokesman. Duke Power is a unit of Duke Energy of Charlotte, N.C.
The higher prices cost Duke, which provides electricity to 2.1 million customers, an extra $25 million to $30 million annually, Williams said. The costs are being passed directly to the customers.
CSXT said the increases were merely to recoup the costs of maintaining and operating the railroad, and reinvesting for the future, Vice President Christopher Jenkins said in a written statement. Twenty-five percent of CSXT’s revenue comes from coal shipments, said a spokesman.
“It’s good news for the railroad industry,” said Anthony Hatch, an independent railroad analyst in New York City. In general, he said, the industry has “been giving their product away too cheaply.”
Duke Energy is considering all its alternatives, Williams said. Those include seeking phasing in of the prices or appealing to the Surface Transportation Board, part of the U.S. Dept. of Transportation.
The ruling joins two other recent decisions on railway coal shipment pricing. Duke Energy also accused Norfolk Southern Railway Co. of charging unreasonable rates. The board originally sided with Norfolk Southern but said Tuesday that Norfolk Southern’s prices were too high. In December, the board found that Norfolk Southern was charging Carolina Power & Light excessively high rates.