(The following story by Kevin Braley appeared on the Herald Times Reporter website on September 21.)
MANITOWOC, Wisc. — The U.S. Senate Judiciary Committee on Thursday approved legislation that Mayor Kevin Crawford said would keep railroads from gouging their customers, including the city’s public utility.
The bill, sponsored by Sen. Herb Kohl, D-Wis., seeks to repeal antitrust exemptions protecting freight railroads from competition. These exemptions deny rail consumers antitrust protections available to consumers in other industries.
The lack of railroad competition is driving skyrocketing costs for Manitowoc, which uses rail service to deliver the fuel used to produce electricity, Crawford said in a phone interview from Washington, D.C., where he attended Thursday’s committee meeting.
“(Railroads) can pretty much charge us anything they want,” Crawford said. “In Wisconsin, we are being terribly injured financially. We’re looking for relief.”
In the past 20 years, railroad industry consolidation has reached the point where four railroads provide more than 90 percent of the nation’s rail transportation.
Many industries are served by only one railroad. These industries have faced constantly rising rail rates.
Kohl authored the Railroad Antitrust Enforcement Act of 2007 in response to concerns that freight railroads are abusing their market power and raising rates for those who rely on them to ship vital commodities, including coal and agricultural products.
“Freight railroads have the luxury of being protected from the competition other industries face,” Kohl said. “They can name their price and the consumer pays. We have seen the result of this outdated policy in Wisconsin, where our utilities were forced to absorb staggering cost increases for shipping coal. This bill will bring scrutiny to freight railroads and encourage competition in this highly consolidated industry.”
According to the Wisconsin Public Service Commission, Wisconsin utilities in 2005 incurred nearly $73 million in additional costs associated with shipments of coal, which provides about 60 percent of the state’s energy. These costs are then passed along to consumers already paying record high energy prices.
“The railroads are gouging people every time they turn on their lights,” Crawford said. “We know we are just being gouged. The fuel surcharges are horribly unfair.”
Canadian National Railway delivers petroleum coke to Manitowoc Public Utilities, which is burned to produce electricity. In 2006, Canadian National charged $295,758.01 for a fuel surcharge. In 2007, the surcharge is estimated to reach $420,000.
The city also uses Union Pacific railway, which delivers coal to Chicago. The coal is unloaded in Chicago, put on a ship, and transported to Manitowoc via Lake Michigan.
In 2006, Union Pacific’s fuel surcharge was $402,446.16. In 2007, it’s estimated to reach $462,000.
“It’s become so expensive, we unload (the coal) in Chicago, put it on a ship and ship it to Manitowoc,” Crawford said. “It’s actually cheaper for us to unload and then reload the shipment in Chicago, than it would be to keep it on the train and have the train deliver it to us.”
Crawford said ship fuel surcharges from Chicago in 2006 were 57 cents per ton. By rail, the surcharge was $4.17 per ton.
A public hearing will be held regarding the bill before being introduced to the entire Senate, Crawford said. The hearing date was not set Thursday.