(Reuters circulated the following article on December 12.)
CHICAGO — A proposal to haul coal on a new Powder River Basin rail line could cause “substantial” delays for time-sensitive goods, railroad Burlington Northern Santa Fe Corp. said in a filing made public on Tuesday.
The filing at the Surface Transportation Board, dated Dec. 11, said if the regulator authorizes Dakota, Minnesota & Eastern Railroad Corp. to haul coal from the basin in Wyoming, it could delay BNSF traffic from the Pacific Northwest to Chicago.
But DM&E’s top executive described the filing as an attempt to prevent competition in the marketplace.
Privately owned DM&E, based in Sioux Falls, South Dakota, has been seeking up to $2.5 billion in U.S. government funding to upgrade and extend its network into Powder River Basin.
The Surface Transportation Board, which regulates disputes between railroads and customers, has given its approval for the project, though the Federal Railroad Administration has yet to rule on DM&E’s loan application.
Mines on the rich seams of the basin are now only served by BNSF and Union Pacific Corp. (UNP.N: Quote, Profile , Research), the two biggest U.S. railroads.
As natural gas prices have risen, the low-cost, low-sulfur coal of Powder River Basin has become increasingly popular among utilities that burn it to produce electricity.
Utilities have complained of delivery problems with Powder River Basin coal, particularly after derailments on the joint line run by BNSF and Union Pacific in the basin in May 2005.
BNSF said coal trains on DM&E’s network would cause “substantial additional delays” for its intermodal traffic from the West Coast at a crucial junction in Savanna, Illinois.
Intermodal services use standardized containers that can be interchanged between different modes of transport – truck, ship or train. Intermodal represents BNSF’s single-biggest source of volumes and revenue.
BNSF spokesman Dick Russack said on average the company has around 20 intermodal trains a day passing through Savanna.
DM&E Chief Executive Kevin Schieffer told Reuters in a phone interview that only three coal trains a day would use that junction. “This is not a significant amount of traffic,” he said. “What this really boils down to is a desire to keep competition out of the marketplace.”
The Energy Information Administration said separately on Tuesday it expects U.S. electricity providers to burn 2.1 percent more coal next year than in 2006, even though the country will produce 2.3 percent less.