(The following article by Christopher Dinsmore was posted on the Virginian-Pilot website on November 7.)
NORFOLK, Va. — Norfolk Southern Corp. won an important rate case Thursday that could have cost it millions of dollars a year.
The Surface Transportation Board, the federal railroad regulatory body, issued a decision upholding as reasonable the rates that the Norfolk-based railroad charges on coal shipments to several Duke Energy Corp. power plants.
In other words, regulators found that the nation’s fourth-largest railroad hasn?t been overcharging as much as $50 million a year for coal shipments to Duke Energy, the nation’s largest utility owner. The STB has the power to roll back rail rate increases, requiring railroads to return money to customers.
In a note to investors written before the decision, Edward Wolfe, a Bear Stearns rail-stock analyst, said that a ruling in Norfolk Southern’s favor “would bode well for future price increases from CSX and Norfolk Southern.”
Norfolk Southern?s stock rose 4.2 percent in trading Thursday on the New York Stock Exchange, closing up 86 cents at $21.46 a share.
Duke, which is based in Charlotte, N.C., has a similar case pending against Norfolk Southern rival CSX Corp., and Norfolk Southern still faces a similar challenge from Progress Energy Inc. Decisions in those cases are expected in the next three months.
According to filings with the Securities and Exchange Commission, Norfolk Southern has been billing and collecting based on the challenged rates. The decision wasn’t expected to have a material impact on earnings, according to those filings.
Norfolk Southern had no additional comment Thursday, but said in a statement that it would comment further once it reviews the decision.
The STB said that it would be willing to consider a request by Duke Energy to phase in the rate increase. Duke Energy also can appeal the STB decision to the federal courts.
Duke Energy is reviewing its options, a spokesman said.