(The following article by Dustin Bleizeffer was posted on the Casper Star-Tribune website on April 27.)
GILLETTE, Wyo. — Total Powder River Basin rail delivery between BNSF Railway and Union Pacific is about 20 million tons short of contracted delivery due in part to two back-to-back derailments in May 2005 and ongoing capacity issues.
A spokesman for the National Rural Electric Cooperative Association said the ongoing rail delivery problems could force Powder River Basin coal customers to seek other fuel sources or turn to the wholesale market to meet service commitments to their customers.
That doesn’t bode well for Wyoming’s export coal industry, which injects more than $450 million into local and state coffers annually in taxes and royalties.
“It will have an impact on the economy of coal-producing regions,” said NRECA spokesman Patrick Lavigne. “(Utilities) that are unable to receive their contracted allotment of Powder River Basin coal will, out of necessity, either have to increase investment in natural gas-fired generation or buy electricity on the wholesale market.”
The shortfall of Powder River Basin coal deliveries could increase utility bills by $2 billion in 2006, according to Basin Electric Power Cooperative, which has filed a grievance to the Surface Transportation Board regarding coal delivery with BNSF Railway.
Despite coal delivery shortfalls, both railroads delivering Powder River Basin coal have posted strong earnings. Union Pacific, for example, reported this week that it doubled its profits to $311 million during the first quarter of 2006, crediting an increase in overall commodity volumes to help the railway overcome increased fuel costs.
Local coal producers have said they are confident that both railroads are investing in major maintenance and capacity improvements to the Powder River Basin rail system.