(The Association of American Railroads issued the following news release on May 3.)
WASHINGTON — The Association of American Railroads (AAR) today urged the FERC to hold a public workshop taking a look at the supply chain that produces, transports and receives the coal used to generate electricity at utility plants across the nation.
The AAR, which represents the nation’s major freight railroads, joins Edison Electric Institute, the American Public Power Association, the National Rural Electric Cooperative Association and the Electric Power Supply Association in asking the Federal Energy Regulatory Commission to take a comprehensive look into energy supply chain reliability.
Although the Surface Transportation Board has jurisdiction over rail rates and service, AAR CEO and President Edward R. Hamberger said the rail industry will take advantage of any and every opportunity to have high-level strategic discussions with our partners in the electricity-by-coal process.
“It’s a complex, interconnected issue that involves the complete supply chain, from production to transportation to the receiving end,” said Hamberger.
In order to get a complete and accurate assessment of the root cause of problems in the coal supply chain, the workshops should not only focus on rail transportation of coal, but should also include:
• Utility management of coal inventories
• Patterns and consequences of heavy investment in gas-fired plants and its impact on companies that produce and transport coal
• Unloading capacity at power plants
• Coal producers’ ability to meet rapidly increasing demand
• Lack of adequate investment in transmission line capacity
• Capacity of waterways to move coal
• Impact of higher natural gas prices on coal demand
The railroad industry is moving more coal than ever before, posting a record 415 million tons from the Powder River Basin alone in 2005. And 2006 is expected to set yet another record of about 450 million tons. Likewise, eastern coal deliveries during 2005 to utilities were up on the two major eastern railroads – 6.3 percent from Norfolk Southern and 7 percent on CSX.
The railroad industry routinely invests much more than the average American manufacturer in its infrastructure and equipment. From 1980 to 2005, the nation’s major freight railroads invested nearly $360 billion – some 45 percent of their revenue — with much of the spending aimed at coal movements. In 2006, the industry is set to spend a record $8.3 billion on capital, dramatically increasing the amounts devoted to expanding capacity.
“America’s freight railroads take very seriously the role they play in helping produce America’s electricity,” said Hamberger. “We transport about two-thirds of the coal burned at coal-fired generators and have worked closely with members of the utility trade associations and mining associations to assure that America’s electricity needs are met.”
Hamberger also said that CEOs from railroads, coal companies and electric utilities have instituted bimonthly calls and meetings to coordinate logistics efforts.
“And these efforts have paid off,” he said, noting that a leading coal publication recently reported that American Electric Power, the nation’s largest coal-burning utility, had coal inventory in “reasonably good shape heading into the hot summer months.”