(The Associated Press circulated the following article on August 10.)
WHEATLAND, Wyo. — The federal agency that oversees U.S. railroads isn’t doing much to address unstable coal delivery service and prices faced by power-generating plants in Wyoming, representatives of utilities told a congressional committee field hearing Wednesday.
Rep. George Radanovich, R-Calif., chaired the hearing by the House Resources Committee’s subcommittee on water and power. Rep. Barbara Cubin, R-Wyo., a member of the panel, arranged the hearing and joined Radanovich to hear testimony.
Representatives of utilities testified that unreliable rail service and rising rail rates are causing supply problems and increasing consumers’ monthly bills.
Joel Dingman, the mayor of Wheatland and a shift supervisor at the Laramie River Power Station just outside the town, said railroads hold too much sway over rates for the coal that powers the plant.
The plant has seen the cost of Wyoming coal delivered by BNSF Railway Co. double since 2004, said Dingman, who added that coal prices are expected to double again.
“If these rates are allowed to go unchecked that will mean an increased cost of $1 billion to the consumer-owners of the Laramie River Station over the next 20 years,” he said.
Basin Electric Power Cooperative, which operates the plant, has filed a rate case with the Surface Transportation Board in late 2004, but the federal agency has yet to act.
The Wheatland plant saw its coal stockpile reduced to just six days earlier this year, far short of the ideal 30-day supply, Dingman said.
Jack Finnerty, board member of the Wheatland Rural Electric Association as well as the Tri-State Generation and Transmission Association, also complained about the STB.
“I believe under the current supervision of the Surface Transportation Board, railroads are allowed to charge above market rates where there is no viable transportation competition, and we must be satisfied with whatever level of service the railroads provide,” Finnerty said.
Officials with BNSF and Union Pacific Railroad say their companies are investing hundreds of millions of dollars in new track and other infrastructure to reliably haul more coal.
BNSF has worked with the Laramie River Power Station to build up its coal stockpile to 36 days as of last week, according to Janssen Thompson, general manager of the railroad’s Powder River division.
But Thompson and Richard Vasy, Union Pacific’s assistant vice president of business development, said the railroads need to make an appropriate profit in order to pay for the investment.
“At Union Pacific, roughly 19 cents of every revenue dollar goes back into our infrastructure,” Vasy said.
“We will continue to make substantial investments so long as demand forecasts support them and we can continue to improve our returns, which must exceed our cost of capital,” Thompson said.
Cubin said it might be worth looking into whether the Surface Transportation Board is doing its job of overseeing the nation’s railroads.
“Really, in this day in age, with the energy crisis and the electrical vulnerability, I think it’s something that the government should do its job,” she said. “Everyone else has to do their job to make the trains run on time, so to speak.”
Radanovich said the federal government also could help railroads working to expand infrastructure with public-land issues and rights of way.
The drought was also cited as causing problems because power plants need lots of water to operate and produce hydropower. While not much can be done about Mother Nature, utility representatives say more can be done to help them secure water sources.