(The Associated Press circulated the following article by Erik Schelzig on June 29.)
CHARLESTON, W.Va. — A second federal railroad rate case over Central Appalachian coal transportation costs has been settled, Duke Power announced Wednesday.
The agreement between the subsidiary of Charlotte, N.C.-based Duke Energy Corp. and CSX Corp. comes less than a week after a similar agreement with Norfolk Southern Corp.
Duke filed the 2001 complaint with the Surface Transportation Board after the two railroads raised rates from about $10 to $15 per carload of coal from West Virginia, Virginia and Kentucky, costing the utility an extra $45 million to $50 million, spokesman Tom Williams said.
Wednesday’s agreement involves a multiyear transportation contract with Jacksonville, Fla.-based CSX Corp. at levels comparable to 2002 rates, and provides for better access to new coal suppliers. Unlike last week’s settlement with Norfolk Southern, the CSX agreement does not involve a cash payment, Williams said.
“The contract will help keep our rail rates stable and provides economical options for purchases of coal from new sources,” Paul Newton, a Duke Power vice president, said in a release. “Like the recent settlement with Norfolk Southern regarding rail rates, these benefits will be passed on to customers annually.”
Specifics of both railroad settlements were not released.
Norfolk Southern said its settlement with Duke and Raleigh, N.C.-based Progress Energy Inc. would likely boost this quarter’s income by $24 million, or 6 cents per share.
Norfolk Southern and CSX are the only major railroads serving the coalfields of Central Appalachia, and most mines are only accessed by a single line.
The Surface Transportation Board last year ruled against the utilities’ arguments that the rate hikes were unreasonable. But the board agreed to consider whether the rates were phased in too quickly.
The settlement with the two railroads closes the board’s first “phasing constraint” cases, leaving it unclear how the utilities would have been asked to pay for the hikes had the Surface Transportation Board found that CSX and Norfolk Southern increased the prices too quickly.
In a quarterly filing with the Securities and Exchange Commission, Norfolk Southern said it had been prepared for several payment adjustment rulings on “whether phasing would be ordered retroactively or prospectively or both.”
CSX shares fell 6 cents to close at $43.10 and Duke shares dropped 18 cents to close at $29.58 on the New York Stock Exchange.