(The following article by Jo Dee Black was posted on the Great Falls Tribune website on May 10.)
GREAT FALLS, Mont. — Consumers are paying a price for monopoly railroads every time they turn on a light switch.
That’s the claim of Sen. Conrad Burns, R-Mont., who wants the Senate Energy and Natural Resources committee to look into accusations that high rail rates and poor service on coal shipments are driving up electricity costs.
It’s also a claim that could help push legislation designed to prevent monopoly railroads from charging unfairly high rates.
“Nationally, complications in rail delivery of coal to power plants are expected to cost ratepayers between $2 billion to $3 billion this year,” Burns said. “That’s a pretty astounding number.”
In areas served by a single railroad company, rates are often higher and service poorer than in areas where there is competition, he said.
“This is a nationwide issue happening across the country” Burns said.
The broadening impact of the captive shipper issues is creating optimism among farm organizations that say a legislative remedy is needed.
“The more industries we can get to support that idea, the better it is,” said Richard Owen, executive vice president of the Montana Grain Growers Association.
“Captive shipper” is a term tossed around frequently on Montana’s Hi-Line. The state’s grain farmers ship their crops to market on the area’s lone railroad, BNSF Railway. Grain industry folks have lobbied for decades for help.
Burns is the sponsor of legislation introduced about a year ago to specify the primary objectives of the Surface and Transportation Board, the federal agency with authority over rates and service issues in captive rail markets.
Burns’ legislation allows rate and service disputes between railroads and customers to be sent to arbitration. It also requires the STB to use actual railroad costs to determine whether or not rail rates are justified.
The legislation gives the STB mandatory authority to require railroads to enter into mandatory, reciprocal-use agreements to allow competing railroads to use each other’s tracks. It also requires the STB to designate areas and states with inadequate rail competition.
If the bill passes, the transportation board will also have to post complaints on its Web site.
Customers are frustrated by the board’s lack of action and lack of accessibility, Burns said.
“Right now, it costs $140,000 to file a case with the STB,” Burns said. “It only costs $150 to file a case in federal district court.
The Montana Electric Cooperative Association and the Montana Grain Growers Association support Burns’ bill.
“We need consumer representation on the STB and we need fairness in rates,” said Dave Wheelihan, general manager of the Montana Electric Cooperative Association. “Some of the electricity we buy is from coal-fired generation and coal delivery is an issue for Basin Electric Power Cooperative in Bismarck, N.D. And it will also be an issue for any new coal-fired plants.”
About half of America’s electricity and 65 percent of that used in Montana comes from coal plants, Wheelihan said.
Returning to government regulated railroads are not the direction to go, Burns said, and he does not want to put the industry at a disadvantage.
“I don’t want to create any unintended consequences,” he said. “We need rail companies to be healthy and viable, we can’t survive without them. Prices should be set by the market, but not by monopolies. If you are a victim of a monopoly, there should be some assurances to get relief if you are impacted.”
Burns also made hearing requests on the issue to the Senate Agriculture, Nutrition and Forestry and Small Business and Entrepreneurship committees.
A spokesman for the Association of American Railroads in Washington, D.C. could not be reached for comment Tuesday evening.