(The following article by Steve Cahalan was posted on the La Crosse Tribune website on September 29.)
LA CROSSE, Wisc. — At a public hearing Thursday in La Crosse, several shippers complained about railroad prices and service, but a railroad official said most are paying less than they did two decades ago when adjusted for inflation.
Rod Nilsestuen, Wisconsin secretary of agriculture, trade and consumer protection, and Dan Ebert, chairman of the state Public Service Commission, held public hearings Tuesday in Milwaukee and Thursday in La Crosse and Green Bay on railroad shipping costs and service.
Nilsestuen said that since 1980 — when Congress partially deregulated the industry — consolidations have decreased the number of Class 1 railroads from more than 40 to only seven.
“We’ve heard about lack of service, we’ve heard about higher freight costs,” he said.
The hearings were held, Nilsestuen said, to gather information so recommendations can be made to the governor and Congress.
Railroad price increases and some coal delivery disruptions have affected electric rates charged by utility companies, Ebert noted.
The vast majority of Wisconsin rail shippers are paying lower prices than they did 25 or 20 years ago, said Paul Nowicki, BNSF Railway assistant vice president for government and public policy.
“Since deregulation, over the last 25 years rail prices have declined on average, adjusted for inflation, by about 40 percent,” Nowicki said. Prices for shipping coal, adjusted for inflation, have declined by about 30 percent, he said.
Nowicki said when he started his career 27 years ago, half of the nation’s rail lines were in bankruptcy and railroads’ share of the transportation market was in the midst of a long free fall.
Over the past 10 years, railroads on average have reinvested about 18 percent of their revenues back into the business, which is high when compared with other industries, he said.
William Berg, president of the La Crosse-based Dairyland Power Cooperative electric generation and transmission cooperative, said Dairyland experienced a 13 percent shortfall of scheduled coal shipments in 2005, “yet we were hit with a 93 percent (railroad) rate increase beginning in 2006 — resulting in about $35 million of increased cost.” That’s the main reason why Dairyland’s average wholesale electric rate for its members increased more than 20 percent, he said.
The railroads Dairyland uses contend the rates they had been charging were too low.
“I think we have made more progress in getting the attention of legislators than we have ever done before,” Berg said. “And I’m confident that something is going to come out of all of this,” because many different kinds of shippers are complaining.
Berg said Dairyland supports giving the federal Surface Transportation Board more teeth to enforce competition and protect captive shippers when no competition exists. Dairyland also supports removing railroads’ anti-trust exemption.
Representatives of the Chippewa Valley Bean Co., Wisconsin Propane Gas Association, Domtar Industries and Wisconsin Farm Bureau also spoke at the La Crosse hearing about railroad service and rate issues.