(The following report by Adam Klawonn appeared at ZonieReport.com on January 22, 2009.)
BENSON, Ariz. — Union Pacific Railroad Co. is suing a leading electricity provider for rural Arizona, claiming it backed out of a valid contract that locked in its shipping rates for coal.
The suit closely follows a formal complaint the utility company filed with federal transportation authorities against Union Pacific. It claims the railroad is charging “excessive” prices and is, ahem, railroading its new contract.
The legal squabble involves Arizona Electric Power Cooperative Inc., a utility outfit based in this small southeastern Arizona town that serves 100,000 homes and businesses in places such as Duncan, Bullhead City, Pima and Willcox. A small fraction of its electricity also feeds Salt River Project Co. in Tempe and users in Mesa.
Both sides had a contract for shipping coal to the cooperative’s Apache generating station in Cochise that lasted from 2003 until Dec. 31, 2008. The coal is picked up from mines in Colorado and Wyoming’s Powder River Basin, then shipped to Arizona by train.
Last April, lawyers for the railroad drafted a new contract that they claim mirrored the old contract. They gave the utility cooperative one month to accept it, and they claim the cooperative did just that.
A legal back-and-forth ensued when the cooperative asked for lower shipping rates. They claimed they had never agreed to the new deal, and issued a prepared statement that called the rates “unfair and excessive.”
Now Union Pacific is asking U.S. District Court Judge Frank Zapata in Tucson to uphold their new contract, essentially forcing the utility company to pay the new rates.