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Rail News: Rail Industry Trends

STB seeks Class I input to calculate the industry's annual cost of capital

Earlier this month, Surface Transportation Board began its yearly process to determine the railroad industry's annual cost of capital.

The board uses a cost-of-capital calculation when evaluating railroad revenues each year under procedures mandated by the Railroad Revitalization and Regulatory Reform Act of 1976. STB also uses the cost figure as a tool in proceedings involving a rate case, merger, trackage rights compensation, branch line abandonment or feeder line purchase.

STB is seeking Class Is' input on their 2003 cost of preferred and common equity, and debt capital; and structure mix on a market-value basis. The board plans to use the feedback to help compute the industry's 2003 composite cost of capital, based on a Class I sampling.

Class Is interested in participating must submit a notice of intent to STB no later than Jan. 12. Cost of capital information is due March 29; statements from other interested persons, April 26; and railroad rebuttal statements, May 17.

The board previously calculated the industry's 2002 and 2001 composite cost of capital at 9.8 percent and 10.2 percent, respectively.

Contact Progressive Railroading editorial staff.

More News from 12/12/2003