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5/14/2002



Rail News: Rail Industry Trends

STB upholds prior decision that UP charges utility high rates


Surface Transportation Board May 14 substantially affirmed its September decision that Union Pacific Railroad charges unreasonably high rates to move coal from Wyoming's Powder River Basin to Wisconsin Power and Light Co.'s (WPL) electric generating facility in Sheboygan, Wis.
Both UP and WPL asked the board to reconsider its prior decision, which computed UP's roadway-ownership costs by using system-average information.
As part of its reconsideration filing, WPL argued that adjustments it suggested to UP's formula-based roadway-ownership costs were correct, but even if inaccurate, the board should've corrected WPL's data rather than make no adjustments at all.
STB determined that, because WPL's and UP's adjustments were inaccurate and the parties didn't present sufficient information to permit the board to restate either's adjustments, the decision to use the unadjusted formula-based roadway-ownership costs was proper.
UP argued that STB's stand-alone cost analysis used to evaluate the reasonableness of the challenged rate was inconsistent with precedent because it failed to recognize that the rate likely would escalate over time, which could change the analysis' result and raise the level of the future maximum rate prescribed.
But STB found that UP presented no evidence of likely rate changes, and that the stand-alone cost analysis was correct and consistent with precedent.


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