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Rail News: Rail Industry Trends

Power co-ops, AAR ask federal energy commission to examine railroads' coal delivery performance and commodity's supply chain

Chief executives from the American Public Power Association (APPA), National Rural Electric Cooperative Association (NRECA) and Edison Electric Institute (EEI) recently sent a joint letter to the Federal Energy Regulatory Commission (FERC) requesting that the federal agency address concerns about railroads’ coal delivery performance.

The execs question the reliability of rail transportation and are concerned that a minor railroad accident or equipment failure at a coal mine could have serious consequences to the power-generation marketplace, according to the letter signed by APPA President and CEO Alan Richardson, NRECA CEO Glenn English and EEI President Thomas Kuhn. In addition, late coal deliveries are causing some coal-fired plants to curtail production, which could increase utilities’ and consumers’ energy costs, they said.

The execs asked FERC commissioners to schedule a meeting to discuss the issues or conduct a public workshop focusing on railroad coal-delivery challenges and their impact on power reliability.

The Association of American Railroads (AAR) also is urging the FERC to hold a public workshop, but not to solely analyze rail transportation of coal. The workshop also should examine utilities’ management of coal inventories, power plant’s unloading capacity, coal producers’ ability to meet rising demand, transmission line and waterway transportation capacity, and the impact of high natural gas prices and investment in gas-fired plants on the coal industry.

The rail industry welcomes any opportunity to have high-level strategic discussions with its partners in the electricity-by-coal process, said AAR President and CEO Edward Hamberger in a prepared statement.

“It’s a complex, interconnected issue that involves the complete supply chain, from production to transportation to the receiving end,” he said.

CEOs from railroads, coal companies and utilities already have instituted bi-monthly calls and meetings to coordinate logistics efforts.

“And these efforts have paid off,” said Hamberger.

After moving a record 415 million tons of coal from the Powder River Basin last year, railroads are on pace to move 450 million tons in 2006, according to the AAR.

Contact Progressive Railroading editorial staff.

More News from 5/4/2006