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Rail News: Rail Industry Trends

NS charging Carolina Power & Light 'unreasonably high' coal rates, STB says


On Dec. 23, Surface Transportation Board issued a decision favoring Carolina Power & Light Co.'s (CP&L) claim that Norfolk Southern Railway charged "unreasonably high" rates to move coal from West Virginia, Kentucky and Virginia mines to power plants in Mayo and Hyco, N.C. The board ordered NS to reduce the challenged rates and pay CP&L reparations.

Using the board's stand-alone cost (SAC) test, CP&L determined NS' rates were unreasonably high, STB officials believe.

Under the SAC test, a complaining shipper designs a hypothetical railroad specifically tailored to serve the shipper's needs. The cost to build and operate the railroad are compared to revenue the road would be expected to earn. If the shipper demonstrates the stand-alone railroad would earn more than necessary to cover all its costs (including a reasonable return on investment), the shipper is entitled to rate relief.

NS officials are pleased with the board's timely decision, which finds "a significant portion of [our] rate increase on coal shipments to several of Carolina Power & Light's facilities to be reasonable," according to a prepared statement. Soon, NS expects to comment on the decision's potential effect on its earnings.

Contact Progressive Railroading editorial staff.

More News from 12/29/2003