Venture

Robert Trigaux

Protests rising against railroad freight fees

5

January

Seminoleeletriccoalplantputnamcty A growing number of railroad customers -- including a prominent electricity provider here in Tampa -- complain big rail companies have been raising prices unfairly. And some customers are pushing for the incoming Congress to reinstitute tighter federal regulation of the industry, according to a Wall Street Journal story (subscription required) today.

Tampa's Seminole Electric Cooperative filed a complaint with federal regulators in October saying CSX Corp., one of the nation's four major railroads, had doubled its rate for shipping coal. The energy producer said the move would boost electric bills by $100-million for the cooperative's 1.7-million Florida customers. Electric cooperatives like Withlacoochie River and Sumter Electric get their power from Seminole Electric, which operates a large coal-fired power plant (shown in photo, courtesy of Seminole Electric) near Palatka in Putnam County. The plant uses about 4-million tons of coal each year. Seminole Electric says the only reasonable way for the plant to receive coal is by rails controlled by CSX.

CSX Transportation spokesman Garrick Francis told the Jacksonville paper earlier this fall that the railroad company tried to negotiate a shipping rate with Seminole. More recently, CSX called Seminole's new rates "fair and reasonable." The complaint is pending before the Surface Transportation Board.

One group composed of utilities, chemical companies, manufacturers and other industries, called Consumers United for Rail Equity (CURE), is raising antitrust concerns and pressing Congress and regulators to make railroads be more competitive on pricing. Railroads defend their prices as producing fair returns after decades of losing business to the trucking industry, the Journal story says. CURE has also recruited support from the antitrust section of the American Bar Association, which has issued a letter to Congress calling for an end to railroad exemptions to antitrust laws.

As reported by the Journal, Ed Hamberger, president of the Association of American Railroads trade group, said these profits are vital at a time when railroads need to spend $148-billion to accommodate an expected boom in rail volumes in decades ahead.

-- Robert Trigaux, Times Business Columnist

[Last modified: Tuesday, June 1, 2010 12:23pm]

    

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