Utility wins split decision in rate case

In a rate case closely monitored by railroads and coal interests, the Surface Transportation Board announced a decision Tuesday giving a utility a limited but important victory. The agency awarded the utility a competitive rail transportation alternative while denying other requested relief.

The STB summarized the case in these words:

“A coal-fired electric utility plant owned by Entergy and Arkansas Electric Cooperative seeks a choice of rail carriers so that it may obtain alternative rates and service. The plant is served by a single small railroad: the Missouri & Northern Arkansas Railroad. MNA works with Union Pacific Railroad to deliver coal to the plant. UP hauls coal from mines in the southern Powder River Basin of Wyoming and hands the shipment to MNA for final delivery. While UP owns the track needed to serve the plant, it leased those facilities to MNA over 18 years ago. Under the terms of the lease, MNA must interchange its traffic on the leased property with UP or pay a large rental fee.

“In addition to service from UP/MNA, the utility wants a joint BNSF Railway/MNA service option. So it seeks three forms of relief. First, it seeks joint BNSF/MNA service from the northern PRB coal mines served only by BNSF. Second, it seeks joint BNSF/MNA service from the southern PRB coal mines served by UP and BNSF. Third, it asks the Board to revoke its approval of the lease and rewrite the lease terms by replacing the current rental fee agreement with a more favorable one.

“With this decision, the Board finds that the plant has a statutory right to service by BNSF from the northern PRB mines, giving the plant a competitive BNSF/MNA transportation alternative (or a BNSF/UP alternative if UP exercises its right under the lease to displace MNA). But the agency denies the rest of the relief sought. The utility did not show that the service problems it experienced were the result of anticompetitive conduct by UP or MNA, and the Board finds that the proposed BNSF/MNA route is not better or more efficient than the existing route. The Board is unable to reach a majority decision on the utility’s request that it revoke agency approval ofthe UP-MNA lease, and the lease authority therefore remains in effect.”