6.1. ERMUSR 03-09-2010 - Laserfiche WebLink

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'Ihe Laramie River Station power plant (LRS) in V~~heatland, Wyoming serves 24 Minnesota municipal utili- ties through Missouri River Energy Services. Along-standing BNSF con- tract for coal delivery to Laramie River expired in 2004. The new rail. shipping rates set by BNSF more than doubled, increasing the cost by about $1 billion over 20 years. The drastic rate increase was given. without negotiation or explanation. In response, coal providers and the plant operators filed a complaint with the STB in 2004, spending more than $6 million and three years on the case. After all filings were submitted, the STB put the case on hold while it developed a new rulemaking on cap- tive shipper cases and subsequently decided to retroactively apply the rule to the case, rejecting the complaint in 2007.On February 18, 2009 the STB issued a decision on appeal that pro- vides substantial relief to the Laramie plant partners. We are pleased with this decision, but appeals are likely and many other STB cases are still pend- ing. We believe that the issue of rail reform remains an important one, and the cost of pursuing a case before the STB is well beyond the means of most ratepayers. In another example, Southern Min- nesota Municipal Power Agency (SMMPA) supplies wholesale power to 18 municipal utilities in Minnesotan The agency is a 41 percent co-owner of Sherco 3, an 884 MW coal-fired power plant near Becker, MN. Coal is delivered by BNSF, the only railroad that serves the plant. Unfortunately, BNSF's charges to SMMPA have nearly doubled in the past two years. Indi~ridual municipal utilities have experienced similar problems with coal shipments to their local plants. Hib- bing and Virginia, two small com- munities located on Minnesota's Iron Range, enjoy the benefits of owning and operating their own municipal electric utilities. Recently both com- munities have been forced to give up their rail service -they have resorted to trucking coal from Superior, Wis- consin to their respective towns to fuel small coal plants rather than deal with. prohibitive rail transport costs. The Virginia Department of Public Utili- ties, for example, now pays upwards of $57 per ton of coal, but only $16 is for the coal itself. The remaining $41 cov- ers the costs of transportation. Congressional Action Two major pieces of legislation that address the concerns of rail customers were introduced in previous Con- gresses and will be reintroduced in the 111th. The bipartisan Railroad Competition and Improvement Act was introduced in both chambers; the lead sponsor in the House last year was Transportation and Infrastructure Committee Chairman James Ober- star (D-MN), who will once again take the lead in the new Congress. A similar bill in the Senate will also be reintroduced. This legislation ad- dresses serious inadequacies in the rate reasonableness process of the Surface Transportation Board, and seeks to .improve rail service for all customers and provide new remedies for a STB in need of reform. HR 233, the bipartisan Railroad An- titrust Enforcement Act, was recently introduced in the 111th Congress by Representative Tammy Baldwin (D-WI). Another lead cosponsor is Representative Tim. Walz (D-MN). A similar bipartisan bill, S 146, was recently introduced by Senator Herb Kohl (D-WI); Senator Amy Klobu- char (D-MN) is also a lead cosponsor. This legislation would eliminate anti- trust exemptions relating to mergers and acquisitions, collective ratemaking and private antitrust lawsuits that the railroads currently enjoy. Last year both bills were approved in committee and awaited floor action as the session ended. Finally, in the last Congress the railroads began to express interest in receiving a federal investment tax credit (ITC) of 25 percent to apply to new investment in rail infrastructure. Any additional federal subsidy for infrastructure improvement should not come without guarantees that dollars will be spent to enhance reliability, especially in captive shipper corridors. Minnesota municipal utilities and captive shipper groups like Consum- ers United for Rail Equity (CURE) support an ITC for the railroads only if STB reforms are enacted at the same time that provide relief for rail cus- tomers. MMUA Position MMUA urges Congress to: • support the STB reform bill; • support the rail antitrust bill; and oppose enactment of the controversial federal ITC proposal for the railroads without these reforms.