Captive rail customers and consumers won an important victory in their fight against the monopoly pricing power of the major freight railroads with a rare win at the Surface Transportation Board (STB).  The result was rate reductions of almost 60 percent, totaling about $345 million in benefits to electricity consumers in nine states.

The rate complaint was filed in 2004 by Western Fuels Association and Basin Electric Power Cooperative against the Burlington Northern Railroad over the coal transportation rate from the Powder River Basin to the Laramie Station generating facilities located about 175 miles away in Wyoming.  The victory came 1582 days after the complaint was filed and after the complainants spent upwards of $8 million prosecuting the case.

“While the outcome of this case is gratifying, the length of time and the amount of money required to pursue it only proves the need to reform the STB,” declared Glenn English, CEO of the National Rural Electric Cooperative Association (NRECA).

“The electricity customers of the Laramie Station generating plant have been paying over five times the cost to the railroad of moving the coal.  It shouldn’t require the patience of Job and the deep pockets of a robber baron to achieve relief from the STB in such an obvious case of monopoly abuse said Bob Szabo, executive director and counsel of Consumers United for Rail Equity (CURE).  “Rate relief from the STB remains out of reach for the overwhelming majority of captive rail customers,” said Szabo. 

The $345 million judgment, announced by the STB Wednesday, will benefit electricity consumers in Colorado, Iowa, Minnesota, Montana, Nebraska, New Mexico, North Dakota, South Dakota and Wyoming. 

During the last Congress, legislation to improve the rate challenge process at the STB was introduced by House Transportation and Infrastructure Committee Chairman James Oberstar (D-MN) and Senator Jay Rockefeller (D-WV), who is now Chairman of the Senate Commerce, Science and Transportation Committee in the 111th Congress.  Both Chairman Oberstar and Chairman Rockefeller appear committed to enacting legislative improvements to the policies of the STB in this Congress.

Congress is also considering legislation that would eliminate the freight railroads’ exemptions from the nation’s anti-trust laws that ensure competitive markets.  The Railroad Antitrust Enforcement Act, which was voted out of both the Senate and House Judiciary Committees in the last Congress, was introduced by Rep. Tammy Baldwin (D-WI) and Sen. Herb Kohl (D-WI) in the first week of the 111th Congress as H.R.233 and S.146.