Coal Transportation

 

Transportation plays a key role in satisfying the energy demands placed on electricity generators. When supported by a reliable source for coal, utilities’ operations run smoothly and more predictably than the peaking systems that rely on natural gas.

Helping provide a dependable supply of coal, even as demand surged nationwide, Western Fuels Association delivered almost 17 million tons of coal to its six Class A and Class B Members during 2005.

WFA owns and maintains 1,600 rail cars, negotiates service contracts with rail companies, schedules loading and deliveries and provides equipment financing and leasing services. In addition, WFA also operates the Escalante-Western Railway in New Mexico – a short-haul line that runs between the Lee Ranch Mine and Tri-State Generation & Transmission Association’s Escalante Generating Station.

Since the rail industry was partially deregulated with the passage of the Staggers Rail Act of 1980, industry consolidation has significantly reduced the number of Class 1 railroads. Resulting market conditions have proven mixed, as companies that rely on non-competitive routes – also known as captive customers – tend to pay higher rates. Following the expiration of a 20-year contract with the Burlington Northern and Santa Fe Railway (BNSF) in the fall of 2004, WFA discovered how high those rates can go.

For its 175-mile haul between Powder River Basin and the Laramie River Station in Wheatland, Wyoming – over which WFA delivered 7.7 million tons of coal in 2005 – BNSF instituted a 100-percent rate increase as soon as the WFA contract ended. As there are no other practical alternatives to BNSF service for the Laramie River Station, WFA filed a complaint against BNSF with the federal Surface Transportation Board in October 2004 challenging BNSF’s rate actions. WFA’s complaint asked the Board to prescribe lower maximum reasonable rates and to award refunds.

To further protect captive shippers, WFA has aligned with the Alliance for Rail Competition, and has actively lent its support to the Railroad Competition Act of 2005. This bipartisan bill, introduced in both houses of Congress in 2004, promotes reasonable rates, even on lines owned and operated by a single entity.

The Association is heartened by the continuing efforts to expand into the Powder River Basin by the Dakota, Minnesota and Eastern Railroad, a regional carrier based in South Dakota.

Considering the importance of equitable transportation services and pricing to WFA Members, the Association will continue to take a leading role in challenging inequities while striving for fair rates.