Coal consumer Arkansas Electric urges changes at federal rail board

Arkansas Electric Cooperative Corp. (AECC), which has interests in coal-fired power plants that need to move their coal via rail, told the U.S. Surface Transportation Board on Jan. 10 that various changes would improve the board’s oversight function.

The AECC testimony came in an October 2011 docket that the board established to take comment from various parties about how it could do its job better. “AECC commends the board for providing this opportunity for review and potential improvement of the board’s past regulatory practices, and believes that the insights to be gained are meaningful,” said the filing.

The practices of the board and its processor, the Interstate Commerce Commission, since the reforms introduced by the Staggers Act have occurred during – and, indeed, contributed to – profound changes of circumstance in the rail industry, including increased volumes, extensive network rationalization, and enhanced financial performance, AECC pointed out. Substantial new evidence has become available, originating from the board, as well as from shippers, railroads, and others, that makes a review of board policy a good idea at this time, the cooperative added.

AECC has identified 12 specific, long-standing regulatory practices that are “demonstrably obsolete” or in need of revision. There are two “common threads” among these 12 practices, and these suggest more general ways in which the board can improve the effectiveness of its approach to regulatory issues.

First, the board has often established a regulatory remedy to address a specific issue or concern, but the remedy turns out to be ineffective and has gone largely or completely unused. The identification of matters that require remedial actions or procedures represents an irreplaceable application of the board’s expertise. However, the value associated with the identification of problems is wasted if the remedies are ineffective, AECC said.

Second, there are cases where board regulations largely nullify specific statutory remedies by superimposing requirements that have the effect of ensuring that the remedies do not achieve their goal. The board has made clear that it does not intend to make law, but rather to implement it, and the board does not and cannot take regulatory actions outside the bounds established by the statutes, the cooperative noted. But, even if the board believes that actions explicitly contemplated in the statutes would be ill-advised, its regulatory practices should not “eviscerate or prevent altogether such actions unless and until it is directed to do so by Congress,” AECC said.

AECC is a generation and transmission cooperative that provides wholesale electric power to electric cooperatives, which in turn serve about 490,000 customers located in each of the 75 counties in Arkansas. In order to serve its 17 member distribution cooperatives, AECC has entered into arrangements with other utilities within the state to share generation and transmission facilities. For example, AECC holds ownership interests in the White Bluff plant at Redfield, Ark., and the Independence plant at Newark, Ark., each of which typically uses over 6 million tons of Powder River Basin (PRB) coal each year. AECC also holds an ownership interest in the Flint Creek plant, located at Gentry, Ark., which normally uses over 2 million tons of PRB coal each year.

“Because of the large volume of coal consumed by these plants, the need for long-distance rail transportation to move this coal, and the absence of rail competition at two of the plants, AECC has a direct interest in many aspects of the board’s regulation of the freight railroads,” the cooperative noted in the Jan. 10 filing.

The board also took comment Jan. 10 from various other parties in the same case, including the Association of American Railroads, Consumers United for Rail Equity and the Norfolk Southern Railway Co.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.