Arizona Electric scores $9.2m in coal haul reparations from railroads

The U.S. Surface Transportation Board on April 27 ordered the Union Pacific Railroad and BNSF Railway to pay $9.2m in reparations to Arizona Electric Power Cooperative as part of a long-running case where the cooperative had disputed rates charged to haul coal to the Apache power plant.

In 2008, Arizona Electric filed a complaint with the board challenging the reasonableness of the joint rates established by BNSF and the UP for unit train coal transportation service from New Mexico and the northern portion of the Powder River Basin in Wyoming and Montana to Apache, which is located near Cochise, Ariz. In a November 2011 decision, the board found that Arizona Electric had shown that defendants have market dominance over those movements, and that their rates were unreasonable.

The board at that point ordered the railroad defendants to reimburse Arizona Electric (with interest) for amounts previously collected above prescribed levels. The board further ordered defendants to establish and maintain future rates for movements of the issue traffic that do not exceed 180% of the variable costs of providing the service, which is a normal board measurement in such cases.

On March 20, Arizona Electric filed an unopposed petition for an order directing payment. The cooperative stated that it is entitled to reparations and interest as of Jan. 10 for freight shipments tendered between January 2009 and December 2011 in the amount of over $9.2m, with interest accruing in the amount of $6.31 per day through March 31, and with interest from that date until the date of payment.

“There is no dispute regarding the calculation or amount of the damages awarded,” the board wrote in the April 27 order. “Therefore, we will order defendants to pay reparations. If the parties are unable to agree on the interest accrued after March 31, 2012, they may petition the board to rule on that matter.”

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.