Intermountain Power to try new version of UP coal complaint

The Intermountain Power Agency (IPA) on May 2 asked the U.S. Surface Transportation Board to let it withdraw a coal rate complaint against the Union Pacific Railroad Co. so it can file a slimmed-down replacement.

In light of the board’s April 4 decision in this case, IPA said it no longer seeks relief under its pending complaint. IPA instead intends to file a new complaint challenging UP’s rates from only one of the three UP origins involved in its pending complaint, which are rates from Provo, Utah, to the Intermountain power plant.

The hypothetical stand-alone railroad that IPA had to build on paper that would compete against the UP for this business will be substantially reduced in scope by limiting it to one of the three original options and will allow IPA to try and demonstrate that UP’s Provo rates exceed a maximum reasonable level.

The equities of the present situation strongly militate in favor of allowing a new complaint, IPA added. In particular, while UP reports that it has incurred substantial legal fees in defending IPA’s original complaint, UP simultaneously has enjoyed the benefit of rates set at levels well in excess of 400% of variable costs for service from Provo to the Intermountain plant, IPA said. Allowing UP to charge rates at this level without even the possibility of a new rate challenge would fundamentally contradict the board’s duty to the general public, the power generator said.

IPA filed its original complaint in December 2010, seeking the prescription of maximum reasonable rates for the transportation of coal in unit train service from one Utah coal loadout (the Savage Coal Terminal), one Utah mine (the Skyline longwall mine of Arch Coal (NYSE: ACI)), and one point of interchange with the Utah Railway Co. (URC) at Provo, Utah. URC provides upstream service on the interline movements with UP under a long-term rail transportation contract with IPA.

IPA’s opening evidence relied upon a stand-alone railroad configuration that could provide the subject service for each of the challenged rates (i.e., the bottleneck Provo rate and the single-line rates from Skyline and Savage to the power plant). The total system included 278.67 route miles, extending between Price, Utah, on the east and Milford, Utah, on the west. The UP argued that IPA had failed to demonstrate that the challenged rates were unreasonable.

In December 2011, IPA filed a petition seeking leave to supplement the record by substantially simplifying its stand-alone railroad. IPA argued that the most fair and informed basis on which to evaluate UP’s common carrier rates would be to permit IPA to submit supplemental opening evidence based on a truncated version of its stand-alone railroad that would replicate only the Provo-to-Milford portion of UP’s system. IPA explained that as a result of this change in its stand-alone railroad, it would only challenge UP’s Provo rates.

The board denied IPA’s petition to supplement the record on April 4, finding that IPA’s arguments in support of the filing of supplemental opening evidence did not meet the standard set forth in a prior case.

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.