Union Pacific seeks hold on Intermountain coal rate complaint

The Union Pacific Railroad has asked the U.S. Surface Transportation Board to hold a coal rate complaint filed by Utah’s Intermountain Power Agency in abeyance while the board works on a broader rate policy initiative.

“The parties’ and the Board’s interests in achieving a fair and efficient resolution of this case would be best served by suspending the procedural schedule so the parties’ evidentiary submissions can reflect any improvements to the Board’s stand-alone cost (‘SAC’) test that are adopted in Rate Regulation Reforms,” the UP argued in an Aug. 14 petition. “The Board held pending SAC cases in abeyance when it instituted its prior reform effort. Holding this case in abeyance is particularly appropriate because the case is in an early stage – the parties are still engaging in discovery – and it would be wasteful for the parties to develop and submit their evidence based on rules that are in flux, and then repeat the process under improved rules.”

The board had not acted on the UP request as of Aug. 23.

On May 30, IPA filed a complaint challenging the reasonableness of UP’s rate for transporting coal in unit train service from Provo, Utah, to IPA’s Intermountain power plant. Discovery in this case does not close until Sept. 18. The earliest IPA will file opening evidence is Dec. 17, but the parties recognized that the schedule could be modified if the board does not issue a decision in addressing the scope of reparations potentially available in this case sufficiently in advance ofthe due date for IPA’s opening evidence, the UP noted.

On July 25, the board proposed several changes to its rules for a full-SAC case that could affect the outcome of this case. The board proposed: to limit the types of movements that could be used as cross-over traffic; to modify the Average Total Cost (ATC) method used to allocate revenues from cross-over traffic; and to change the interest rate used when calculating interest owed to shippers for rates found to be unreasonable.

IPA seeks fair rates for interchange service

In the May 30 complaint, IPA asks the board to look at whether the UP is charging IPA too much for coal transportation to the Intermountain power plant under rates set in 2010. IPA is seeking the establishment of reasonable rates and other terms for unit train coal transportation service by the UP from a point of interchange with the Utah Railway (URC) at Provo, Utah, to IPA’s power plant in Utah. The two Intermountain units have a total capacity of 1,800 MW and consume 4 million to 6 million tons of coal per year.

In December 2010, UP published the rates subject to challenge in this complaint. Later in December 2010, IPA filed a first complaint with the board challenging the same rates that are the subject of this complaint and rates from two other origins that are not the subject of the May 30 complaint.

On May 2, IPA moved for leave to withdraw that prior complaint. On May 22, UP filed a reply to IPA’s withdrawal motion. In its reply, UP acknowledged that IPA is entitled to file a new complaint challenging the rates from the Provo interchange, but asserted that IPA should be prohibited from seeking reparations for any period preceding the dismissal of the old complaint, IPA noted.

IPA said it has shipped, and anticipates it will continue to ship, at least 2.5 million to 3.5 million tons of coal per year from the Provo interchange through the end of the 10-year prescriptive period.

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.