Ameren loses bid for competitive rail access at Labadie coal plant

Union Electric, also known as Ameren Missouri, lost an effort at the U.S. Surface Transportation Board that would have allowed another carrier besides the Union Pacific Railroad and the BNSF Railway to offer coal-delivery services to its Labadie power plant.

When UP completed the sale of a rail line to Missouri Central Railroad (MCRR) in 1999, it included a contractual service restriction, which prevents Missouri Central from serving Labadie. Missouri Central and Ameren Missouri in 2010 asked the board to remove the service restriction so that Missouri Central could provide rail service to Ameren Missouri, which already receives service from two other railroads.

“The Board is rejecting this request, as we find no basis to partially revoke our prior approval to restructure the terms of sale between these parties,” said the board in a Feb. 26 decision. The board noted that Union Electric was involved in a settlement that led to the board’s approval of that 1999 deal, so it said the utility can’t go back now and try to get the decision changed.

In the early 1970s, Union Electric completed construction of the Labadie plant at the intersection of the Rock Island Line and the former Missouri Pacific Railroad Line and began operations. Labadie has a capacity of 2,405 MW, burns over 10 million tons of coal annually, and is Missouri’s largest power plant, the board noted. The Labadie plant currently receives its coal from the Powder River Basin (PRB) in Wyoming, nearly all of which is delivered by the UP.

Ameren Missouri argued that the BNSF Railway, which also serves Labadie, only provides what amounts to token competitive service to the plant, moving very few trains to the plant in recent years. So it said it needs another point of competitive access to the plant.

The board decision noted: “On June 17, 2011, UP filed a reply asking the Board to either dismiss the complaint or hold the proceeding in abeyance. UP argues there is no need for Board action as UP is willing to negotiate with MCRR to establish Rock Island Line service to the Labadie Plant. UP also argues that Ameren Missouri is not being unlawfully deprived of common carrier service as the Labadie Plant is currently being served by two carriers (BNSF and UP) and that Ameren Missouri is not entitled to service from a third carrier. UP further states that Ameren Missouri and MCRR have previously argued to the Board that the contested provisions were valid. UP asks that the complaint be dismissed with prejudice; that no relief of any kind be awarded to Ameren Missouri or MCRR; and that the Board grant UP such other and further relief as may be appropriate.”

On the point that all the parties knew what they were signing into when the line restriction was first agreed to, the board wrote: “Here, the evidence submitted clearly indicates that all parties to this proceeding actively worked toward the sale of the Rock Island Line, including the Labadie Service Restriction, and that some of these parties also actively promoted this transaction before the Board. Nor can any party claim that it was unaware of the Labadie Service Restriction. Here, MCRR is not an uninvolved third party whose common carrier duties are being interfered with unexpectedly by the Line Sale Agreements. Instead, MCRR is a signatory of the Line Sale Agreements. We thus conclude that MCRR knew or should have known the impact that the Labadie Service Restriction would have on its operations and finances as a short line railroad, as well as its obligations as a common carrier. Presumably, MCRR also understood that the transaction had certain benefits to it because it proceeded with the transaction. The mere fact that MCRR has now reweighed the pros and cons of a transaction that it entered into 10 years ago does not justify complete or partial revocation of the exemptions to restructure the transaction.”

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.