Basin Electric pushes coal rate equity with STB members

Basin Electric Power Cooperative representatives met with U.S. Surface Transportation Board (STB) Chairman Daniel Elliott and STB Vice Chairman Ann Begeman during the STB officials’ visit to Minot, N.D., on Sept. 26.

Basin Electric CEO and General Manager Andrew Serri and Chris VandeVenter, Basin Electric legislative representative, visited with Elliott and Begeman about Basin Electric’s commitment to working with the STB and Congress to achieve meaningful rail reform to promote competition and shipper access, Basin Electric said in a Sept. 27 statement.

Basin Electric relies on rail service for transport of fuel and co-products to and from several of its facilities, and in 2009 won a case before the STB to ensure reasonable rail rates for the shipment of coal to the Laramie River Station, at Wheatland, Wyo., which is partly-owned and operated by Basin Electric. That case was appealed by the railroad and has been working its way through the federal court system for the last several years.

Basin Electric is a member of Consumers United for Rail Equity (CURE), an advocacy group working to help ensure fair and reasonable rail rates for rail-dependent shippers, Basin said. Serri is a member of CURE’s executive committee.

The STB officials were in North Dakota to tour rail facilities and visit with rail shippers in the state. The STB is an economic regulatory agency that Congress charged with resolving railroad rate and service disputes and reviewing proposed railroad mergers.

Most of the coal Basin Electric uses for energy generation is mined near the plant sites, but coal for Laramie River is shipped by BNSF Railway. U.S. Energy Information Administration data shows supplying mines for Laramie River earlier this year included the Antelope and Cordero operations of Cloud Peak Energy, plus Peabody Energy‘s North Antelope Rochelle and Arch Coal‘s Black Thunder mines, all in the Wyoming Powder River Basin.

The lack of a competing railroad or viable transportation alternatives has left Basin Electric a “captive shipper” and mired in a drawn-out battle for fair and reasonable rail rates, the cooperative has claimed.

The issue dates back to 2004, when BNSF Railway began charging Basin Electric double what it had been charging for the previous 20-plus years. Basin Electric brought a rate complaint before the STB, which ruled in Basin Electric’s favor in 2009. BNSF has appealed the decision to the U.S. Court of Appeals for the D.C. Circuit, with the current version of the case due for oral argument at that court on Oct. 11.

In a July 2012 brief filed at the appeals court to contest the STB’s most recent ruling in this matter, BNSF said: “This proceeding was previously before this Court as Nos. 09-1092, 09-1190, and 09-1234 (con.). In an order initially served on February 18, 2009 (as modified by orders served on June 5 and July 23, 2009), the STB found that certain rates charged by BNSF for transportation of coal from the Powder River Basin in Wyoming to the Laramie River Station electric generating facility located near Moba Junction, Wyoming, were unreasonably high. In making that determination, the STB applied newly adopted aspects of its rate reasonableness methodology used in coal rate cases. Through a formal rulemaking proceeding (the ‘Major Issues Rulemaking’), the Board earlier had adopted an approach that it called the average total cost (ATC) methodology. But in this case – the first case to apply ATC – the Board departed from Major Issues and applied a modified version of ATC. The Board ordered BNSF to establish new, reduced rates and to pay reparations for amounts previously collected that exceed maximum reasonable rates. BNSF timely petitioned for this Court’s review.”