Consumers Energy files coal rate complaint against CSX Transportation

Consumers Energy filed Jan. 13 at the federal Surface Transportation Board a complaint against CSX Transportation over what are just and reasonable rates, rules and other terms for unit train coal transportation service in shipper-supplied railcars to Consumers’ J.H. Campbell Generating Station in Ottawa County, Michigan.

This service is from CSXT’s established railroad interchange with BNSF Railway in the vicinity of Chicago, Illinois.

Over 75% of Consumers’ base load system capacity is comprised of coal-fired assets, of which Campbell, at 1,455 MW, is the largest. Annually, Campbell consumes as much as 5,500,000 tons of low-sulfur coal from origins in the Powder River Basin of Wyoming, and has the capacity to bum well in excess of 6,000,000 tons each year. Campbell also uses about 500,000 tons of higher-Btu coal each year from origins east of the Mississippi River.

Since 1992 and through the present, PRB coal bound for Campbell has been transported from mine origins to CSXT-served interchange tracks near Chicago by BNSF, pursuant to a series of separate, private contracts between Consumers and the originating railroad. CSXT delivers the shipments from the interchange to Campbell by separate arrangement. Eastern coal moves to Campbell in direct, single-line CSXT service from CSXT-served mine origins.

Said the Jan. 13 complaint: “In anticipation of the need for unit train coal service after 2014, and consistent with its internal planning and budgeting requirements, well over a year ago Consumers initiated discussions with CSXT regarding terms and conditions for a new contract for coal deliveries to Campbell. Despite conscientious effort and multiple, alternative proposals advanced by Consumers, however, the parties were not able to reach agreement on reasonable terms either for an extension of CSXT-C-84720 or for a new contract.

“With no alternatives available, and faced with an urgent need for new rates, terms and conditions for the transportation of its essential generation fuel commencing January 1, 2015, Consumers made a written request to CSXT on November 24, 2014 for the establishment or disclosure of the rates and service terms that CSXT would apply to the transportation of coal to Campbell in common carriage using Consumers-supplied railcars, on and after January 1, 2015. Following Consumers’ response to a request by CSXT for additional information regarding post-2014 coal shipments to Campbell, on December 26, 2014 CSXT provided Consumers with Tariff CSXT-13952. Inter alia, this tariff contained rates and rules for coal transportation service from various CSXT-served eastern coal origin Districts, and from the Chicago area interchange with BNSF to Campbell, and incorporates other CSXT tariffs and publications containing additional rules, accessorial charges and other provisions applicable to CSXT coal service.

“On or about January 7, 2015, CSXT established and provided Consumers with Amendment l to Tariff CSXT-13952, which made changes to the base Tariff that are not relevant to this Complaint. As shown in Exhibit A hereto, as of January 1, 2015, CSXT’s established common carrier rate for PRB coal delivery service to Campbell in shipper-supplied railcars is $14.95 per ton.

“According to Tariff CSXT-13952 (including Amendment 1), PRB coal shipments moving to Campbell in common carriage also are subject to a ‘fuel surcharge,’ which under CSXT Publication 8662 is calculated based on the relationship between the monthly average price of on-highway diesel fuel published by the U.S. Energy Information Administration and $3.749 per gallon, and the distance that a shipment moves. On information and belief, as of January 1, 2015 no CSXT fuel surcharge would be applicable to Consumers’ PRB coal shipments from the Chicago area interchange to Campbell moving under Exhibit A, because the average price of on-highway diesel fuel for the reference month (November 2014) was lower than $3.749 per gallon. However, pursuant to Tariff CSXT-13952 and Publication 8662, the fuel surcharge applicable to Consumers’ Campbell coal traffic will be recalculated monthly, starting in February 2015.

“Because CSXT possesses market dominance over coal transportation to Campbell, the Board has jurisdiction to adjudicate the reasonableness of the CSXT rates, rules and practices applicable to that transportation which are the subject of this Complaint. … CSXT’s charges are excessive and unreasonable both under the Stand AloneCost Constraint and under the Revenue Adequacy Constraint of the Coal Rate Guidelines.”  

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.