Western Fuels, Basin work on coal rate settlement with the BNSF Railway

The Western Fuels Association, which represents a number of cooperatives and municipal utilities, and Basin Electric Power Cooperative on Jan. 28 asked the U.S. Surface Transportation Board to shelve a coal rate complaint they had filed long ago against the BNSF Railway.

“This case is currently before the Board on remand from the United States Court of Appeals for the District of Columbia Circuit,” WFA and Basin wrote. “The Parties have reached a preliminary settlement agreement that calls for dismissal of the case and vacation of the rate prescription that is the subject of the remand. The agreement is contingent upon the Parties’ development and execution of a rail transportation contract. The Parties jointly request that the Board hold further proceedings in this docket in abeyance pending resolution of the Parties’ contract discussions.”

In this case, WFA and Basin in October 2014 filed arguments at the board. Their brief was filed in response to the BNSF Railway’s 78-page reply comments on remand.

“In its Reply, BNSF asks the Board to strip WFA/Basin’s rural electric ratepayers of over $328 million in rate relief by retroactively applying the Board’s new Alternative Average Total Cost (‘ATC’) cross-over traffic revenue allocation methodology on the existing administrative record,” WFA and Basin said in the October 2014 filing. “BNSF’s request is predicated on fundamental misstatements of governing law and equities. WFA/Basin submits this short response will aid the Board by providing a more complete record to decide how to fairly protect the rights of rural consumers in this case.

“BNSF claims that the Board should retroactively apply Alternative ATC in this case because: (i) WFA/Basin had no settled expectation that the Board would apply Modified ATC under the standards set forth in Major Issues; (ii) the Board always applies superior procedural rules retroactively; and (iii) retroactivity concerns fall outside the scope of the Court’s remand order. None of these assertions is correct.”

WFA/Basin said their prescribed rates determined using Modified ATC are already extraordinarily high when measured using industry-standard metrics such as mills per ton-mile. “Retroactively raising these already high rates would be manifestly unfair to the rural consumers served by WFA/Basin who ultimately pay BNSF’s rates in their monthly electric bills,” they said.

Said the BNSF in a September 2014 filing in this case: “This is the second remand of the Board’s February 18, 2009 Decision in this proceeding from the U.S. Court of Appeals for the D.C. Circuit for the Board to address a flaw in the Board’s treatment of revenues on cross-over traffic. On this second remand, the Board should recalculate the SAC results underlying the 2009 Decision using the revenue allocation methodology that the Board adopted in Rate Regulation Reforms – referred to as Alternative ATC – and revise the rate prescription to reflect the recalculated SAC results.” 

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.