Basin Electric announces May settlement with BNSF over coal-haul rates

Before the U.S. Surface Transportation Board (STB) could reach its decision, the Western Fuels Association, Basin Electric Power Cooperative and the BNSF Railway were able to reach a settlement in a rate case dating back to 2004, said Basin Electric in a June 4 statement.

The Western Fuels Association, which is a fuel-buying entity with a number of members, and Basin Electric, as the operating agent for the six participants of the Missouri Basin Power Project (MBPP), reached a settlement with BNSF Railway in May on a rate case dating back to 2004. The legal dispute with BNSF involved coal shipping rates for the Laramie River Station located near Wheatland, Wyoming.

After a contract expired in 2004, BNSF set new rates to ship coal to Laramie River. In October 2004, Basin Electric and Western Fuels filed a complaint with the STB, asserting they were captive to BNSF for rail deliveries of coal from the Powder River Basin to Laramie River and that the new rates BNSF had imposed were unreasonably high under governing regulatory standards.

In 2009, the STB determined the rates BNSF was charging for shipping coal to Laramie River were unreasonable, and provided an estimated $345 million in current dollar rate relief through 2024. As part of this relief, BNSF was ordered to refund nearly $120 million for excess rates paid between 2004 and 2009.

BNSF originally appealed the 2009 decision in the Court of Appeals in Washington, D.C., on several grounds, but the STB’s decision was upheld on appeal in all respects, except one technical matter that was remanded to the STB on the grounds that the STB had not specifically explained its rationale. BNSF’s request for U.S. Supreme Court review was also denied, Basin Electric added. In a 2012 decision, the STB provided the explanation requested by the court on the issue remanded to the STB, and upheld the STB’s original 2009 decision.

In January 2014, the Court of Appeals upheld BNSF’s challenges to that 2012 ruling by a vote of two to one, marking the second time the dispute had come before the court and been returned to the STB. Before the STB would reach its latest decision, Western Fuels, Basin Electric and BNSF were able to reach a settlement. The parties have requested the STB discontinue its proceeding.

“The details of the settlement agreement are confidential, but the parties are satisfied with the outcome. BNSF and Basin look forward to working together to serve the project’s consumers,” said Paul Sukut, Basin Electric CEO and general manager, in the June 4 statement. “This settlement marks the end of this dispute and assures a continued partnership between all parties.”

Western Fuels, Basin Electric Power and the BNSF Railway on May 15 jointly asked the Surface Transportation Board to dismiss the WFA/Basin Electric complaint against the BNSF because the parties have settled this complaint. In the May 15 filing, the parties said they have entered into a new “rail transportation agreement” as part of this settlement, but they offered no details about it.

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.