Consumers Energy files evidence in coal rate complaint against the CSX railroad

Consumers Energy filed on Nov. 2 at the U.S. Surface Transportation Board its opening evidence in its rate complaint against CSX Transportation over the cost of moves of Powder River Basin from an interchange with BNSF Railway, the originating carrier, to the utility’s J.H. Campbell power plant in Michigan.

In this proceeding, Consumers challenges the reasonableness of the common carrier rates established by CSX for application to the transportation of coal in unit trains comprised of Consumers-supplied railcars to Consumers’ J.H. Campbell Generating Station from CSXT’s interchange with BNSF near Cicero, Illinois, in the vicinity of Chicago.

The challenged rates were established in Amendment 1 to CSXT’s common carrier Tariff CSXT-13952. As of the third quarter of 2015, the rate established by CSXT for coal transportation to Campbell from the Chicago interchange with BNSF was $14.95 per ton, the utility said. As of the third quarter of 2015, the maximum rate which the evidence demonstrates the board should prescribe for coal delivery service to Campbell – and which clearly illustrates the degree of monopoly pricing that CSXT has imposed on Consumers and its ratepayers – is $10.08 per ton, the filing added.

Consumers wants the following relief from the board:

  • a ruling that CSXT possesses market dominance over the coal transportation to which the challenged CSXT-13952 rate applies;
  • a board determination that the challenged CSXT rate exceeds a reasonable level based on the Coal Rate Guidelines’ Stand-Alone Cost (SAC) Constraint;
  • a board determination that CSXT is “revenue adequate” for purposes of application of the Revenue Adequacy Constraint in the board’s guidelines;
  • a board determination that the rate increase that CSXT imposed on Consumers’ Campbell coal traffic effective Jan. 1, 2015, was unreasonable under the Guidelines’ Revenue Adequacy Constraint;
  • the prescription by the board of lawful maximum rates for coal transportation from the BNSF interchange with CSXT near Chicago to Campbell for each of the years 2015 through 2024, at the lower of the maximum rates indicated by application of the SAC Constraint and the Revenue Adequacy Constraint; and
  • an award by the board of reparations payable by CSXT to Consumers for all charges collected under CSXT-13952 in excess of the maximum rates prescribed by the board, between Jan. 1, 2015, and the date of CSXT’s compliance with the board’s prescription order, together with interest.

Campbell currently is comprised of three coal-fired units, with a combined output of 1,455 MW. Campbell Units 1 and 2 first came on-line in 1962 and 1967, respectively. Campbell Unit 3 – the largest of the three generators – began commercial operation in 1980. The units at Campbell generally consume between 4.8 million and 6 million tons of coal annually, depending upon regional power demand. Prior to 1990, the Campbell Station relied almost exclusively on coal from origins in the Eastern United States. However, since the early 2000s, Units 1 and 3 have run on western coal sourced in the Powder River Basin region of Wyoming, while Unit 2 uses a blend of eastern and western coal.

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.