Published on Tuesday, September 11, 2007.
Last modified on 9/11/2007 at 12:36 am

Feds rule for BNSF in coal rates case

By The Associated Press

BISMARCK, N.D. - Federal regulators have ruled in favor of BNSF Railway in a case brought by Basin Electric Power Cooperative over coal-hauling rates.

The Bismarck-based electric co-op claimed the railroad is a monopoly that charges too much to provide substandard service hauling coal to a Wyoming power plant. The Surface Transportation Board said Monday that Basin "failed to establish that the challenged rates are unreasonably high."

"We are deeply discouraged and frustrated," said Mike Eggl, a Basin Electric senior vice president.

"We're satisfied with the ruling, and we believe it is fair and correct," BNSF spokesman Gus Melonas said.

Basin has been at odds with BNSF over rail service since a 20-year contract to haul 8 million tons of coal annually from the Powder River Basin to the Laramie River Station power plant expired in 2004. The two sides were unable to negotiate a contract, and BNSF then set a rate at twice the expired contract rate, or roughly $6 per ton, to haul the coal about 200 miles to the plant, board documents say.

Basin, which filed the complaint against BNSF along with the Western Fuels Association, claims its costs for shipping coal to the Laramie River Station plant have doubled and says that will cost utility customers in nine states an additional $1 billion over the next 20 years.

The plant produces power for about 2 million consumers in North Dakota, South Dakota, Colorado, Iowa, Minnesota, Montana, Nebraska, New Mexico and Wyoming.

Basin officials say the Laramie River Station is a "captive" customer to the railroad, the only one serving the plant.

The increased costs to ship the coal will be passed on to Basin's customers, Basin spokesman Daryl Hill said.

The board's ruling, released Monday, says it will give Basin a chance to revise its case in light of changes in the method of allocating revenue since the original complaint was filed.

Eggl said Basin is mulling whether to appeal the board's decision.