The decision was in a case brought by Consumers Energy against CSX Transportation in January 2015. Consumers challenged the rates that CSX charged the Jackson, Mich.,-based utility to move Powder River Basin coal from a BNSF Railway interchange in Chicago to the company’s J.H. Campbell generating plant near West Olive, Mich., nearly 235 route miles.
The STB on Jan. 18 determined that CSX had charged too much, and determined a lower rate that CSX could charge the utility. CSX requested that proceedings be extended to Feb. 20 to decide whether or not to ask the board to reconsider.
According to an attorney who is familiar with the case, but spoke on background, a win for shippers before the STB has been rare in recent years. Most rate challenges have come from chemical companies, but the volumes of cars in question and the varied distribution of chemical products made it difficult for the STB to determine if rates were reasonable.
The Consumers Energy-CSX case involved large volumes of coal moving over a long period, the attorney said.
In its ruling, the STB determined that CSX was the “dominant” carrier in the market. Put another way, Consumers Energy was a captive shipper. That allowed STB staff to use “stand-alone cost” method to determine if CSX’s revenue unfairly exceeded its cost of operations.
CSX argued that Consumers Energy had an alternative to rail, shipping coal by water, since the plant almost fronts Lake Michigan. In fact, a nearby Consumers plant on Lake Michigan does receive its coal by lake vessel. The STB rejected the argument.
“The case is a win for shippers, and demonstrates that shippers can win rate cases,” the attorney said. “Consumers clearly won and will enjoy rates below tariff for years.
But “it was not a great defeat for CSX,” he said.
The board determined that CSX had an unusually high revenue-to-variable cost ratio because of the costs of moving coal through the Chicago gateway and maintaining the rail line along the eastern shore of Lake Michigan.
“Most rate challenges have come from chemical companies, but the volumes of cars in question and the varied distribution of chemical products made it difficult for the STB to determine if rates were reasonable.”
What kind of rationale is that? Doesn’t the STB have computer people to do certain situational analysis? I guess customers who do not use one bulk product in large enough volume simply lose out. That’s like the cops saying they won’t run a radar gun in your neighborhoods unless the trucks on your street weigh X amount and ship Y volume.
Today’s CSX business model is one based on being investor oriented. Therefore, they want the highest return on investment in the shortest time. They want the money so as to increase their investments and pay off stockholders/investors as soon as possible and not earn long term profits from product or services rendered.
Well, if CSX isn’t happy about it, that’s one more line they can sell. But I have a feeling they will hold onto this one.
I wonder if since I am “captive” to one power company I can claim their rates are unfair?
Gee, will Consumers Energy lower my electric bill…retroactively? naaa, probably not.