STB rules against CSX in rare rate-case win for a rail shipper

RELATED TOPICS: EAST | CSX | REGULATION | COAL
Trains Industry Newsletter
Get a weekly roundup of the industry news you need.
By signing up you may also receive occasional reader surveys and special offers from Trains magazine. View our privacy policy.
csxtomorrow
WASHINGTON — The Surface Transportation Board recently settled a carrier-shipper rate dispute in favor of the shipper, something that hasn't happened in several years.

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.

The STB's ruling in the case is available online.
Leave a Comment
Want to leave a comment?
Only registered members of TrainsMag.com are allowed to leave comments. Registration is FREE and only takes a couple minutes.

Login or Register now.
Please keep your feedback on-topic and respectful. Trains staffers reserve the right to edit or delete any comments.
0 COMMENTS
ROAD TO OBLIVION

ROAD TO OBLIVION

Free download

SEE INSIDE THIS ISSUE

Learn more about the stories and photos in this months issue

Newsletter Sign-Up

By signing up you may also receive occasional reader surveys and special offers from Trains magazine.Please view our privacy policy
Subscribe Up To 54% off the newsstand price!
Subscribe To Trains Mag Today
+