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[quote]QUOTE: Originally posted by PNWRMNM All, Lets debate open access straight up. I think Mark Hemphill's piece this month pointed out the undesirable features of a tax on either shippers or carriers, some portion of which would make it back to the infrastructure. I am not a fan of open access for several reasons, I will cite a few. First, while the friends of ths shippers think this is a good idea, it will eliminate what modest ability the carriers now have to price discriminate. This will bring rates to very near long run variable cost, decreasing revenue, and decreasing profits. Second, if the idea is to get more dollars into the plant, I do not see how open access will do it. Third, while the fixed costs associated with the plant will disapear from the carrier's budgets, it will be replaced by operating costs. The infrastructure entity will have to generate funds to maintain the track and terminals and do the dispatching. These costs do not disapear, they just get shifted to a new entity. That entity will almost certainly make pricing mistakes. Those mistakes will either cause shortfall in maintenance funds or result in payments so high as to discourage use of the asset. This will be a major pricing problem. Fourth, I see the most important issue as getting money into the infrastructure. Any railroad has a list of capital projects far longer than what it can fund. They will rank the projects on the basis of expected return and fund those that exceed their investment threshold, presuming they can get the funds, which they should so long as the investment threshhold is greater than the cost of money. My view is that the next layer of projects can be funded through the RRIF program which is a cheap money loan program. I have not seen any of the Class I carriers use these funds. Any ideas why, or have I missed something? Finally, for the proponents, who would own the fixed plant asset? Book value is probably $100 billion. How do we get from here to there? Would you have the Federal Government buy the asset or just steal it? Would you incorporate a for profit infrastructue company owned jointly by all of the carriers together? Something like a big union station company? Would you distribute stock in the infrastructure company to shareholders of the railroads so they could reallocate their portfolios if they desired, or would operating railroads be required to hold their infrastructure stock? Who would apply for authority to build or abandon? In short what is your vision, why is it better, and how do we get there? Mac [/quote] On, NO, not again... Open access is not a good idea for oh so many reasons that we have gone over and over again... I just can't expend the effort now. Try me back after the holidays... The In Laws are coming, the In Laws are coming...get out your muskets... LC
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