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Mac, I disagree with your contention that BNSF and UP are engaged in a rate war for the transport of PRB coal, or that there are any number of coal hauling contracts that result in RVC's in the 100% range. Most coal fired plants out West are captive to one or the other. Even if a connecting line in the South and East (such as KCS, NS, or CSX) has the ability to play one connection against the other, the coal fired plants on those railroads are also likely to be captive, so the overall rate from PRB to those plants will be a captive rate, and either UP or BNSF will share in a percentage of those captive rates. Given the pricing power railroads have right now for coal transport I would expect those "shared" corridors are bringing in revenues well in line with the STB RVC standard. I just don't see either UP or BNSF having an average RVC for all PRB coal hauling at below 180%. If true, then the entry by DM&E will not have that great of an impact on average PRB coal rates. You may be right that DM&E will have less on line captive customers relative to BNSF and UP to balance out the total coal hauling RVC ratios. There are also the the cross benefits of this project on DM&E's other business, such as grain hauling. And I still think that there is more to this project than just DM&E's desire to enter the PRB. It's just a hunch.
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