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jeaton - You ostensibly oppose socialism. You state that you oppose anti-trust law. Therefore, anti-trust law must be socialist. And so on, and so on,........ Let's not forget, that in this debate it is your side that always brings up the accusation of socialism when discussing OA. There is no sliding down the slippery slope until someone takes the first plunge....... Murphy - Did I answer your question or not? As usual, Mac takes it upon himself to speak for others, and I just can't assume that he speaks for you as to whether you thought the question was answered. But since you posted a further need for clarification, I'll take a stab at it. Whether other utilities have a long track record or not is irrelevent to your question pertaining to why someone would want to invest in an IO company, in so much as any new type of investment security with a regulated return would be a causal factor for hesitency on the part of investors unless there is some type of security backing by the feds during the transition stage. Take it in it's most basic inquiry: Are shippers willing to pay a user fee to use railroad tracks the way they do highways? Despite the innacurate myth of highways being "heavily subsidized", the truth is that at the federal level most interstate-type highways are paid for with user fees via fuel taxes and other various trucking fees. Since the highway version of TOC's pass this cost onto shippers, the answer is yes. However, as publicly owned ROW's highways do have certain advantages pertaining to public ownership, even with the user fee system, and such is an equivalency to a regulated private utility. With railroad technology's superiority in moving bulk commodities at speed, there is an opportunity for profit in owning railroad infrastructure that is not present in highways or waterways (outside obvious bottlenecks such as the Panama Canal or the remaining privately owned toll bridges), and in terms of public support all we need is to emulate a user fee system combined with a public-ownership by proxy (no property taxes) to "equalize" the playing field among modes. I would include certain tax incentives as part of the user fee alignment, since the social benefits of railroads are not as transparent to the public as electric utilities, and railroad maintenance needs are more crucial to sustained access than the maintenance needs of highways. BTW, the government does not regulate the electric utilities' profit margins to "protect them from competitors", they do so knowing full well the need for a minimum level of return to attract investors. And investors are attracted to the regulated utilities, despite the introduction of OA competition to that sector. Right now regulated utilities are the darlings of Wall Street, so some how the seeming incompatibility of competition and regulation has managed to take the industry to a higher level on all counts. So with the transportation cross-modal cost base "equalized", we now need to prevent the very monopolistic tendencies that we see now in the closed access rail system. That's the other side of regulation, and it fits nicely into the separated regime of an OA rail industry, e.g. it makes sense to regulate infrastructure, but not services. Remember, the downside of past railroad regulation was that services were regulated, which prevented market dynamics, yet there was no transparency of how railroads maintained their ROW's, which allowed deferred maintenance to undercut the longevity of so many fine Class I's. So now we have IO's with tracks that go from one market to another. The shippers line up, pay their user fees which cover associated maintenance costs and the regulated 10% profit margin, and off they go. If the shippers can garner savings from using this user fee system to run multiple boxes at a time as opposed to the highway user fee system with it's one or two boxes at a time, then they will use OA rails. If OA rails get enough use, investors will see it and participate by purchasing the OA securities. If OA rails do not get enough use, investors will see it and invest elsewhere. To recap, you asked why anyone would invest in an IO with regulated characteristics if there is no long term track record. It's kind of a rhetorical question, since IO's would be new to the market. It is my guess that there would have to be some sort of federal backing during the transition period to attract the investors until a track record can be established. After all, at one time electric utilities were new, in fact every type of investment was at one time new to people. Since our economic way of life is well established, any new investment scenarios that would have significant impact on society if something went awry would need backing to ameliorate such fears.
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