RXR Anti Trust Exemptions. Is it a problem?

[jwinter]

Below is an article I saw in the "Wisconsin Energy Cooperative" magazine September issue. Looks like we'll be going through another round of talks about antitrust exemptions. Next to follow will be talk about "open access".

Railroaded!
Rates, Service Worsen for Captive Shippers

Electric cooperatives are waiting for coal. Grain is piling up. Logs are rotting in the yards. Paper mills are shutting down machines and closing their doors.

Exorbitant freight-rail rates and poor service that Wisconsin captive shippers—those without access to rail competition—have had to tolerate from the Class I railroads have taken a toll on the state’s economy and have reached a critical point. But captive shippers are demanding changes. Across the country they are banding together to back three pieces of federal legislation that take on the kings of “big business.”

“Currently, Class I railroads overcharge and under-serve captive shippers with impunity and with an antitrust exemption preventing meaningful oversight by Congress. Customers have no power,” said Senator John D. Rockefeller IV (D–WV). “This means higher prices for electricity, food, medicine, paper products; the chemicals to protect our water supply and crops; and the basic ingredients of the plastics in many of the goods we purchase. This is crucial to protecting commerce in the United States.”

An Old Fight

Following decades of conflict with shippers, the railroads became a regulated industry in the early 1900s. But along with regulation came certain antitrust exemptions that they still enjoy today.

The railroad industry became bloated and it deteriorated financially through the 20th century, culminating in the late 1970s when 21 percent of the country’s track was operated by bankrupt railroads. It was in this environment that Congress passed the 1980 Staggers Act and largely deregulated the railroad industry. In the 25 years since, consolidations and mergers have cut the number of Class I railroads serving North America from 42 to seven, with four railroads controlling more than 95 percent of the industry.

With the Staggers Act came the theory of differential pricing, which meant that captive shippers would pay more for their services to cover the fixed costs of operating the railroads. A study in 2000 found that captive shippers pay rates 20.9 percent higher than non-captive shippers and there is mounting evidence that the quality of service is decreasing. In Wisconsin, with only four Class I railroads operating and Canadian National (CN) dominating the tracks within the state, most industries are being affected by the expense of captive shipping.

Electric Co-ops Impacted

Dairyland Power Cooperative is a generation and transmission co-op providing electric power to 525,000 residents of Wisconsin, Minnesota, Iowa, and Illinois. Each year Dairyland spends about $40 million to transport 3 million tons of coal, but with rising rates and deteriorating service its transportation expenses could skyrocket.

Other shippers of Western coal have recently experienced rate increases of 50 to 100 percent. Similar increases in the cost of moving Dairyland’s coal would increase Dairyland’s total annual expenditures by 8 to 16 percent. In 2004, one of the Western railroads failed to deliver more than 25 percent of scheduled shipments, causing Dairyland’s fuel budget to jump 10 percent.

“We have seen railroads move away from negotiating contracts and going to tariff rates,” said Brian Rude, director of external relations at Dairyland. “Basically, instead of working with us it’s a take-it-or-leave-it rate.”

Farm Co-op, Lumber and Paper Woes

Cooperative Plus Inc. (CPI), a farm supply co-op with several locations in southeastern Wisconsin, has seen its rates to ship grain from Burlington to Chicago more than double since December 2003 due to unannounced rate hikes last November. These increases have put the co-op at a substantial disadvantage because its rates with CN are now more than twice those of some of its competitors who can use Wisconsin & Southern Railroad.

“Ten years ago, the railroad encouraged us to expand and offered attractive rates and incentives to build the business. Now we are left with uncompetitive shipping rates and underutilized assets,” said Pat Vogel, president and CEO of CPI. “Instead of helping our farmer patrons with market opportunities, we have saddled them with higher cost of operations and reduced company profits. Our margins are among the lowest by industry standards, and few expenses are left to be trimmed.”

As one of the top five industries in the state, the paper industry employs nearly 40,000 Wisconsinites. The industry’s heavy reliance on shipping by rail means that its bottom line has been cut, leading to mill closures and putting the industry at the center of the battle with the railroads.

“What we have been witnessing the last couple of years has us really alarmed and concerned because we are an industry that is struggling right now,” said Patrick Schillinger, president of the Wisconsin Paper Council. “We cannot absorb the types of increases that we are seeing in rail rates and the decreases in overall service that we are receiving.”

Butch Johnson, owner and president of Johnson Timber Corporation, had his rates double at a moment’s notice and his logs deteriorate while waiting for freight cars to arrive. “Our costs need to go down instead of going up because it will make us uncompetitive. As an example, there was the closure of the pulp mill in Brokaw. That could just be the start of other ones to follow,” said Johnson.

Readying Relief

So what’s a captive shipper to do? Due to current antitrust exemptions, the only recourse is to file a rate case with the Surface Transportation Board (STB), the regulatory body that oversees the railroad industry to ensure competition and reasonable rates for captive shippers. The problem that many shippers face, however, is the amount of time and money that must be devoted to a rate case: about $5 million and a minimum of two years, according to Robert Szabo, executive director of Consumers United for Rail Equity (CURE). The shipper is very rarely the victor in such a case, which adds to the disillusionment with the system.

To answer the pleas of captive shippers across the country, Congress is currently considering three pieces of legislation that would remove the antitrust exemptions and STB policies that give railroads the upper hand.

In July, Representative Mark Green (R–WI) introduced the Railroad Antitrust and Competition Enhancement Act of 2005 (H.R.3318) after hearing from Wisconsinites about their problems with the current situation and its effects on the economy. Green’s bill would give shippers, states, and the U.S. Justice Department the ability to bring antitrust cases against the railroads if they believe anti-competitive measures are being taken as well as give the Justice Department a role in reviewing railroad merger proposals.

“Our principal purpose in this legislation is to update the antitrust law and to really get at the long-standing exemption that the railroad industry has had,” said Green. “Railroads have now been operating in a deregulated environment for 25 years and I think we’re long past the time when we need to re-examine the antitrust law in respect to railroads.”

In addition, companion bills were introduced this spring in the U.S. House of Representatives and Senate (H.R.2047 and S.919). At the heart of these Railroad Competition Acts are promotion of more competition within the railroad industry, more reasonable rates for captive shippers, and more affordable access to the STB.

“This is hardly the competitive environment envisioned when Congress voted to deregulate the railroad industry,” said Representative James Oberstar (D–MN) in his statement introducing H.R.2047. “This bill will preserve existing rail-to-rail competition in areas of the United States where competition is working and take action to reduce impediments to competition that adversely affect rail customers.”

Shippers Optimistic

Similar legislation has been introduced previously without success, but captive shippers and their allies believe this time will be different due to unified support from industries across the board and strong bipartisan co-sponsorships in both the House and Senate.

“We’re off to a good start and there’s a lot of sympathy from members of Congress to our problem,” Szabo said. “More and more people from all over the country and from all kinds of industries are getting involved in the issue and talking to Congress.”

Captive shippers are ready for the fight of their lives and for their livelihoods. But they need members of Congress to understand the plight of captive shippers and that without increased freight mobility in the state the economy is bound to suffer. - Keisha Rovick

[bobwilcox]

William Jennings Brian would have been proud of this one! Before going off on a tangent about this overblown PR release I have a question.

The only Anti-Trust exemption I can think of for railroads concerns mergers. Whould one of the lawyers out there let us know what, if any, are there other exemptions. I'm not really interested in a policy discussion about open access or differential pricing but what the Anit-Trust statues have to say re. railroads. I know it's not differential pricing because all types of business selling services charge different customers different prices for the same service. Just look at any hospital's fees for patients with or without medical insurance. Another example woud be renting an autombile from Hertz or Avis.

[Anonymous]

The disincentive of captive shippers having no recourse but through a stacked STB process is the big problem. Once that roadblock is removed, you will see an avalanche of cases being brought against the railroads.

Hmmm, "all types of businesses selling services charge different customers different prices"? They had a word for that down in the Old South. It was called "segregation".

A monopolistic closed access system simply will not work in market based economy governed by a representative democracy in the long run. Either the collective enterprise will self destruct via the inherent inefficiencies of monopolistic enterprises, or/and those pesky little peons we call "rail shippers" will storm the proverbial castle via legislative support. Face the facts, railroad disciples, there are more of them than there are of you. You are outnumbered, and in a representative-type government that usually spells trouble for the holders of the minority view.

No matter how hard core of a railfan you are, all have to admit that all of us are paying the price of rail captivity, whether via higher power rates, higher commodity prices, or congested highways.

[PNWRMNM]

So if there are more of them than there are of us what is theirs is theirs and what is ours is theirs too. Thank you for making that perfectly clear.

What we are paying for today is the United States Governments previous, sustained, and largely successful efforts to make railroading unprofitable. If the business can not make a profit, who will supply the funds to provide service and greater capacity?

Mac

[Anonymous]

Railroads make millions.........MILLIONS! What the hell are thay doing with that money.
The costomers need railcars that there not getting. Freight rates keep going up,service sucks,lost cargo,derailments. explain what their problem is. Prices at the store keep going up. The Railroads have been for many years have been cutting back on Track Maintence which doesn't help any = More Derailments. The morons who run the RR today are far worse than that back in the Steam era. Train travel was much safer back in the early 1900 that today. I think that the Government need to start taking control of the RR's. I have to agree with the Shippers.......Freight rates are WAY too high. And service sucks.

[PNWRMNM]

BNSF,

You are wrong on virtually every count. Shippers have always whined about not being able to get all the cars they want when they want them. Sometimes they have been right, typically unforseen surges in demand. There is no profit for the railroad in loosing traffic. There is big losses in buying cars that don't move for 6, 9 or 12 months per year.

Most main track is in better condition now than ever before. Consider the MILW and Penn Central which had truly awful track at various times and places.

You have obviously not looked at data on passenger deaths from 1900 to date.

If someone who ought to be informed thinks the things you say, I wonder what the truly ignorant think. Probably nothing because they don't know the railroad exists.

Mac

[PBenham]

Once again, an "innocent dupe" of the left is out spreading just so much nonsense!

[Anonymous]

Actually, in general BNSF railfan is right, albeit in a somewhat pedantic way. I have pointed out in past posts references that show freight car utilization is extremely poor by any standard (one carload per month, absolutely terrible). Railroads have a long history of deferred maintenance, a well documented fact, so nothing new there. Rates have gone up, an irrefutable fact. And if a shipper says they are dissatisfied with service, then it is inarguable that they are dissatisfied. To pawn off shipper dissatisfaction as "well, they always complain", as if they just complain for the entertainment value of doing so, is shear sophistry.

The reference I had to rail shippers outnumbering rail service providers is simply an observation that things will eventually change in rail shippers direction. The railroad lobby has had the feds in the palm of their hands for 25 years now, as most complaints were presented in the background of the news cycles. Now that rail service-related issues affecting the general public are coming to the forefront of public awareness, you can bet the days of railroads being able to sweep things under the rug are over. Energy issues affect the public more than ag issues, and the railroads are a major part of some energy supply shortages, so as the service problems that historically affect ag grow into other sectors with more public awareness, the actions of the railroads will become more highly scrutinized.

[Anonymous]

There was nothing fair about that article. The facts were stacked with no attempt to gather fact or opinion from railroad management's side. But judging by the name of the periodical, this was, as one person said, just a kind of extended op-ed from what I guess is an advocacy journal.

If it isn't an advocacy journal, well then they should be ashamed of themselves for writing such one-sided blatt-blatt.

[dehusman]

So far, other than to complain about how the shippers are being so abused and cry for reform, nobody has anwered the question of exactly what anti-trust provisions the railroad is exempt from.

It was my understanding that the anti-trust exemption allowed railroads to make joint rates or to join in rate bureaus.

For an interesting look at things, go to :
http://www.aar.org/ViewContent.asp?Content_ID=2786
open the pdf file and scroll down to the first chart. Notice how productivity, rates, revenue and volume are all essentially flat through those "glory days" of regulation. Then in 1981 Staggers was passed. Productivity skyrocketed, volumes went up, rates went and revenue went down (in 1981 dollars). That one chart alone is a ringing endorsement of deregulation.

Dave H.

[jeaton]

Futuremodal

I have always thought that a person with a high IQ would also have a rather good ability to draw logical conclusions. You have consistantly proven me wrong.

You have falted railroads for only getting one car turn per month ( a slight exaggeration, but not relavant here), and deferring maintenance. You have here alluded to general service failures, for whatever cause, and noted that these conditions are the basis for shipper disatisfaction and a growing support for changes to rail regulation.

I took a look at the postion papers of the National Industrial Transportation League, the largest and most powerful shipper group in the country, and yes, they detail and support current legislative proposals to improve the rate situation for "captive shippers". The proposed legislation seeks to get lower rates for these shippers by prohibiting railroads that serve such shippers from setting any barriers to the shipper from getting rates via connecting railroads, thus possibly getting a joint rate lower than the single line rate of their serving railroad. The legislation also proposes to substantially reduce barriers to initiating actions claiming unreasonable rates.

Clearly, the goal of the proposed legislation is to reduce the rail rates charged to captive shippers, and if that goal is achieved, railroad revenues will drop. Now unless the railroads have gold mines and oil wells to offset the loss of rail revenue, I do not see how they will do things like improve car turns, increase maintenance or do anything else to improve service. In fact, with less income, it seems possible that service might get worse. That just seems to run counter to your off stated goal of making the world a better place.

Be careful what you wish for.

[jwinter]

Interesting reading most of your comments. Since I started this thread, thought I'd throw my 2 cents in. But first let me say that I would not be in favor of re-regulating the railroads. That would be the worse. At this point I'm not taking sides on the issue because I don't feel I now enough about it to make an informed decision. There is one common thing most can agree with and it is that this is a complicated topic.

I've read several artciles in the recent past about captive shippers complaining about unreasonable rate hikes. I've also seen it happen in my own hometown. But on the other hand I can understand some of the reasons railroads give for these rate hikes, for instance the costs of maintaining a line that serves only one shipper with little traffic. These might be legitimate reasons for unusual rate hikes. But if the sole reason for raising rates is because the railroad has a captive customer(s), especially if there are several customers on one line or they have a large customer with lots of rail traffic, then I would view these rate increases as being unreasonable.

As one person mentioned above, if railroads are forced to lower rates for these customers, then this would reduce their revenues which translates to deferred maintenance, etc. But wouldn't it be true that if ALL railroads were forced to reduce rates for captive shippers, then wouldn't ALL the railroads raise rates on the competitive lines to cover the loses. Since all the railroads would be in the same predicament, this shouldn't give one railroad the edge over another when pricing in a shared market. Maybe this is too simple minded.

Again, I'm not an expert, but it does sound like shippers with complaints have the table stacked against them if they wi***o file a complaint. But I have a question, or need something explained. What anti-trust exemptions do the railroads have that give them the overwhelming edge???

[jimrice4449]

The definitive answer to most of the above is to be found in comparing the RRs rate of return on capital plant w/ the average of, say, the Standard & Poors 500. If the RRs rate of return is signifigantly higher than average the shippers have a valid beef. If not we have just another of an incessant line of pressure groups trying to use the political power they can generate to get into the pocket of their fellow citizens. I actually don't know what the result of such a comparison would be, but I have my suspisions that it would be the latter rather than the former.

[jimrice4449]

The definitive answer to most of the above is to be found in comparing the RRs rate of return on capital plant w/ the average of, say, the Standard & Poors 500. If the RRs rate of return is signifigantly higher than average the shippers have a valid beef. If not we have just another of an incessant line of pressure groups trying to use the political power they can generate to get into the pocket of their fellow citizens. I actually don't know what the result of such a comparison would be, but I have my suspisions that it would be the latter rather than the former.

[PNWRMNM]

4449

Railroads have for decades earned less than manufactureres and electric utilities. As an industry, they have yet to earn their cost of capital post Staggers. One or two railroads may have hit cost of capital for one or two years, but they are the statistical outliers. Real rail rates are down since Staggers, which means the shippers have captured most, if not all, of the efficiency gains of the last 25 years.

If specific rates are going up, as some are, part of it is fuel price adjustments. To the extent rates are up beyond fuel price adjustments halelula brother becuase if they stay down the capital startation of the industry will continue. That capital starvation has beeen the direct result of punative rate regulation since 1906, and consistent govt bias toward rail labor which is the largest single component of rail costs. Most of the service problems, and there are many are due directly to this chronic capital startation. The capital starvation is the direct result of decades of hostile public policy.

Mac

Mac

[Anonymous]

Mac,

The "capital starvation" to which you refer has nothing to do with public policy, other than the fact that public policy for other modes favors public ownership or public access of ROW's. Railroads choose to bear the entire cost of the ROW rather than splitting that cost among all the carriers and/or allowing public participation in that ROW cost in return for a certain degree of public access to that ROW. Until and if railroads are willing to let others share the cost of ROW in exchange for those others having access to the property, the railroads will always suffer from low ROI's. The inabillity to adaquately cover investment demands is part and parcel of a closed access system. Apparently, blaming "public policy" or "unfair competition" from truckers and barge lines is also part and parcel of railroading's closed access system.

[bobwilcox]

QUOTE: Originally posted by dehusman

So far, other than to complain about how the shippers are being so abused and cry for reform, nobody has anwered the question of exactly what anti-trust provisions the railroad is exempt from.

It was my understanding that the anti-trust exemption allowed railroads to make joint rates or to join in rate bureaus.

For an interesting look at things, go to :
http://www.aar.org/ViewContent.asp?Content_ID=2786
open the pdf file and scroll down to the first chart. Notice how productivity, rates, revenue and volume are all essentially flat through those "glory days" of regulation. Then in 1981 Staggers was passed. Productivity skyrocketed, volumes went up, rates went and revenue went down (in 1981 dollars). That one chart alone is a ringing endorsement of deregulation.

Dave H.

[Anonymous]

QUOTE: Originally posted by bobwilcox

For an interesting look at things, go to :
http://www.aar.org/ViewContent.asp?Content_ID=2786
open the pdf file and scroll down to the first chart. Notice how productivity, rates, revenue and volume are all essentially flat through those "glory days" of regulation. Then in 1981 Staggers was passed. Productivity skyrocketed, volumes went up, rates went and revenue went down (in 1981 dollars). That one chart alone is a ringing endorsement of deregulation.

Considering the source (AAR), a ringing endorsement of partial deregulation is to be expected. If anyone has any evidence of the AAR advertising the not-so-great aspects of partial deregulation, please let us know.

When railroads were regulated, they were given this anti-trust exemption, e.g. there was a trade off of sorts to "balance" out the equation. When Staggers was passed, the anti-trust exemption should have also been lifted. That would have been closer to true deregulation of the railroads, but as it happened the railroads retained anti-trust exemption, so by any measure Staggers was only partial deregulation. The anti-trust exemption is a continuation of regulation, albeit on the shippers rather than the railroads themselves.

Yep, Staggers is a perfect example of railroads "having their cake and eating it too".

[PNWRMNM]

For those who are interested in the facts of how the hostile public policy of 1906-1985 caused the near destruction of the railroad industry I offer the following. Sources are "Enterprise Denied, Albro Martin, 1971; "Rates of Return - Class I line Haul Railwarys" 1921-1948, Stanley Miller and others, 1950; and "Performance of US Railroads Since World War II", Kent Healey 1985. "Enterprise" should be available in used book section of Amazon or Barnes and Noble, the others I do not know as I got them from my local University library.

Martin covers the period 1897-1917. The ICC was given extensive regulatory powers in 1906 and 1910. The commission then held down rates in a period of inflation in which only rates were restrained, which by the end of the period place the industry in the capital starved position it has yet to recover from. The rate freeze was in fact a continuing series of real rate reductions.

Martin's fundamental question was "what investments were actually made in this period, and what investments should have been made to keep up with the growing demand". The chart on page 131 answers that question as does a table in the appendix that describes in detail how the chart was constructed. His conclusion is that in the period 1889-1906 underinvestment ran about $200 million per year, and did not exceed 300 million per year. In the years 1912-1915 underinvestment averaged over $1,000 million per year. He also shows sources of funds invested, stock issues, bond issues and retained earnings. The peak year for retained earnings was 1906.

Rates of Return is full of small print tables, a statistician's joy On pages 48 and 49 is a table of rates of return for all railroads, page 50 and 51 is same but for Class I railroads only. There is not much difference. Without doing the math the average return over the period for all railroads is about 3.5%. Only in 1942 does return exceed 6%, at 6.46%.

Early in this period there was great hue and cry about what the industry should be allowed to earn. The tansportation act of 1920 decreed that the carriers should earn 5.5%, which did not happen. In 1922 the ICC announced that they should earn 5.75%, that happened once in the study period. The ICC never addressed the issue again in this time period.

By contrast gas and electric utilities at the time were allowed a return of 8%, and telephone companies were allowed 7.5%. These were regulated natureal monopolies where the rates could be maintained by government fiat. In contrast the government in this same period set about subsidizing the railroads' motor and water carrier competitors.

"Performance" covers many areas, including financial. It points out that during the 1945-1970 period, NO investment funds were raised by stock issue, and on an industry basis debt retirement exceeded debt issue, which means the only source of net investment money was retained earnings. This is a huge and adverse change from the situation of 1897-1907.

The wonder is not that the industry has had trouble, the wonder is that it has survived.

Mac

[bobwilcox]

QUOTE: Originally posted by PNWRMNM
...In contrast the government in this same period set about subsidizing the railroads' motor and water carrier competitors...

Henry Ford started mass producing Model Ts at Highland Park in 1914. The masses demanded good roads for a Sunday drive and the Federal money spigot was turned on in the 1920s. Regulation and millions in highway subsidies. Talk about a double edge sword!

I beleve the most important year in 20th century US railroading was not 1940 with EMDs FT tour but 1914 with Fords mass production of automobiles.

[kenneo]

Rates too high on coal for the utilities?

If they were, the DME would have these boys fighting to give (as in donate) the necessary money to build their approved Powder River Extension. Since we don't see that happening, must be complaints for the sake of taking advantage of others for their own sake.

Since the coal burners have taken nearly all of the railroads productivity increases, and since they want to lower costs and, where possible, raise rates, their only avenue is to force the rail rates down. And believe me, they would really like to railroads to pay them for the opportunity to haul the coal.

[Anonymous]

Nobody has explained what railroads are exempt FROM with the anti-trust exemption. If you don'tknow specifically what they are allowed to do that other industries can't , then how do you know that its bad or that whatever it is they are allowed to do won't actually help consumers?

Dave H.

[jeaton]

nhs792
Go to this page on the National Industrial Transportation League (NIT League) and click on "STATUS OF RAIL REFORM"

http://www.nitl.org/newsletsamp.htm

This will give you some details of the changes proposed in the existing laws and the benifits that shippers percieve will flow from the changes. The counter arguments are found on the AAR's site listed above. If you read both, you will have a fairly good picture of the position of both sides.

Jay

[Anonymous]

QUOTE: Originally posted by PNWRMNM
...In contrast the government in this same period set about subsidizing the railroads' motor and water carrier competitors...

And just where did those "subsidies" come from? User fees. Ergo, they are not subsidies, they are pay as you go expenditures.

You cannot include property tax expenditures for county and city streets, those are service oriented expenditures, not commerce oriented expenditures. Nor can you include the States' share of non-user fee expenditures for commerce related highways, since that is up to the discretion of each state's legislatures, not the federal government.

In a more gray area, most of the "subsidies" for water carriers are actually expenditures required to maintain navigatability of previously navigatable rivers that have been dammed for energy, irrigation, and/or flood control. You can argue that the resulting slack water from such projects allows greater load factors than had existed prior to such projects, but you also cannot expect a navigation maintenance project to purposefully minimize the load factor for water carriers. It should also be pointed out that railroads are the recipients of the same "subsidy" if a rail line needs to be relocated for a water project. The only difference in that vein is that the railroads must resume maintenance of those relocated tracks once the relocation project is done, while the water carriers pay for channel maintenance via the Waterways Trust Fund.

On the whole, the only real advantage of highway users and water carriers is that the railroads must pay property taxes on their ROW. This property hold is entirely the result of the railroad's choice, and anytime they want to turn their ROW over to a public entity, I'm sure they could do so. Since they choose to keep it private, the property tax argument is also moot.

Since the railroads have held onto proprietary ownership of ROW rather than allowing public ownership in the same vein as highways and waterways, their complaints of "subsidies" for the ROW's of the other modes is specious argument not worthy of credibility or empathy.

[Anonymous]

As a RR fan and a heavy user of the RR through my industry (electric power), a few perspectives.

People will be screaming no matter what's done with regulations until "captive shippers" are set free. No amount of regulation will solve the problem until, and ONLY until the RR's are forced to open their rails to any train that wants to pay the fee to run on them. That's being a common carrier. That's often called Open Access.

The electric utility industry fought this approach tooth and nail for years, proclaiming immediate failure, massive outages, and much higher costs. FERC forced it upon them. They had no choice. When Open Access hit, none of the dire predictions came true. True some improvements needed to be made, and still need to be made to the transmission system, but it's all driven by the economics.

In a utility that sees a 40 year return on investment as typical, the transmission improvements being driven by open access are seeing payback times of 5 years or less! I suspect that when the RR's have to open up their system we'll see the same sort of thing going on. Some lines will become VERY heavily used, and additional trackage will be built to accomodate the additional haulage.

Electric utilities used to think they made the most money by generating power. They are now realizing that the money to be made is in the wires. If the RR's realize the same thing, they'll see that the money to be made is not in the running of the trains, but in the operation of the rails. You could conceivably see RR's in the future with no trains, but a lot of rails that they've opened up to multiple carriers under long-term contracts.

The RR industry is in a state of change. Eventually, no matter what the RR's want, they'll be forced to be open access, fully deregulated, and have to play on the same level playing field that all other businesses must work on. Will they still have some "privlidges"? Sure. They'll undoubtedly always have the ability to condemm property and such to be able to establish new routes, similar to electric utilities. In many ways, RR's and electric utilities will be operating under the same types of regulations.

Mark in Utah

[jeaton]

futuremodal You really are quite the left wing socialist. By the way, is there anyway I can get a refund of the federal fuel tax I pay for gas I use when I am on non-federal highways? Oh yah, how about a federal gas tax refund for the 1000 or so earmarks that go to projects other than federal highways.

Mark in Utah Are there any statuatory limits on the fees that transmission line owners can charge electric producers for the use of those wires?

Jay

[Anonymous]

QUOTE: Originally posted by jeaton

Mark in Utah

Are there any statuatory limits on the fees that transmission line owners can charge electric producers for the use of those wires?

Jay

The rates charged are based upon rate-of-return calculations. They're also the same rates they have to charge themselves internally for the use of those lines. Some areas of the country have been allowed to charge "congestion fees", which allow higher rates to encourage increased generation or transmission improvements in an area. Congestionn fees are not popular, and I'm guesing that you'll see them drop be the way side.

There has been some talk of nationalizing the entire interstate transmission system, making it a completely open system, paid for by the public, for the use and benefit of the public, similar to the interstate highway system. Interesting concept, and has some merit on the basic priinciples. It'll be interesting to see what comes of that proposal.

Mark in Utah

[Anonymous]

QUOTE: Originally posted by jeaton

futuremodal You really are quite the left wing socialist.

Rather than get drawn into yet another flame war with Jay, I will give you a brief history of my political life. The only reason I did not achieve a 4.0 GPA through college was due to a half dozen left-wing professors who graded me down because of my right-of-center views. I belong to no political party, but every election year I usually end up voting Republican (I have only voted for three Democrats my entire life, all at the local level). I voted for Reagan, I voted for Bu***he elder, I voted for Dole, and I voted for Bu***he younger. I am quite certain I will end up voting for the Republican nominee in 2008 (unless it's McCain). I am proud to reside in a conservative State such as Idaho, and I am a proud supporter of Gov. Dirk Kempthorne (an ideal candidate for a 2008 Presidential bid).

Yeah, I guess in Jay's Bizzaro World I am a left wing socialist.

Jay, your problem is that you cannot discern between a general ideology and a specific apolitical issue such as open access.

QUOTE:
By the way, is there anyway I can get a refund of the federal fuel tax I pay for gas I use when I am on non-federal highways? Oh yah, how about a federal gas tax refund for the 1000 or so earmarks that go to projects other than federal highways.
Jay

Jay, if such issues concern you, you should contact your elected representative to Congress. I seriously doubt you'll have any credibility down that avenue either.

[bobwilcox]

QUOTE: Originally posted by futuremodal

QUOTE: Originally posted by jeaton

futuremodal You really are quite the left wing socialist.

Rather than get drawn into yet another flame war with Jay, I will give you a brief history of my political life. The only reason I did not achieve a 4.0 GPA through college was due to a half dozen left-wing professors who graded me down because of my right-of-center views. I belong to no political party, but every election year I usually end up voting Republican (I have only voted for three Democrats my entire life, all at the local level). I voted for Reagan, I voted for Bu***he elder, I voted for Dole, and I voted for Bu***he younger. I am quite certain I will end up voting for the Republican nominee in 2008 (unless it's McCain). I am proud to reside in a conservative State such as Idaho, and I am a proud supporter of Gov. Dirk Kempthorne (an ideal candidate for a 2008 Presidential bid).

Yeah, I guess in Jay's Bizzaro World I am a left wing socialist.

Jay, your problem is that you cannot discern between a general ideology and a specific apolitical issue such as open access.

QUOTE:
By the way, is there anyway I can get a refund of the federal fuel tax I pay for gas I use when I am on non-federal highways? Oh yah, how about a federal gas tax refund for the 1000 or so earmarks that go to projects other than federal highways.
Jay

Jay, if such issues concern you, you should contact your elected representative to Congress. I seriously doubt you'll have any credibility down that avenue either.

Dave-Sounds like you would have loved Theodore Roosevlet.

[CSSHEGEWISCH]

I would hardly describe the open access issue as apolitical since it would require a major rewrite of anti-trust statutes or a pretty liberal interpretation of eminent domain. Since both of these options would require an action by the Congress or the legislatures of the several states, the issue is by definition political.