QUOTE: Originally posted by Mark_W._Hemphill QUOTE: Originally posted by rpwood 1. With the price of petroleum fuels and products going up, am wondering if anyone has heard any rumblings from any railroad corporate HQs about considering electrifying main lines? No. There are no rumblings. QUOTE: 2. I know freight traffic levels have been up in the past year, but based on the cyclical nature of the business, would this traffic increase be enough to initially sustain and eventually recover the costs of any such project.? No. Traffic levels will not rise enough to pay for electricification, not unless the government radically changes tax law (that is, subsidize the installation costs). QUOTE: 3. Which road(s) would benefit the most? Better way to phrase this would be, "Which railroads would puni***heir equity holders the worst by doing this?" QUOTE: 4. Where would potential electrifications be most likely? Any place the taxpayer can be gulled into paying for it. QUOTE: My own observations and opinions on the subject are: - This is probably a subject kept on the back burner in all Class 1 HQ's, and is dusted off in times such as these. However, I have not seen or heard of any accounts that any RR is considering such topics at this time. No, it's not kept on the back burner. It's not even in the dustiest box in the dimmest recess of the oldest warehouse. This is a very capital-intensive industry already; why make it worse? QUOTE: It would make sense to electrify mainly in mountainous regiions where railroads now expend more fuel to move the same tonnage of freight than across the plains or flatlands. Thus all North American Class 1's could benefit. to some degree, and stem initial installation costs by electrifying only the sections which now cost the greatest amounts to transit. To me this would include any main lines spanning the Appalachan's in the east and the Rockies in the west. Perhaps, but this is like giving someone the choice of walking the plank over 20 fathoms of water or 200 fathoms of water.
QUOTE: Originally posted by rpwood 1. With the price of petroleum fuels and products going up, am wondering if anyone has heard any rumblings from any railroad corporate HQs about considering electrifying main lines?
QUOTE: 2. I know freight traffic levels have been up in the past year, but based on the cyclical nature of the business, would this traffic increase be enough to initially sustain and eventually recover the costs of any such project.?
QUOTE: 3. Which road(s) would benefit the most?
QUOTE: 4. Where would potential electrifications be most likely?
QUOTE: My own observations and opinions on the subject are: - This is probably a subject kept on the back burner in all Class 1 HQ's, and is dusted off in times such as these. However, I have not seen or heard of any accounts that any RR is considering such topics at this time.
QUOTE: It would make sense to electrify mainly in mountainous regiions where railroads now expend more fuel to move the same tonnage of freight than across the plains or flatlands. Thus all North American Class 1's could benefit. to some degree, and stem initial installation costs by electrifying only the sections which now cost the greatest amounts to transit. To me this would include any main lines spanning the Appalachan's in the east and the Rockies in the west.
-Don (Random stuff, mostly about trains - what else? http://blerfblog.blogspot.com/)
QUOTE: Originally posted by dehusman The problem with electrification isn't the transmission of the electricity. The problem is that you have to change engines or have special engines that are very expensive. Dave H.
QUOTE: Originally posted by CSSHEGEWISCH As has been brought up earlier, dual-mode sounds nice on paper for short electric zones in a diesel world but a dual-mode locomotive would be more expensive and that extra investment would spend a lot of time not justifying its existence and earning a return. As I pointed out earlier, dual-mode locomotives are still tied to the electric zone, it's just not as obvious. If dual-mode is such a great idea, why didn't PRR or NYC order any dual-mode power after the FL9 proved itself?
QUOTE: Originally posted by nanaimo73 [For electification to pay for itself long hauls are necessary. The longer the better. I believe the place to start would be the first crew change point. I would think the loading loops should be the last place to be electified. Some of the Powder River mines shut down for periods which would waste the investment. Logically the place to start would be with Union Pacific from Bill to North Platte.
QUOTE: Originally posted by Isambard Can anyone comment regarding potential electrification of Canadian railway mainlines in view of climbing diesel fuel rates and increasing traffic density e.g. the Quebec City-Montreal-Toronto-Windsor corridor or the Calgary-Vancouver or Edmonton -Vancouver routes? Viable propositions or pipe dreams?
QUOTE: Originally posted by Murphy Siding I still wonder why the first leg of the route out of the Powder River Basin couldn't be electified as far as the first crew change point?
QUOTE: Originally posted by greyhounds QUOTE: Originally posted by MichaelSol QUOTE: Originally posted by greyhounds Anyway, the main point was that the financial risks of electrification are too great. The projected ROI was fantastic, on the order of 32% for the UP. But, the costs were all up front and the payback was years in the future. The company would have a negative cash flow for 9-10 years. Sensativity analysis showed great risks if everything didn't go as planned. Costs of any project are almost always up front. Something doesn't sound right here. "The company would have a negative cash flow for 9-10 years." Guess what the negative cash flow period is for a new road diesel. Does Withun say? Isn't that important to know? What was the risk analysis of staying with the same system, based on the well known historical trends that diesel fuel costs always trend up, while electric power costs almost always trend down? This is the part that is usually missing: the analysis of the risk of not changing. In 1970, electric power price per kilowatt hour averaged 8 cents in the US. In places like Montana with abundant Hydroelectric resources, the price was closer to 5 cents per kilowatt hour. Diesel fuel was less than 8 cents per gallon. This year, electric power costs are at 4.5 cents per kilowatt hour in Montana (industrial), and range from 2.39 cents in Washington state (industrial) to 7 cents in Eastern states. Diesel fuel has gone up from 8 cents per gallon in the early 1970s to $1.17 for railroads in 2004 to $2.19 this year. While we happen to think it's just awful, this isn't that far off the historical trend that has existed since WWII and, indeed, confirms that trend. How does Withun deal with that historical probability in his analysis? I am curious. Given that the historical trends have been well defined and accepted -- Bonneville Power Administration noted and recognized them, in fact emphasized them, in a railroad electrification proposal made to the Milwaukee Road and several other Western railroads (GN, NP, UP, and SP) in the early 1950s -- I have an impression from the description of the Withun article that it is likely that the real "risk" factor was not assessed. The question is interesting enough that I will get the paper and read it. This is a standard business school problem: to do a risk analysis for the change, but not for staying the same. A single risk or sensitivity analysis is fairly meaningless without the corresponding risk analysis. It is the comparison of risks that is important, not "a" single risk. After all, the risk of the staying the same is high. Most businesses ultimately fail when they stay the same, not when they change. Best regards, Michael Sol It's not that the costs were upfront. It's that they were so large and upfront. It was a "bet the compny" proposition with a reasonable chance that they could loose. All the analysis came down indicating the risk was too great. Claiming the analysis were wrong, every one of them, is a road to nowhere. A way needs to be found to mitigate the risk. This wasn't a case of one management team arriving at the wrong conclusion, something that does happen. There were numerous independant electricfication studies done. Not one of them produced an electrification project. I don't think a diesel purchase involves much negative cash flow. GE will finance its equipment. The diesel locomotive will begin to produce revenue ton miles almost as soon as it arrives on the property. That revenue will offset the finance charges. And diesels can be bought incramentally on shorter lead times that electrification. There's more certainty in the projections with the shorter time frames. Remember, if the projections about diesel fuel costs, electricity costs, etc. ten years out are wrong, the company will be destroyed. They're risking "other people's money" on what will happen ten years from now. Not exactly a prudent thing to do. Why don't we quit arguing over old analysis and try to come up with a way to reduce the risks of electrification? I think that's the key. There is a need to: 1) convert existing diesel electrics to also operate as straight electrics - reducing the capital costs greatly. 2) deal with the electric current in a way that doesn't require rebuilding of the entire signal system. Including grade crossing protection. 3) assure an uninteruptable adequate power supply 4) keep "pet" projects such as open access, Amtrak, lower freight rates for farmers, etc. out of the process. Do these four things and the risks of electrification will be reduced significantly. Will they be reduced enough to justify it, who knows?
QUOTE: Originally posted by MichaelSol QUOTE: Originally posted by greyhounds Anyway, the main point was that the financial risks of electrification are too great. The projected ROI was fantastic, on the order of 32% for the UP. But, the costs were all up front and the payback was years in the future. The company would have a negative cash flow for 9-10 years. Sensativity analysis showed great risks if everything didn't go as planned. Costs of any project are almost always up front. Something doesn't sound right here. "The company would have a negative cash flow for 9-10 years." Guess what the negative cash flow period is for a new road diesel. Does Withun say? Isn't that important to know? What was the risk analysis of staying with the same system, based on the well known historical trends that diesel fuel costs always trend up, while electric power costs almost always trend down? This is the part that is usually missing: the analysis of the risk of not changing. In 1970, electric power price per kilowatt hour averaged 8 cents in the US. In places like Montana with abundant Hydroelectric resources, the price was closer to 5 cents per kilowatt hour. Diesel fuel was less than 8 cents per gallon. This year, electric power costs are at 4.5 cents per kilowatt hour in Montana (industrial), and range from 2.39 cents in Washington state (industrial) to 7 cents in Eastern states. Diesel fuel has gone up from 8 cents per gallon in the early 1970s to $1.17 for railroads in 2004 to $2.19 this year. While we happen to think it's just awful, this isn't that far off the historical trend that has existed since WWII and, indeed, confirms that trend. How does Withun deal with that historical probability in his analysis? I am curious. Given that the historical trends have been well defined and accepted -- Bonneville Power Administration noted and recognized them, in fact emphasized them, in a railroad electrification proposal made to the Milwaukee Road and several other Western railroads (GN, NP, UP, and SP) in the early 1950s -- I have an impression from the description of the Withun article that it is likely that the real "risk" factor was not assessed. The question is interesting enough that I will get the paper and read it. This is a standard business school problem: to do a risk analysis for the change, but not for staying the same. A single risk or sensitivity analysis is fairly meaningless without the corresponding risk analysis. It is the comparison of risks that is important, not "a" single risk. After all, the risk of the staying the same is high. Most businesses ultimately fail when they stay the same, not when they change. Best regards, Michael Sol
QUOTE: Originally posted by greyhounds Anyway, the main point was that the financial risks of electrification are too great. The projected ROI was fantastic, on the order of 32% for the UP. But, the costs were all up front and the payback was years in the future. The company would have a negative cash flow for 9-10 years. Sensativity analysis showed great risks if everything didn't go as planned.
Thanks to Chris / CopCarSS for my avatar.
Isambard
Grizzly Northern history, Tales from the Grizzly and news on line at isambard5935.blogspot.com
QUOTE: Originally posted by Leon Silverman These discussions compare the actions of the Milwaukee Railroad with various European railroads. Milwaukee financed, built, and ultimately discarded electrication as a private corporation. Correct me if I am wrong, but weren't the European railroad electrification financed and built by Government Organizations, equivalent to Britrak, Polandtrak, Germantrak, etc.?
QUOTE: Originally posted by dehusman The problem with electrification isn't the transmission of the electricity. The problem is that you have to change engines ...
QUOTE: Originally posted by futuremodal QUOTE: Originally posted by greyhounds QUOTE: Originally posted by Leon Silverman These discussions compare the actions of the Milwaukee Railroad with various European railroads. Milwaukee financed, built, and ultimately discarded electrication as a private corporation. Correct me if I am wrong, but weren't the European railroad electrification financed and built by Government Organizations, equivalent to Britrak, Polandtrak, Germantrak, etc.? The fact that it might take a railroad like Union Pacific ten years to realize a positive return on investment means that electrication in the USA could only be financed by the US government. Considering our current preoccupation with the war on terror and hurricane recovery efforts, this is not likely to happen no matter what the economics are, even if you could claim it would ultimately eliminate our dependency on oil imports. No, we haven't shut down the country to repair huricane damage and fight the war. The O'Hare expansion got the go ahead, only to be stopped in court. But the Government was ready to act. Same with a lot of highway projects. The Interstate Highway System was constructed at the height of the Cold War. We can do more than one thing at a time. Mainline freight electrification in the US would produce tremendous benifits - think of what would happen to the price of diesel fuel if the railroads didn't need near as much - but the risks of the huge capital costs have to be mitigated. There is a role for the government here in mitigating the risks. How to structure this is an interesting question. The government can't assume all the risks or money will be wasted. And the taxpayers should get their money back. But expecting a private company to go into a negative cash flow situation for a decade is unrealistic. And any govt funds would include "strings" - these must be minimized. The railroads don't want to become puppets on those strings. Right now, I don't have a clue as to how such a thing shold be structured - but it sure would be good if those perisables out of California (half of what is consumed in the US, not to mention Canada) could ride in the reefer units drawing power from the overhead wire instead of small diesel gen sets. And a train going downhill in dynamic could feed power to a train going uphill instead of wasting the energy, and, and, and!! Hmmm. Government participation in rail infrastructure modernization? We covered that in the Open Access thread. Chalk up another for OA!
QUOTE: Originally posted by greyhounds QUOTE: Originally posted by Leon Silverman These discussions compare the actions of the Milwaukee Railroad with various European railroads. Milwaukee financed, built, and ultimately discarded electrication as a private corporation. Correct me if I am wrong, but weren't the European railroad electrification financed and built by Government Organizations, equivalent to Britrak, Polandtrak, Germantrak, etc.? The fact that it might take a railroad like Union Pacific ten years to realize a positive return on investment means that electrication in the USA could only be financed by the US government. Considering our current preoccupation with the war on terror and hurricane recovery efforts, this is not likely to happen no matter what the economics are, even if you could claim it would ultimately eliminate our dependency on oil imports. No, we haven't shut down the country to repair huricane damage and fight the war. The O'Hare expansion got the go ahead, only to be stopped in court. But the Government was ready to act. Same with a lot of highway projects. The Interstate Highway System was constructed at the height of the Cold War. We can do more than one thing at a time. Mainline freight electrification in the US would produce tremendous benifits - think of what would happen to the price of diesel fuel if the railroads didn't need near as much - but the risks of the huge capital costs have to be mitigated. There is a role for the government here in mitigating the risks. How to structure this is an interesting question. The government can't assume all the risks or money will be wasted. And the taxpayers should get their money back. But expecting a private company to go into a negative cash flow situation for a decade is unrealistic. And any govt funds would include "strings" - these must be minimized. The railroads don't want to become puppets on those strings. Right now, I don't have a clue as to how such a thing shold be structured - but it sure would be good if those perisables out of California (half of what is consumed in the US, not to mention Canada) could ride in the reefer units drawing power from the overhead wire instead of small diesel gen sets. And a train going downhill in dynamic could feed power to a train going uphill instead of wasting the energy, and, and, and!!
QUOTE: Originally posted by Leon Silverman These discussions compare the actions of the Milwaukee Railroad with various European railroads. Milwaukee financed, built, and ultimately discarded electrication as a private corporation. Correct me if I am wrong, but weren't the European railroad electrification financed and built by Government Organizations, equivalent to Britrak, Polandtrak, Germantrak, etc.? The fact that it might take a railroad like Union Pacific ten years to realize a positive return on investment means that electrication in the USA could only be financed by the US government. Considering our current preoccupation with the war on terror and hurricane recovery efforts, this is not likely to happen no matter what the economics are, even if you could claim it would ultimately eliminate our dependency on oil imports.
Dave H. Painted side goes up. My website : wnbranch.com
QUOTE: Originally posted by bobwilcox There may be a Federal role for fixed investments other than electrification but we can't even get Amtrak's capital neeeds covered.
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