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Basin Electric Power Cooperative, together with its 124 member cooperatives in nine states, other captive rail consumers in the Midwest and its employees, are sending a strong message to members of Congress and the U.S. Surface Transportation Board: The U.S. rail system is deeply flawed, and Rural America is paying the price.

The Surface Transportation Board (STB) announced Sept.10 its decision on the Basin Electric and Western Fuels Association rate case against BNSF Railway. The STB ruled against Basin Electric and Western Fuels, saying “the shipper had not shown that the challenged rates are unreasonable under the Board’s ‘stand-alone cost’ (SAC) rate test.”

Ron Harper, Basin Electric CEO and general manager, said the ruling is deeply disappointing. "This ruling demonstrates that the STB and its process are completely broken.  We need to fix that system, and Congress needs to make that a high priority. Unrestrained monopoly power has brought record profits to the rail industry, while our member-owners pay the price -- $1 billion over the next 20 years, to be precise”

At the forefront of those impacted is the Basin Electric-operated Laramie River Station, in Wheatland, Wyo., which is entirely dependent on BNSF for its Powder River Basin coal. After a 20-year coal-purchase contract expired, BNSF dramatically doubled its rates. Compounding this were severe service lapses, causing the power plant’s stockpile of coal to dwindle to dangerously low levels.

In 2004 Basin Electric and Western Fuels filed suit against BNSF before the STB. “Since we can only do business with the BNSF, we had no leverage to negotiate a reasonable arrangement with the BNSF. Our ‘contract’ was a ‘take it or leave it’ proposition.”

With the STB’s unfavorable ruling, Basin Electric now has the option of revising key portions of its case in light of the STB’s changes to the SAC methodology made after the initial case was filed. The cooperative must advise the STB by Oct. 10, 2007, whether it intends to submit revisions.

Basin Electric has been working closely with national groups leading the charge for rail reform, such as Consumers United for Rail Equity (CURE) and the Alliance for Rail Competition (ARC) and will continue to engage others impacted by adverse rail practices. “We have the 124 member cooperatives who own Basin Electric actively involved in this issue. We plan to carry our message to Washington, D.C., in a variety of ways – letters, phone calls, e-mails and in person. We’re here. We’re unhappy. We’re going to keep fighting to reform this broken system, and are extremely pleased that Representative Earl Pomeroy and Senator Byron Dorgan are leading the way,” Harper says.

Harper will deliver his message in person on Sept. 20 before the U.S. House Transportation and Infrastructure Committee’s hearing on rail competition and service. Chaired by U.S. Rep. James Oberstar (D-MN), the Committee will hear testimony on H.R. 2125, a bill designed to ensure competition in the rail industry, enable rail customers to obtain reliable rail service, and provide those customers with a reasonable process for challenging rate and service disputes. “Legislation is the only way to fix this problem, and that starts from the ground up,” Harper said. “I encourage other captive consumers and those in the cooperative family to get engaged in this issue. The STB needs to be forced to do what it was originally supposed to do: provide a balance between shippers and rail. This is a very important effort on behalf of all of us.”

The hearing for H.R. 2125 will take place Sept, 20, 2007, at 11 a.m. ET in the Rayburn House Office Building in Washington, DC. A post-hearing story will be posted on basinelectric.com immediately following the hearing.

U.S. Rep Pomeroy, along with Reps. Tammy Baldwin (D-WI) and Rodney Alexander (R-LA) also introduced legislation earlier this year, The Railroad Antitrust Enforcement Act of 2007 (H.R. 1650), which repeals the railroad antitrust exemptions in antitrust and transportation statutes, so antitrust law fully covers railroads. The bill will permit the Justice Department and Federal Trade Commission to review railroad mergers under antitrust law, and it will eliminate antitrust exemptions for mergers, acquisitions, collective ratemaking and coordination among railroads. The bill also will allow state Attorneys General and other private parties to sue for treble damages and to sue to halt anticompetitive conduct, both of which are not currently allowed under federal law.

“Representative Pomeroy and Senator Dorgan are looking out for the end-use consumer in his state, and so are we. We encourage others within the cooperative family and in Washington, DC, to get behind H.R. 2125 and H.R. 1650 and start making a difference,” Harper said.