STB unanimously rules for MBPP in shipper case

STB unanimously rules for MBPP in shipper case Decision requires BNSF Railway to pay an estimated $345 million A decision by the U.S. Surface Transportation Board (STB) could bring substantial cost savings to Missouri River Energy Services (MRES) and the five other participating utilities in the Missouri Basin Power Project (MBPP). MRES is a wholesale supplier of electricity and energy services to 60 member municipalities in the states of Iowa, Minnesota, North Dakota, and South Dakota. Each MRES member, including Vermillion, owns and operates a local electric distribution utility and each MRES member utility stands to benefit from this decision if it is upheld. The STB unanimously ruled Feb. 18 that BNSF Railway must pay Western Fuels Association Inc., and the MBPP participants an estimated $345 million in damages and rate reductions. Basin Electric Power Cooperative, on behalf of the MBPP participants, and Western Fuels filed a complaint with the STB in October 2004 after a long-term contract between Western Fuels and BNSF expired.  At that point, BNSF doubled its rates for shipping coal from Wyoming's Powder River Basin to MBPP's Laramie River Station, a power plant located near Wheatland, WY, a haul of about 175 miles. The STB said this is the largest award it has ever given to a captive shipper, which is an entity that must rely on service from a single railroad because the shipper has no access to a competitive carrier. The decision follows an appeal by MBPP and Western Fuels of a 2007 STB ruling that favored BNSF. Under the new ruling, BNSF must immediately reimburse MBPP and Western Fuels $100 million and, over the next 20 years, it must provide an estimated $245 million in rate relief, which amounts to about a 60 percent reduction in the rates MBPP participants have been paying since 2004.  "It is very unusual for consumers to get such a favorable ruling from the STB in a case against a railroad," said MRES CEO Tom Heller. "This has been a very costly, time-consuming case and it's gratifying to see that persistence can pay off when the cause is right." MBPP has spent about $7 million in fighting this case so far. The MRES share of the initial $100 million award amounts to about $16.5 million. The decision also will represent reduced costs to MRES every year through 2024. "This case is not over yet because BNSF will likely file further appeals," Heller said. "But if the decision holds up, it could go a long way toward helping MRES replenish reserve funds that have been depleted partly due to the excessive BNSF rates we have been paying for four years." Heller explained that a combination of factors, including the excessive coal shipping charges, required MRES in recent years to use reserve funds to provide its members with as much rate stabilization as possible. "Our board of directors, just last week, stated its intent to replenish our reserve funds through future rate and operational strategies," Heller said. "This STB decision won't provide the entire answer, but it certainly will help."

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