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Arizona Power Company Wins $63 Million Case Against BNSF and UP

Business Week has reported that a small nonprofit power company has won a significant legal battle against BNSF Railway and Union Pacific.  The company, the Arizona Electric Power Cooperative Inc. (AEPCO), services about 150,000 customers in southern and western Arizona and has had a case against the railroads since 2008.  AEPCO has claimed to be a “captive shipper” with no alternative means to obtain coal shipments; a situation that they fell BNSF and Union Pacific have been taking advantage of by doubling their shipping rates.  While circumstantial evidence of price gouging is usually hard to find, AEPCO was able to prove that it would be cheaper for the power company to build and operate its own short rail line than to continue receiving shipments at the current rate. With the appropriate evidence on hand, the Surface Transportation Board ruled in favor of AEPCO and ordered refunds with interest for the last three years, as well as lower coal-shipping rates through 2018.  In total, the ruling will force BNSF and Union Pacific to pay $63 million to AEPCO and will result in a 37% decrease in coal-shipping rates over the next decade.  According to  AEPCO attorney Skip Whitley, “[The victory] will have the effect of dramatically lowering our fuel costs and the savings go directly to our members.” Whitley continues to say,  “We anticipate this will allow us to lower our rates to our members.”

For the most part, our country’s major railroads help to ship goods across the country at efficient and affordable rates, but there are some situations where they can take advantage of the “little guy.” The ruling of this case shows that the law will not let railroads like BNSF and Union Pacific get away with unfair practices, regardless of the railroads size or influence.  The $63 million settlement will greatly benefit a small nonprofit energy company like AEPCO and it appears that their customers will also feel some of the relief.

      

{ 1 comment }

Pyrrhic Victory December 1, 2011 at 5:10 pm

If AEPCO really wants to save money for its ratepayers, it should invest that $63 million settlement into solar panels on its members’ rooftops. AEPCO’s territory has some of the best solar radiation (both in intensity and availability) anywhere in the world. Why send AEPCO ratepayers’ dollars to buy coal from other places when the electricity could be generated locally? Even if the initial cost of solar is higher, it would eliminate the risk of rising coal prices due to competition from India, China, and other U.S. utilities. plus returning a portion of the cost back to AEPCO ratepayers, providing more local jobs and an economic boost.

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