Railroad Re-regulation

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Postby Ken W2KB » Tue Apr 10, 2007 12:35 pm

gprimr1 wrote:
The USA's electric generation business, for which the coal is needed, has been deregulated for many years, with competiton everywhere and in many areas of the USA competition is intense.


Respectfully, I would really like to see your figures on this. In my home state of Maryland, we just deregulated our power, and our electric rates shot up 72%. (PEPCO customers received no help from the Maryland Senate.)


I will be very brief, as it is mostly off-topic except that Amtrak is an electric customer in Maryland. :wink: There are two factors that caused the dramatic rate increase: (1) the cost of natural gas and coal for generation fuel skyrocketed, and (2) Maryland froze untility rates years ago in restructuring and despite suppliers' escallating costs over those years, they were not allowed to increase rates until the freeze expired. There was a substantial savings in rates for energy over the period, and even a 72% increase does not bring the rates as high as they would have been absent the wholesale power market deregulation.

See:
http://www.pjm.com/documents/downloads/reports/20061121-analysis-coordinated-elec-mkts.pdf
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railroad re-regulation

Postby Jeff Smith » Tue Jan 03, 2017 11:35 am

I'm going to move this topic to Class I and retitle it, but first post an opinion piece: Real Clear Policy

Don't Re-Regulate the Railroads

Proponents of railroad re-regulation have a new definition of “competition.” Competition, they say, is when the government steps in and orders one company to use privately owned facilities on behalf of a competitor and then tells that company what rate to charge for the service. This sort of direct government intervention and manipulation of the marketplace is hardly consistent with a free-market economy, or with the true competition a healthy private enterprise system fosters.

But that’s just what a small group of powerful shippers are calling for. The U.S. Surface Transportation Board (STB), the independent agency tasked with regulating freight railroads and their privately owned infrastructure, is currently weighing a number of proposals that would effectively undo the de-regulatory framework enacted in 1980. That framework reversed the effects of heavy regulation, which threatened the financial viability of the railroad industry. The STB is considering this policy reversal not because of any market failure, but, rather, because some shipping companies don’t like the market price they pay to railroads for transportation costs and so have asked the government to step in.

In reality, however, average inflation-adjusted rail rates were 45 percent less in 2015 than in 1981. That means the average rail shipper today can move close to twice as much freight for about the same price it paid 35 years ago.

The importance of rail transportation is obvious when you consider the scalability of rail, which allows more affordable freight transportation per mile. For instance, research shows that if all freight rail traffic were shifted to trucks, rail shippers would have to pay an additional $69 billion per year. Adjusted for increased freight volume and inflation, that cost is probably close to $100 billion today.
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