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1/5/2011
Rail News: Rail Industry Trends
Mississippi co-op files rate complaints against NS with U.S. court, STB
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On Dec. 29, power generation and transmission cooperative South Mississippi Electric Power Association (SME) filed a complaint against Norfolk Southern Railway in the U.S. District Court for the Southern District of Mississippi claiming the Class I breached a coal transportation contract by charging excessive rates. The co-op also filed a rate complaint with the Surface Transportation Board.
NS is the sole rail carrier that transports coal from Appalachian mines to a co-op generating station near Purvis, Miss., according to SME. The most recent contract with NS expired on Dec. 31, and the Class I notified the co-op that rates beginning in 2011 will be “four times those charged” under a contract as recently as 2003, SME officials said in a prepared statement.
The co-op claims NS breached the contract by applying a fuel surcharge that over-compensated for fuel-cost changes; “improperly” applying an adjustment clause that resulted in overpayments; and not avoiding service failures that led to delivery shortfalls totaling about 130,000 tons in 2010.
“Each contract over the past decade has resulted in costs 60 percent to 80 percent higher than the preceding one,” said SME spokesman Kurt Brautigam in the statement. “Our rail costs have continued to rise significantly while the service we receive has steadily deteriorated.”
NS declined to address the complaint because, as a matter of policy, the Class I "doesn’t comment on active or pending litigation," said NS Director of Public Relations Rudy Husband in an e-mail.
NS is the sole rail carrier that transports coal from Appalachian mines to a co-op generating station near Purvis, Miss., according to SME. The most recent contract with NS expired on Dec. 31, and the Class I notified the co-op that rates beginning in 2011 will be “four times those charged” under a contract as recently as 2003, SME officials said in a prepared statement.
The co-op claims NS breached the contract by applying a fuel surcharge that over-compensated for fuel-cost changes; “improperly” applying an adjustment clause that resulted in overpayments; and not avoiding service failures that led to delivery shortfalls totaling about 130,000 tons in 2010.
“Each contract over the past decade has resulted in costs 60 percent to 80 percent higher than the preceding one,” said SME spokesman Kurt Brautigam in the statement. “Our rail costs have continued to rise significantly while the service we receive has steadily deteriorated.”
NS declined to address the complaint because, as a matter of policy, the Class I "doesn’t comment on active or pending litigation," said NS Director of Public Relations Rudy Husband in an e-mail.
