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On Oct. 3, Seminole Electric Cooperative Inc. filed a complaint with the Surface Transportation Board (STB) challenging CSX Transportation's proposed rates for continuing to move coal from the Illinois Basin and Appalachia to a generating station near Palatka, Fla.

The new rates, which would take effect Jan. 1, 2009, are "unreasonably high and unlawful under federal law," said officials of the cooperative — which provides electricity to 46 of Florida's 67 counties — in a prepared statement.

Seminole officials have asked the STB to prescribe lower rates for the coal shipments. The cooperative, which is a captive shipper to CSXT, uses about 4 million tons of coal annually at the generating station, Seminole said.

For 10 years, the cooperative has paid rates stipulated in a coal transportation contract negotiated with CSXT in 1998 that expires at year's end. Seminole began negotiating a new contract with the Class I in 2006, but has been unable to reach a new agreement, the cooperative said, adding that as a result, the proposed new rates include a fuel surcharge and are more than twice as high as the expiring contract rates.

"Because we have no other option but to use CSXT for the delivery of coal to our facilities and could not reach agreement with them on the terms and conditions for a new agreement after nearly two years of negotiations, we have no choice but to take this action to protect the interests of our members and their consumers," said Seminole Chief Executive Officer Tim Woodbury.

The rate case is expected to take 18 to 24 months to conclude. Seminole also petitioned the STB to place interim limits on CSXT's tariff rates while the case is pending.

CSXT made a "fair and reasonable" rate proposal to Seminole comparable to those posed to other utilities served by the railroad, says CSXT spokesman Garrick Francis, adding that there are rare occasions when rate negotiations with a utility fail to succeed. The Class I plans to defend its Seminole rate proposal before the STB, he says.

— Jeff Stagl