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Fla. Electric Cooperative Disputes Rail Rate Hike

October 10, 2008

NEW YORK  - A Florida electric cooperative has asked government regulators to step in and prevent from CSX Corp. from doubling the rates it charges to ship coal -- a move it says would mean $100 million in higher electric bills for customers in the state.

The Seminole Electric Cooperative, which provides electricity to about two-thirds of counties in Florida, filed its complaint with the Surface Transportation Board last week. The STB is an economic regulatory agency affiliated by the U.S. Department of Transportation.

Seminole Electric said it needs about 4 million tons of coal annually to provide electricity for about 1.7 million Floridians. The cooperative said in a statement it does not have any other method by which to ship its coal.

Seminole said it has asked to STB to allow them to pay the old contract rate until the case is resolved. Seminole said CSX has doubled its shipping rate to $50 from $25 per ton, which would cost the co-op about $100 million annually.

CSX spokesman Garrick Francis said the company and its primary operating subsidiary "made fair and reasonable proposals to Seminole that are comparable to other utilities the company serves."

He added the company will "aggressively defend" itself in any action pursued by Seminole.

Earlier this year, the STB ruled that CSX charged "unreasonably high rail rates" to ship chemicals for DuPont Co. In that case, the STB ordered CSX to reduce its rates and pay fines to DuPont. The STB said the reduced rates and fines could reach $3 million over the next five years.

Amid broader market turmoil, shares of CSX fell $3.89, or 8.7 percent, to $40.99 in afternoon trading.

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