By Anita Weier, The Capital Times

Februrary 22, 2006

If you think your heating costs have risen far too quickly, consider this: the Dairyland Power Cooperative in La Crosse is spending $80 million to ship $35 million worth of coal by rail.

"It costs more to ship the coal than it costs to buy the coal," said William Skewes, a representative of the Wisconsin Utilities Association, who added that the rail shipping rates for Dairyland went up 93 percent this year. "This has a significant impact on customer's bills at a time when consumers are being squeezed on the energy front."

In an unusual bipartisan effort, two members of Wisconsin's congressional delegation are trying to bring down those costs by ending an antitrust exemption held by freight railroads. Rep. Tammy Baldwin, D-Madison, co-sponsored H.R. 3318, a bill introduced by Rep. Mark Green, R-Green Bay, in July 2005. But the bill remains stuck in a House of Representatives subcommittee, so the Wisconsin Senate passed a resolution Tuesday hoping to prod national legislators into action.

Freight railroads were exempted from antitrust laws in the early 20th century and then deregulated in the 1980s while retaining their antitrust exemption. The resolution, authored by Sen. Ron Brown, R-Eau Claire, points out that the United States had 40 major freight railroads in 1980, but now four railroads control 90 percent of the nation's freight rail traffic. 

"The freight rail industry enjoys both freedom from extensive federal regulations and an exemption from the federal antitrust laws, creating an uncompetitive environment that hampers the development of competitive forces that might restrain transportation price increases," the resolution says.

The resolution states that electric power suppliers in Wisconsin rely heavily on rail service for fuel delivery and are suffering from "a declining quality of rail service" and "near doubling of rail rates for moving coal to electric generators." The state's agriculture industry also has been affected, the resolution says.

Four railroad organizations opposed the resolution, according to the Ethics Board Web site.

Samuel Gratz, a local lobbyist for the Union Pacific Railroad Co. and the Burlington Northern Santa Fe Railway, said that the matter is a federal -- not a state -- issue.

"It seems to me that the people concerned should be talking to their congressmen," Gratz said in an interview. "I know some people are concerned about the increase in railroad rates. The attempt at the federal level is to go back to suppression of rates, when railroads were losing money and not able to keep up infrastructure. I think they would just go backwards."

But David Hoopman, a lobbyist for the Wisconsin Federation of Cooperatives, said that part of the problem is that infrastructure has not been kept up, so derailments occurred in eastern Wyoming last May.

"The derailments occurred in a section of track that are jointly operated by Burlington Northern and the Union Pacific," Hoopman said. "It is about a 100-mile segment of track that has been in need of major maintenance and construction. I think they expect to get it done this year, but the consequence is that the number of trains coming out of there is significantly below the number needed to maintain optimum fuel reserves for utilities in this part of the country.

"It's not just in Wisconsin, but in Missouri and Illinois as well. Lots of utilities have been trying to shepherd their coal reserves so they don't get caught short. They are doing things like idling coal-fired generation during off-peak hours on evenings and weekends and buying power on the spot market to replace what they would normally make on their own. The consequence is that power gets more expensive, because they are buying power made from natural gas. It is an evolving problem that will affect more people as time goes on. There is a dearth of meaningful competition for the railroads that serve the Powder River Basin in Wyoming."

Gratz conceded that there have been issues with track condition in some areas. But he said the money to fix the tracks has to come from the shippers.

Canadian National railroad spokesman Kevin Soucie said that re-regulation would hurt shippers.

"The big beneficiaries of the deregulation of the early 1980s were shippers. Ever since deregulation there has been an increase in productivity and volume hauled and a sharp decline in rates," Soucie said. "With any effort to re-regulate, shippers will be the losers."

But Green says that competition is needed to solve pricing problems.

"While businesses in virtually every other sector of our economy have been shaped by healthy competitive forces, railroad companies have been immune to laws that thwart monopolies and foster competition," Green said in a written statement. "It's an erosion of our free market system, and it's time to tell the railroads that they need to modernize their industry and compete like every other sector."

The Railroad Antitrust and Competition Act would repeal an "antiquated" antitrust exemption for the freight rail industry that gave them an unfair advantage over freight shippers and created a monopolistic environment that continues to have a harmful effect on Wisconsin businesses and the economy, Green's statement said.

Baldwin said that though the United States has strong antitrust laws to protect consumers, railroads and major league baseball are exempt.

"Consequently railroads -- which in some cases have virtual monopolies over their lines -- have no competition and can demand any price to transport essential commodities including coal, lumber, and paper," Baldwin said in a written statement. "This is unfair to consumers who ultimately bear the increased cost of essential products and services, such as electricity generated by coal."