Railroad wins in coal dust-up
Powder River Basin coal customers will eventually have to kick in an extra few million dollars per year to help control coal dust from loaded trains leaving Wyoming.
According to Platts reporter Peter Gartrell, BNSF Railway will impose a new tariff for coal dust suppression. The pending tariff comes after a March ruling by the U.S. Surface Transportation Board that nullified one previously proposed by BNSF. That ruling was the latest in a years-long battle between the railroad and utilities over just who is responsible to pay for dust suppression along thousands of miles of rail used to connect the Powder River Basin to coal-fired power plants across the U.S.
Last year, Arkansas Electric Cooperative Corp., which challenged the tariff, estimated the annual cost at $100 million. But no matter how the estimated $100 million in annual coal suppression is eventually divided between utilities and the railroad, it still adds to the overall cost of Powder River Basin coal.
Before you roll your eyes thinking this is another ploy by environmentalists to poke Big Coal in the eye, consider this; Suppressing coal dust from loaded trains is a matter of national security.
In 2005, back-to-back derailments in the southern Powder River Basin temporarily cut more than 20 million tons of expected deliveries, throwing utilities into a panic as their stockpiles shrank to a little more than a week’s supply in some cases. At the time, mines in the Powder River Basin supplied about 40 percent of the nation’s coal, putting at risk more than 20 percent of the nation’s electrical generation. Utilities were forced to buy coal and natural gas on the daily market, resulting in millions of dollars of unexpected costs to their customers.
The cause of the derailments; Coal dust from loaded trains had accumulated on the rail bed preventing proper water drainage during the wet 2005 spring.
Of course, coal dust is a human health and environmental issue, too. According to a recent column in the Seattle Post Intelligencer, coal dust blowing into an aquatic reserve is among a long list of concerns by opponents of the proposed Gateway Terminal, which would export Powder River Basin coal to China and other Asian countries.
Wyoming coal producers Arch Coal Inc. and Peabody Energy (and others) intend to push hard for this project and other West Coast coal port expansions to serve a lucrative Asian market. And they won’t have to battle for it alone. The potential new export market represents a huge opportunity for BNSF Railway, which stands to gain new contracts to ship coal from Wyoming to West Coast ports.
While the railroad is careful to make sure utilities bear their fair cost of transportation, it has a clear interest in keeping coal trains rolling.
The 2005 coal-dust derailments forced BNSF Railway and Union Pacific to decide their future partnership with the Powder River Basin coal industry, and their response was to invest about $1 billion to modernize and expand their coal networks, focusing on their Powder River Basin routes — clearly an intent to keep coal flowing from northeast Wyoming for a long time to come.
Contact Dustin Bleizeffer at 307-577-6069 or dustin@wyofile.com.