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FOR IMMEDIATE RELEASE: Tuesday, April 25, 2006
CONTACT: Leah Mohr, (605)773-3201
Group discusses coal shipping, electricity costs
PIERRE, S.D. – Increased rail transportation rates and a shortage of rail cars delivering coal to regional power plants could translate into higher electric rates for consumers this summer. That was the message South Dakota's public utilities commissioners heard at a meeting with power companies and a major railway last week.
"Coal shortages at our power plants mean increased electricity costs and possibly higher rates for South Dakota consumers," said PUC Chairman Bob Sahr. "Dangerously low reserves also could impact energy security if weather or accident impacts a rail line. Our goal was to bring the key players to the table to define the problem and look for solutions."
Representatives from Otter Tail Power Company, Basin Electric Power Cooperative and the Burlington Northern Santa Fe Railway met with the commissioners at the PUC-organized forum in Sioux Falls on April 21.
"Officials from Otter Tail Power Company told us they have had to curtail production at their Big Stone Power Plant in recent months," said Commissioner Dusty Johnson. "Since they don't have enough coal to operate, they purchase electricity for their customers from the open market. As a result, their customers receiving power from the Big Stone Power Plant are paying an additional $3 million per month for this more expensive power. That is already raising electricity bills by 5 or 10 percent for some South Dakota rate payers," he said.
"It was astonishing to learn that Basin Electric must pay 500 percent more for coal transportation than the actual cost to the railroad," said Commissioner Gary Hanson. "Electric production has already been substantially decreased. Immediate and drastic action is required to restore the coal stockpiles in order to prevent the further plant shut downs," Hanson declared.
A number of approaches to easing these problems were discussed, including increasing rail competition, reforming the way the federal Surface Transportation Board regulates railroads, passing federal legislation like U.S. Senate Bill 919, and greater investment in the rail system. Representatives from BNSF outlined the $2.4 billion they are investing in expansion this year and how they expect that to improve the system. They also explained how the surge in demand for their transportation products and how 2005 weather-related incidents are affecting their ability to keep pace with the power companies' needs.
Basin Electric Cooperative provides power to rural electric distribution cooperatives throughout South Dakota. Otter Tail Power Company serves customers in northeastern South Dakota and NorthWestern Energy serves customers throughout eastern South Dakota. Both of these utilities own a share of the Big Stone Power Plant. BNSF transports coal to the companies' power plants from the Powder River Basin in Wyoming.
Representatives from other power companies also attended the meeting, including East River Electric Power Cooperative, Missouri River Energy Services and NorthWestern Energy. In addition, other industries impacted by rail shipping also presented at the meeting. Those included the South Dakota Grain and Feed Association, Dakota Gold/Broin Companies (ethanol) and Sprenger Midwest (lumber).
The Public Utilities Commissioners thanked all the presenters for participating in the forum and for their commitment to resolve the coal shortage crisis.
A web cast of the full meeting and presentations by Otter Tail Power Company, Basin Electric Power Cooperative and BNSF are available on the PUC Web site. Go to www.puc.sd.gov and click on the "PUC Events" link on the left-hand side of the home page