(Wyoming Business Report, October 29) – Burlington Northern Santa Fe Railway is under the microscope for its coal shipping services as utilities’ coal stockpiles diminish due to what officials are calling deficient service that has hampered coal companies in the Powder River Basin.
“Regrettably, no immediate relief is in sight, and winter is coming,” wrote Western Coal Traffic League officials in a petition to the U.S. Surface Transportation Board seeking intervention.
The Oct. 22 petition called for a coal-specific service recovery plan from BNSF, which the board, “given the severity of the concerns,” granted Oct. 24, calling for action from BNSF within 10 days. That’s half the time normally allotted to respond to such petitions.
“BNSF-served members will have little or no opportunity to rebuild stockpiles in the fall given current BNSF service levels,” the petition stated. “Indeed, Western Coal Traffic League has just been informed that BNSF intends to remove approximately 60 coal train sets from service. Thus, at a time when WCTL’s members are in significant need of coal, BNSF is further cutting back service.”
That, the league argued, has filtered down to businesses and consumers.
“The limited coal deliveries and the uncertainty of adequate future deliveries have caused most of the WCTL membership to curtail coal-fired production,” the petition stated. “These curtailments have forced the utilities to seek alternative generation at significantly higher costs, which in turn has cost electric consumers and ratepayers hundreds of millions of dollars.”
Others have also keyed into the coal shortage created by inadequate shipping. The Surface Transportation Board said utilities have filed emergency notices of coal shortages with the U.S. Department of Energy.
BNSF replied to the concerns Tuesday, only four days into the shortened 10-day window. The letter stated a more official plan would follow on Nov. 3, but emphasized that BNSF is aware of the challenges “coal customers face in light of our service challenges.”
“That is because BNSF communicates with our coal customers every single day about stockpile levels, train and set status, day-to-day service challenges and the short-term and long-term measures that we are undertaking to remedy those challenges,” wrote Roger Nober, executive vice president of law and corporate affairs for BNSF.
BNSF said not all of the fault is the railway’s, pointing to increased coal demand while BNSF is meeting some of its declaration-driven obligations.
“When gas prices rose precipitously during 2013, PRB coal burn increased significantly as coal generation became a more economically attractive option on the dispatch curve, and the heightened demand for generation only increased as a result of the extreme temperatures during the 2013/2014 winter,” Nober said.
He added that BNSF is already doing much to address the situation, including spending $5 billion for maintenance and expansion, including record locomotive additions and $1 billion in network capacity expansions in key corridors leading from Wyoming coal country to key markets.
“Since May, we have added new projects to our 2014 plan, including two double-track projects in Nebraska to support our coal route,” Nober said.
Coal companies like Gillette-based Cloud Peak have acknowledged the shipping problem as well, though they have pointed to alleviation in the near future. Arch Coal in its quarterly earnings report noted that many utilities plan to go into “coal conservation activities” due to shipping challenges, but said things should get better.
“Looking ahead, we expect our western thermal operations, particularly in the Powder River Basin, to benefit from incrementally improving rail service in the fourth quarter of 2014 and in 2015,” said John Eaves, Arch’s president and chief executive officer in a statement released this week.