Sept. 21, 2007

 

The LES Administrative Board held its regular monthly meeting Sept. 21 at the Lincoln Electric Building. Items from the meeting, as well as other pertinent information, include:

 

STB Rules against Electric Consumers in Favor of Railroads

 

After the U.S. Surface Transportation Board (STB) ruled on Sept. 10 that the owners of Laramie River Station power plant aren’t entitled to rate relief, the owners have filed a request to extend a deadline to submit revisions.

 

The STB gave the owners until Oct. 10 to revise key portions of its case in light of the STB’s changes to the methodology for its stand-alone cost rate test; that is, what it would cost the owners to operate their own railroad system. An extension was requested until Oct. 22, and it is expected that the STB will grant the request.

 

The STB’s ruling came after the owners, including Lincoln Electric System (LES), asked for rate relief stemming from Burlington Northern-Santa Fe Railway’s (BNSF) doubling of rates in the fall of 2004 after the previous contract expired.

 

“This is the strongest evidence to date that the rate challenge process at the STB is irreparably flawed,” said LES Administrator and CEO Terry Bundy. “To be sure the utilities got no relief, the STB went so far as to stop our case after all the evidence was filed, changed the rules on how the case was to be evaluated and then apply the changed rules retroactively to our case. It is simply outrageous.”

 

LES and the other owners will continue their efforts to seek legislative changes in Congress to stop these abusive pricing practices, Bundy said.
“LES plans to continue to fight these rates because they unnecessarily cost LES customers millions of dollars per year,” Bundy said. “The federal legislative effort has been gaining momentum with Congressional representatives across the country, although none from Nebraska have joined the effort.”

 

"Utilities with competitive alternatives in Iowa pay a lower cost per ton to ship coal than the captive Laramie River Station plant just south of the Wyoming coal fields is forced to pay,” he said.

The excessive rates charged by BNSF are costing LES $3-$4 million a year more and threaten Lincoln’s economic development. The impact on the average customer is about $30 a year. Partners in Laramie River Station are paying about $40 million a year more.

The STB’s ruling will have a chilling effect on utilities that consider challenging rates through the STB. The case has cost the owner of Laramie River about $6 million in three years, and other utilities may shy away from filing an action that is doubtful to receive a decision in their favor and that carries a high price tag.

There was a sign of hope Thursday (9/20) when the Senate Judiciary Committee reported S. 772, the Railroad Antitrust Enforcement Act of 2007, to the full Senate. The committee’s action marks the first time since 1980, when the Staggers Rail Act was passed, that any committee of Congress advanced legislation changing national rail policy. At issue is that the Staggers Act was passed when there were 40 railroads in the U.S. Today, four railroads control 90 percent of railroad traffic, and they have no significant regulatory oversight. Only railroads and organized baseball enjoy an antitrust exemption.

In another decision, the STB ordered the railroads to change the way they calculate and collect fuel surcharges. While studies have shown that the fuel surcharge practices resulted in several billion dollars in overcharges, the STB did not order the railroads to make any refunds, only that they change their practices going forward.

 

Results of United Way/Community Health Charities/Community Services Fund Drive

Employee contributions to the LES & IBEW UW/CHC/CSF drive in August were more than $70,000 for the second consecutive year, reported Cindy Gore, Professional Manager in Human Resources (HR), to the Board at its September meeting on Friday (9/21).

Cary Drijber, Line Tech 1st Class representing the IBEW, and Jessie Martin, Administrative Support Specialist Sr. in HR, co-chaired the campaign.

In addition, 26 employees served as canvassers and contacted LES’ 453 employees. Contributions totaled $70,144.44. The average contribution per donating employee was $208.23, compared to $197.92 last year.

The total amount raised at LES represents 4.1 percent of the Pacesetter campaign of $1.7 million, and 1.3 percent of the community-wide campaign goal of $5.5 million.

 

Other Reports

The following statistics for August were presented to the Board:

August 2007	August 2006	Change
Number of Customers
126,044	124,437	+1,607 (+1.3%)
Retail Electricity Use (MWh)
339,254	311,769	27,485 (+8.8%)
12-Month Average Outage Time/Customer (minutes)
35.3	17.7	+17.6

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