Antitrust rules needed for freight railroads

Monday, December 22, 2008

From an editorial in The Capital Times:

U.S. Rep. Tammy Baldwin, D-Madison, is making progress on her effort to once again bring the nation's freight railroads under antitrust regulations.

Through the years and because of their deteriorating business and infrastructure, the railroads were exempted from many provisions of the antitrust laws dealing with pricing and service.

But in the past two decades and thanks to 1980 legislation that removed much of the regulatory oversight, there has been a huge consolidation of railroad corporations. Now just four major railroad companies carry 90 percent of the rail freight in the country and all four are quite profitable, a complete turnaround of where rail was in the mid-1900s.

The downside of all this consolidation, however, has been to leave many parts of the country with as little as one railroad serving them. The lack of competition has allowed them to charge virtually whatever they can to, for instance, haul coal to coal-fired utilities or pick up grain and other commodities at rural collecting points.

Wisconsin's Dairyland Power Co-Op, whose three coal-fired power plants deliver electricity to 575,000 people in southwest Wisconsin and parts of Illinois, Iowa and Minnesota, has experienced huge rate increases on the coal it gets from Wyoming. The co-op is now paying $75 million in freight costs to get $30 million of coal delivered.