	Introduction and Review of Findings

Half the nation's electricity comes from coal, and most of that coal is delivered to power plants by railroads. The reliable supply of coal by rail is therefore important to the electric power system. Concern over reliable deliveries of coal and other commodities, limited rail system capacity, and related issues such as rail rates, sparked several congressional hearings in 2006. This report provides background information and analysis on coal transportation by rail to power plants. The report discusses:
Problems since 1990 with the rail delivery of coal. Implications of rail capacity limits on service reliability. The role of coal inventories as a backstop to reliable coal deliveries. Proposed legislation intended, in part, to improve the quality of rail service to coal-fired plants and other shippers. The report also identifies data and analysis gaps that complicate measuring the scope of rail service and capacity issues, determining the need for federal action, and evaluating the possible efficacy of proposed legislation. Since 2006, as rail service improved, the power industry has increased coal stocks. Railroads accounted for over 70% of coal shipments to power plants in 2005. The balance moved by truck, barge, and conveyor. The Staggers Act established a 15-point national Rail Transportation Policy, including:
(1) to allow, to the maximum extent possible, competition and the demand for services to establish reasonable rates for transportation by rail;
(2) to minimize the need for Federal regulatory control over the rail transportation system and to require fair and expeditious regulatory decisions when regulation is required;
(3) to promote a safe and efficient rail transportation system by allowing rail carriers to earn adequate revenues, as determined by the Board;
(6) to maintain reasonable rates where there is an absence of effective competition and where rail rates provide revenues which exceed the amount necessary to maintain the rail system and to attract capital;
(12) to prohibit predatory pricing and practices, to avoid undue concentrations of market power, and to prohibit unlawful discrimination. An issue between power companies and railroads is how should the cost of improving reliability be shared between paying for larger stocks at power plants and building more rail capacity. Description of Legislative Proposals

S. 1125 , the Freight Rail Infrastructure Capacity Expansion Act of 2007 (FRICEA), was introduced on April 17, 2007, and its House counterpart ( H.R. The greatest difference in expectations is likely to be between shippers, such as electric power producers, and the railroads. Description of Legislative Proposals: Antitrust

S. 772 , the Railroad Antitrust Enforcement Act of 2007, was introduced on March 6, 2007, and its House counterpart ( H.R. Significant Disruptions in Deliveries of Coal to Power Generators Since 1990
Appendix B.
Half the nation's electricity comes from coal, and most of that coal is delivered to power plants by railroads. The reliable supply of coal by rail is therefore important to the electric power system. Concern over reliable deliveries of coal and other commodities, limited rail system capacity, and related issues such as rail rates, sparked several congressional hearings in 2006.
This report provides background information and analysis on coal transportation by rail to power plants. The report discusses:
Problems since 1990 with the rail delivery of coal. Implications of rail capacity limits on service reliability. The role of coal inventories as a backstop to reliable coal deliveries. Proposed legislation intended, in part, to improve the quality of rail service to coal-fired plants and other shippers.
The report also identifies data and analysis gaps that complicate measuring the scope of rail service and capacity issues, determining the need for federal action, and evaluating the possible efficacy of proposed legislation.
Freight rail transportation and electric power generation are mutually dependent network industries. Railroads accounted for over 70% of coal shipments to power plants in 2005, and due to economic and physical limitations on other modes (truck, barge, and conveyor) the heavy dependency of the power industry on rail transportation is likely to continue into the future. From the standpoint of the rail industry, coal transportation is an important business, accounting in recent years for about 20% of freight revenues for the major railroads.
The mutual dependency between the rail and power industries creates a complex business relationship. There are connections and to some degree tradeoffs between such factors as railroad investments in capacity and service enhancement, and power company tolerance for transportation risk and willingness to carry the cost of larger coal stockpiles. A central point is that increasing the reliability of coal deliveries to power plants costs money, as does coping with disruptions. A central issue between power companies and railroads is how these costs should be shared.
Proposed legislation before the 110th Congress discussed in this report includes the Freight Rail Infrastructure Capacity Expansion Act of 2007 (S. 1125 and H.R. 2116), the Railroad Competition and Service Improvement Act of 2007 (S. 953 and H.R. 2125), and the Railroad Antitrust Enforcement Act of 2007 (S. 772 and H.R. 1650).
This report will be updated as developments warrant.