MARKETS

Utility sues Norfolk Southern for contract breach

POWER company South Mississippi Electric Power Association has filed suit against Norfolk Southern claiming the major coal rail shipper inflated costs using a coal delivery monopoly.

Donna Schmidt
Utility sues Norfolk Southern for contract breach

The company said earlier this week that NS was the only railroad company which delivered coal from the Appalachian region to its main generation station, the Morrow plant in Purvis, Mississippi, making SMEPA a “captive shipper”. It did not indicate which Appalachian mines the coal was sourced from.

“NS exerts sole control over the rates, rules and other terms of transporting coal to Morrow and has been the sole carrier of fuel since the plant began operations in 1978,” the power company said, noting that every contract renewal carried with it a price increase of between 60% and 80%.

The companies’ most recent contract expired the last day of 2010.

The utility also claims NS had delivery shortfalls last year totaling 130,000 tons of coal.

"Our rail costs have continued to rise significantly while the service we receive has steadily deteriorated," SMEPA spokesperson Kurt Brautigam said.

“NS is one of the most profitable railroads in the country, and it is troubling that we have received no reasonable or substantive response to our concerns. At this point, unfortunately, we have no other recourse than to litigate to seek relief from the monopolistic abuse NS has subjected us to.”

SMEPA filed its suit December 29 in the US District Court in south Mississippi, though case documents are not public.

The Associated Press quoted Brautigam as saying that the lawsuit is seeking $US17 million. Court documents reportedly reflect $34 million, but Brautigam said he did not know the reason behind the discrepancy.

South Mississippi Electric provides power for 11 distribution cooperatives which deliver not‐for‐profit retail electric services to 406,000 homes and businesses throughout most of Mississippi.

NS has not issued public comment on the suit.

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