The cost of shipping coal by rail today can exceed the cost of the coal itself, increasing rates for electric co-ops and their consumers. Without federal action, this situation will hinder the need to meet the nation’s growing appetite for affordable and dependable electricity. Electric co-ops, along with the rest of the electric utility industry, are not the only businesses affected by railroad monopolies. Grain farmers, steel manufacturers, wood and paper products industries, and chemical and fertilizer producers have had to deal with unfair pricing and unreliable service from the railroads for far too long.

How railroad monopolies formed?
A series of mergers in the railroad industry, following deregulation in 1980, cut competition from 40 major railroads to four. That consolidation left some shippers, like electric co-ops, captive to a single carrier with no alternative way to move coal and other supplies. Today, at least one-fifth of all rail customers are held captive by a monopoly freight railroad. What started as just a regional captive shipper issue has now grown into a national economic concern that affects all Americans. When competition exists, railroads average a 6 percent profit. But without competition, shippers are held hostage by the railroads whose profits soar to an average of 400 percent or more.

What is being done, and what you can do as a co-op member
Over the years, the National Rural Electric Cooperative Association (NRECA), on behalf of member co-ops, has worked with other businesses and consumer groups to bring the anticompetitive rail practices to the attention of regulators and legislators. Working together, the coalition, Consumers United for Rail Equity (CURE), was formed to focus on congressional policies affecting railroad competition. As a result, electric co-ops have their best opportunity in decades to push for congressional action aimed at forcing big railroads to offer better service and fair rates. Specifically, CURE is calling for a common rail carrier “obligation to serve” standard when it comes to delivering products, like coal, that are critical to the U.S. economy.
To succeed, all of our grassroots resources need to concentrate on this fight. As member-owners of your electric co-op, each of you can play an important role. I encourage you and your neighbors to get involved by contacting your U.S. legislators and asking them to reject the monopoly practices of America’s freight railroads. It is time for our leaders on Capitol Hill to do something to fix this problem.