Eastern Railroad Discussion > PSNH eyes rate increase, should rail follow suit?

Below is an article from the July 27, 2005 edition of the Concord Monitor Newspaper covering a continuing trend for the Public Service Co. (PSNH);an electric rate increase. Notice the reason this time: coal.
If this were my vote I would vote no on the rate increase and require PSNH to develop a long hedging strategy rather than pass on rate increases to the consumers. If a decision like this is granted, a N.H. utilities could request a rate increase every time the price of fuel goes up--imagine this in a volatile energy market!
This leads to the rail question and reason for this thread. PSNH currently has only one coal fired plant in NH PSNH-Bow. If the price of coal is in fact increasing, should the rail carriers also be increasing their rates for carriage of this coal. If coal is now a more valuable commodity should not its transporation also be more valuable?


New Hampshire's largest electric utility seeks to raise its rates by 5.8 percent as of Monday to cover rising fuel costs.

Public Service Company of New Hampshire told the Public Utilities Commission yesterday that the increase would raise the average monthly residential bill about $4.25.

Company officials said global events, including storms at a South American coal mine and a roof collapse at a Virginia coal mine, have increased the cost of coal.

"We will take a very hard look to see if PSNH reasonably managed its contracts with coal suppliers,"Commissioner Donald Kreis said.

The request follows a 5 percent rate increase in February, which the utility also blamed on rising energy costs. The average monthly household bill for PSNH customers is about $72.69, the same as when deregulation went into effect in 2000

"I think most of the costs PSNH is asking for are legitimate, but this is a midcourse adjustment," said Anne Ross, of the Office of the Consumer Advocate.
In the meantime, PSNH hopes to stabilize expenses by pre-buying fuel.

"We are trying to look into oil and coal contracts farther into the future to avoid these price spikes," company spokesman Ian Wilson said.

PSNH officials said that although fuel costs are expected to keep rising, customers will catch a break at the end of 2006 when the utility expects to pay off long-term debts.



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Since when should be companies not be allowed to pass on increased costs to the consumers of the products, in this case electricity, that they produce? If the costs of coal goes up so does their cost to generate electricity. There is nothing wrong with this proposed increase.

I know, you liberals will want to blame this on Bush as well and some how, in your dimented way of reasoning, you will.

About coal being more valuable and thus the RR's should increase their rate to tranports it, that does not hold water. Fuel costs going up are one thing and so is demand for transportation, labor, etc...I don't think that a comodity being more valuable is basis for the rr's to increase their rates to transport coal.

DB

DenisFBlake Wrote:
-------------------------------------------------------
> Since when should be companies not be allowed to
> pass on increased costs to the consumers of the
> products, in this case electricity, that they
> produce? If the costs of coal goes up so does
> their cost to generate electricity. There is
> nothing wrong with this proposed increase.

Companies that provide an essential and needed service
should not be allowed to pass on increased costs to the
consumers. This is plain and good economic policy in a
regulated market not politics. The alternative would be to
deregulate the electric market let the market price for
electricity find its own level which has been tried and also
defeated through the efforts and lobbying by companies like
PSNH. I beleive if the electric markets were in fact truly
deregulated the increased costs of coal would not be passed
on to the consumers the market competition would absorb this
increase likely through a hedging strategy. There are clearly
some things wrong with this proposed increase.
>
> I know, you liberals will want to blame this on
> Bush as well and some how, in your dimented way of
> reasoning, you will.

Perhaps you would be willing to discuss the current Bush energy
plan. Ethanol costs more to produce than energy produced. Tax credits
for coal and nuclear energy. Elimination of renewable energy portfolios
and lastly drilling for oil in Alaska. Is this supportable energy policy
or just dimented reasoning supported by powerful lobbyists.
>
> About coal being more valuable and thus the RR's
> should increase their rate to tranports it, that
> does not hold water. Fuel costs going up are one
> thing and so is demand for transportation, labor,
> etc...I don't think that a comodity being more
> valuable is basis for the rr's to increase their
> rates to transport coal.

Energy policy debate aside could in fact railroads generate more needed
revenue through the increased and needed demand for a commodity in this case
coal. Oceangoing tankers do this frequently.

Discussion.

DenisFBlake Wrote:
-------------------------------------------------------
> Since when should be companies not be allowed to
> pass on increased costs to the consumers of the
> products, in this case electricity, that they
> produce? If the costs of coal goes up so does
> their cost to generate electricity. There is
> nothing wrong with this proposed increase.
>
> I know, you liberals will want to blame this on
> Bush as well and some how, in your dimented way of
> reasoning, you will.
>
> About coal being more valuable and thus the RR's
> should increase their rate to tranports it, that
> does not hold water. Fuel costs going up are one
> thing and so is demand for transportation, labor,
> etc...I don't think that a comodity being more
> valuable is basis for the rr's to increase their
> rates to transport coal.
>
> DB

I wouldn't blame this on Bush - he probably supports nookulur energy sources.

ExceptedTRAK Wrote:
-------------------------------------------------------
> If this were my vote I would vote no on the rate
> increase and require PSNH to develop a long
> hedging strategy rather than pass on rate
> increases to the consumers. If a decision like
> this is granted, a N.H. utilities could request a
> rate increase every time the price of fuel goes
> up--imagine this in a volatile energy market!


Who is John Galt?