Evaluation of Effects of Alternative Western Freight Rates for Coal. Analysis Report AR/IA/80-04

摘要

This report presents an analysis of the impact of coal rail transportation costs upon coal production, distribution, and consumption based on runs of the Midterm Energy Market Model (MEMM) using rate structures defined by the Interstate Commerce Commission. Overall levels of coal production in the United States change significantly in response to changes in western freight rates for coal. In addition, significant regional impacts can be expected in the coal producing areas of Northern and Central Appalachia, the Midwest, and the Western Northern Great Plains. Any increase or decrease in western freight rates will have an opposite effect on coal movements crossing the Mississippi River. In general, coal shipments from western producing areas to eastern coal markets are more sensitive to freight rate changes than vice versa. The amount of energy consumed in the United States would be negligibly affected by a change in western freight rates. However, electric utilities would substitute between coal and oil. In general, any freight rate increase would cause the electric utility industry to replace sub-bituminous fired generating capacity with bituminous units. However, in the West and New York/New Jersey regions, oil would be substituted in place of coal by operating existing distillate and residual units more intensively. Electricity prices are only slightly affected by western coal freight rates for coal. A quadrupling in western rail rates would cause average electricity prices to increase 6 percent. (ERA citation 05:013020)