The nation's railroads were granted approximately $660 million in annual freight rate increases by the Interstate Commerce Commission yesterday, but only after the commission cut back a requested 7 percent increase on coal shipments to 4 percent.
Increases on shipments of other commodities will average 3.7 percent.
The regulatory agency delayed the effective date of the increase from today to June 17, a move the industry claims will mean $20 million of lost revenues.
By cutting back the coal increase request, the ICC claimed it would be saving consumers and utility companies dependent on coal $47 million in added costs.
But the remaining $660 million rate hike will be passed on to consumers in prices paid for such things as electricity, peanuts, automobile parts, paper bags and many other commodities and end products. A spokesman for the White House's Council on Wage and Price Stability declined to comment on the freight rate decision.
Association of American Railroads spokesman Richard Briggs said the industry is "gratified that the ICC proceeded so fast on this request, which was submitted only 37 days ago. Of course, we are upset that we didn't get what we asked for in coal."
Briggs said that industry costs have increased $940 million over the past year, and the rate hike would take care of about 70 percent of those increases. "We've got to eat the rest," Briggs said.
Because of new ICC requirements covering the amount of information that must be provided with rate hike requests, Briggs said the AAR submitted "seven tons of paper - a ten-fold increase in the data we have to produce," to justify the increase.
Besides the 4 percent across-the-board coal hike, the ICC also boasted rates on most other commodities by 4 percent for East-West travel and 2 percent for commodities going from, to and within the South. Southern railroads are in much better financial shape than those in the rest of the country.
The ICC said it would also investigate freight rates of 10 commodities because of "apparently high revenue/cost relationships." These include such products as newsprint paper, rubber, sulphuric acid and others.
The ICC statement on the increase said that the railroads could not justify the 7 percent hike, which the commission called "inflationary."
"On the contrary," the decision read, "protestants have established that coal is relatively profitable, particularly when compared with the overall cost/revenue relationship of all traffic."
Discussion over the proposed rate hike had been heated in recent days, with more than 200 protests filed against the planned hike. Several utility companies were among those opposing increases in coal rates.
Two of the seven ICC commissioners filed dissenting opinions on the coal decision. Robert Gresham said the decision "flies directly in the face of the commission's previous calls for selectivity in rail management's pricing decisions." He said the 7 percent increase was justified "in light of the carriers' demonstrated revenue needs."
Commissioner Rupert Murphy also favored the 7 percent coal hike, adding, "I believe that respondents should be given the opportunity, if necessary, in a sub-numbered proceeding, to justify the additional 3 percent proposed."