Consolidated Rail Corp. will need an additional $1.4 billion in federal subsidies through 1983 and more after that if federal rail regulation isn't changed, a United States Railway Association staff report concludes.
Even with this federal funding -- which would be on top of the $3.3 billion currently authorized -- Conrail couldnT achieve lon-term self-sufficiency at its present rate of improvement, assuming no major change in the physical system, the report states.
The pessimistic projection is contained in a staff analysis of five basic choices to be considered for Conrail now that it is nearing the end of its currently authorized funding. The report was released by the USRA to solicit public comment about Conrail's future course.
The USRA was created by the Regional Rail Reorganization Act (the 3R Act) to reorganized several bankrupt railroads, act as banker for the federal aid it would get and monitor the redesigned system's operations. Conrail's 17-state operations are concerned primarily with freight, but Conrail also is the nation's largest commuter rail operator.
Although USRA President Donald C. Cole stressed yesterday that the staff report didn't present conclusions or make recommendations, its analysis of the five basic options available makes most of them reasonably unattractive. Besides continuing Conrail's current operations with additional large amounts of money, the options presented are:
Assuming no additional federal funding for Conrail with no change in the regulatory climate or the rail's physical system, significantly diminishing the prospect that Conrail ultimarely might achieve and sustain viability and provide reliable, efficient service. With this option, a substantial federal investment goes down the drain.
Dividing Conrail in two and creat- ing a "firewall" between its losing and money-making operations; this promise to cost at least $1.7 billion more, and the line is too difficult to draw.
Transferring Conrail's lines and operations to other railroads in an orderly fashion, an option that couldn't be pursued for lack of information about the finances of potential acquiring carriers.
The option that appeared to be favored by the staff envisions an "improved Conrail" that could become financially self-sustaining by the end of 1983. It assumes that regulatory reforms permitting increased pricing flexibility along with greater market entry and exit flexibility become effective in 1980.
Under this option, Conrail is able to improve its operating efficiency by rationalizing its route system although the staff analyzed three different mileage plans, the optimum appeared to require an additional $850 million federal subsidy before Conrail is cut loose.
Cole of the USRA said that the report's assumptions don't reflect a disposition toward adoption of either legislative or administrative policy changes for the rail industry. Nevertheless, he admitted in response to a question that it was "basically true" that Conrail never would be self-sustaining without regulatory reform.