Utility sues railroad claiming monopoly abuse

SMEPA antitrust lawsuit alleges Norfolk Southern monopoly over coal delivery to Plant Morrow in Purvis, Mississippi, driving steep rate hikes. The nonprofit also petitioned the Surface Transportation Board amid freight rail service shortfalls.

A Mississippi power company has sued Norfolk Southern Railway Company for millions of dollars, claiming the railroad uses a monopoly over coal deliveries to inflate costs.

Hattiesburg-based South Mississippi Electric Power Association SMEPA said Norfolk Southern is the only railroad company that delivers coal from the Appalachias to Plant Morrow, the utility's main electricity generating station located in Purvis, Miss.

The power company claims Norfolk Southern has used that control over coal delivery since 1978 to negotiate price increases of between 60 percent and 80 percent each time the companies' contracts face renewal, a pattern of railroad monopoly behavior SMEPA alleges.

The power company also claims Norfolk Southern Railway racked up 130,000 tons of delivery shortfalls in 2010, amid ongoing railroads-utilities coal disputes nationwide.

"Our rail costs have continued to rise significantly while the service we receive has steadily deteriorated," SMEPA spokesman Kurt Brautigam said in a statement. He added that, regrettably, the utility had no other recourse but to file litigation seeking relief from the "monopolistic abuse" it claims it is subjected to by Norfolk Southern.

SMEPA filed the suit December 29 in U.S. District Court in south Mississippi, similar to a recent Mississippi AG lawsuit against Entergy, but documents related to the case are sealed.

The court docket listed the lawsuit demand as $34 million. Brautigam, however, said the lawsuit seeks $17 million. Brautigan said he didn't know the reason for the discrepancy. The lawsuit was filed under seal and is not open to public viewing.

Rudy Husband, a spokesman for Virginia-based Norfolk, said the company doesn't comment on pending litigation.

The power company said that Norfolk wants a rate increase beginning in 2011 that will be four times higher than the amount the railroad charged under contract as recently as 2003. SMEPA said such a rate hike would be especially hard because it is a nonprofit company and because regulators aim to keep power bills low for customers.

Brautigam said SMEPA also filed a complaint with the National Surface Transportation Board, echoing a recent Mississippi hearing on utility charges by state officials, saying it was "seeking relief from excessive and unreasonable future rates."

SMEPA provides wholesale power for eleven distribution cooperatives that provide electricity to 406,000 homes and businesses in 52 Mississippi counties.

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