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SMEPA suing railroad for 'monopolistic abuse'

HATTIESBURG — South Mississippi Electric Power Association is suing Norfolk Southern Railway Company for millions of dollars, claiming the railroad uses a monopoly over coal deliveries to inflate costs.

Hattiesburg-based SMEPA said Norfolk Southern is the only railroad company that delivers coal from the Appalachians to Plant Morrow, the utility’s main electricity generating station located in Purvis.

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. The latest contract expired Dec. 31.

The power company also claims Norfolk Southern Railway racked up 130,000 tons of delivery shortfalls in 2010.

“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” by Norfolk Southern.

SMEPA filed the suit Dec. 29 in U.S. District Court in South Mississippi, 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.

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

The power company said yesterday 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.

Brautigam said SMEPA also filed a complaint with the National Surface Transportation Board, saying it was “seeking relief from excessive and unreasonable future rates.”

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