demand and revenue will remain high over the long term (Hamberger, 2006). The railroads have cited changes in demographics, training requirements, and limits on the availability of qualified personnel as posing a risk to their ability to meet the long-term demand for rail service (BNSF, 2005; UPC, 2006).

Rail Reliability

Weather and other natural phenomena, such as earthquakes, fires, and floods, have the potential to cause localized line outages that can, in turn, adversely affect an entire rail network. Weather conditions in Wyoming in May 2005 demonstrated this risk when heavy rain and snow, combined with accumulated coal dust in the roadbed, led to track instability on the Joint Line (UPC, 2006). Two coal trains derailed on consecutive days, damaging the line and temporarily putting it out of service (EIA, 2005b). Both Union Pacific and BNSF declared force majeure, beginning with the derailments and continuing until normal operations were restored. Track maintenance and restoration disrupted operations and reduced shipments on the Joint Line throughout most of the rest of 2005 (UPC, 2006). The spot price of Powder River Basin 8,800 Btu (British thermal unit) coal reflected the severity of this disruption, rising from $8.19 per short ton just before the derailments to $16.89 per short ton in October 2005 (EIA, 2005a, 2005c).

The terrorist attacks of September 11, 2001, and the more recent attacks on passenger transportation systems in London, Madrid, and Mumbai, have raised concerns about possible terrorist disruptions of freight rail transportation. Even when freight rail infrastructure is not directly the target of a terrorist attack, government efforts to protect against such attacks can slow trains, increase congestion, and adversely affect railroads’ profitability, financial condition, or liquidity (UPC, 2006).

State utility regulators have noted increases in uncertainty associated with the availability of rail cars for loading the coal at its point of origin, the availability of locomotive power, and the arrival time at the train destination (NARUC, 2006). Opinions differ about whether or not disruptions in coal delivery reflect a substantial and ongoing problem and about whether the power plant operators or the railroads should modify their activities to respond to these delivery problems (English, 2006; Hamberger, 2006; McLennan, 2006; Mohl, 2006; Wilkes, 2006).

The rail networks that transport the nation’s coal—like air traffic control and electric transmission networks—have an inherent fragility and instability common to complex networks. Because concerns about sabotage and terrorism were largely ignored until recently, existing networks were created with potential choke points (see Figure 5.1) that cause vulnerability. The complex and dynamic interactions between societal and environmental factors—as well as the intrinsic dynamics of a system that operates close to its capacity—result in the potential for small-scale issues to become large-scale disruptions.

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