Addressing Shippers' Concernsby BlueFish
Public Testimony at Clarkston, February 10, 2000
Tonight, I would like to propose a solution that addresses the concerns of the shippers that ship about 4 million tons of commodities through the Lower Snake River corridor.
Currently, the 139 mile trip from Lewiston to Pasco costs $1.48 per ton. This is the cost that shippers are asking to protect. $1.48 per ton.
The true cost of shipping by barge is of course much higher.
Averaging 20 years of ACOE data which includes channel dredging, lock repairs, operations and maintenance, amounts to a little under $4 million per year. Divide this by 4 million tons of commodities shipped per year, amounts to about 97 cents per ton.
This is a cost not paid by shippers.
Another cost is hydropower revenue that is lost when water is used to move a ship through the locks rather than producing hydroelectricity. This amounts to about 14.5 cents per ton.
Combined these subsidies amount to about $1.11 per ton.
For the moment let's also consider the $435 million per year that ratepayers currently pay for salmon recovery efforts. Let's recall that Congress authorized these dam projects based on a 1930's ACOE report which assigned navigation with 18.5% of the "cost-carrying abilities"
18.5% of $435 million current annual salmon recovery costs is about $80 million per year. Divided this by 4 million tons per year amounts to another $20 per ton that shippers do not pay.
But let's ignore this $20 per ton for now and focus on the $1.11 per ton cost of dredging, repairs, operation and maintenance and forgone power revenues.
If shippers were asked to pay this additional $1.11 per ton, I am quite certain they would shift their commodities to rail, an alternative that currently exists and is very competitive with the $1.48 per ton that the shippers wish to protect.
From listening to the shipper's valid concerns and with the goal of minimizing any economic effect, I propose that along with the dam breach alternative, shippers be guaranteed this $1.48 per ton rate. Any rail costs in excess of $1.48 would be rebated to the shippers. Estimates that I have seen suggest this amount will be on the order of 5 to 10 cents per bushel. (more recent data available from a Transportation Report by Ken Casavant shipwhea.htm and BST Associates' affordab.htm).
Remember, the current subsidy is $1.11 per ton. A 5-10 cent per ton rebate would represent a substantial savings and would continue to provide the $1.48 per ton cost that shippers are asking to protect.
Additionally, I would also encourage an extension of Washington State's very successful "Grain Train" program. The program was designed to alleviate the shortage of hoppers in Washington that occurs at peak times when hoppers tend to congregate in the Midwest.
To quote from the June Wall Street Journal report:
"For most Washington farmers and grain elevators, the lack of hoppers means they must rely on trucks and barges to move their wheat -- a more expensive option: A 1996 Washington State University study of the grain trains first year said that rail rates, on average, were about 6.6 cents a bushel lower than the truck/barge mode."
An extension of the "Grain Train" program would ensure hopper availability for shippers.
Breach the Lower Snake River Dams: No economic effect need be felt.
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