SURFACE TRANSPORTATION BOARD DECISION DOCUMENT | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||

Decision Information | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||

Docket Number: | EP_290_4 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||

Case Title: | RAILROAD COST RECOVERY PROCEDURES-PRODUCTIVITY ADJUSTMENT | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||

Decision Type: | Decision | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||

Deciding Body: | Entire Board | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||

Decision Summary | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||

Decision Notes: | DECISION ADOPTED AN AVERAGE PRODUCTIVITY CHANGE IN VALUE OF 1.0% PER YEAR FOR THE 2004-2008 AVERAGING PERIOD, WHICH IS A 0.5 OF A PERCENTAGE POINT LOWER THAN THE CURRENT MEASURE THAT WAS DEVELOPED FOR THE 2003-2007 PERIOD. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||

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Full Text of Decision | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||

40537 SERVICE
DATE – FEBRUARY 1, 2010 EB SURFACE TRANSPORTATION BOARD DECISION STB Ex Parte No. 290 (Sub-No. 4) RAILROAD COST RECOVERY PROCEDURES—PRODUCTIVITY ADJUSTMENT Decided: January 26,
2010 We
propose to adopt 1.010 (1.0% per year) as the measure of average (geometric
mean) change in railroad productivity for the 2004-2008 (5-year) averaging
period. This value represents a 0.5%
decline from the current measure of 1.5% that was developed for the 2003-2007
period. Since
1989, the cost recovery procedures have required that the quarterly rail cost
adjustment factor (RCAF) be adjusted for long-run changes in railroad
productivity. The ICC Termination Act of
1995 continues this requirement. Productivity change for the year 2008 is 0.997 based on
changes in input and output levels from 2007, representing a decrease of 2.1%
from the rate of productivity growth in 2007 relative to 2006 (1.018). Incorporating the 2008 value with the values
for the 2004-2007 period produces a geometric average productivity growth of 1.010
for the 5-year period 2004-2008, or 1.0% per year. As the new geometric mean was computed by
replacing the 2003 figure of 1.019 with the lower figure of 0.997 for 2008,
there was a 0.5% decrease in the geometric mean from last year’s value. A detailed discussion of our calculations is
contained in the Appendix to this decision. Comments
may be filed addressing any perceived data and computational errors in our
calculation. Any party proposing a
different estimate of productivity growth must, at the time it files comments,
furnish the Board with one set of detailed workpapers and documentation
underlying its calculations. The same
information must be made available to other parties upon request. This decision will not significantly affect the quality of
the human environment or the conservation of energy resources.
1.
Comments are due by
February 22, 2010. 2.
An original and 10
copies must be filed with: 395 E Street, S.W. 3.
Comments must be
served on all parties appearing on the current service list. 4.
Unless further order
is issued postponing the effective date, this order becomes effective on March
1, 2010. By the
Board, Chairman Elliott, Vice Chairman Mulvey, and Commissioner Nottingham. APPENDIX The
following is a description of the methodology currently used to calculate the RCAF
productivity adjustment. The input
index uses constant dollar-adjusted expenses.
The inputs in this index—freight expenses, fixed charges and contingent interest—are
stated on a constant dollar basis using the most recent year as the base, and
updating the base by the Series RCR Index published by the Association of
American Railroads. Freight expenses,
fixed charges, and contingent interest were obtained from railroad Annual
Report (Form R-1) data. The constant
dollar adjustment factor for each of the 6 years was calculated by dividing the
2008 RCR index value (472.7) by the RCR index values for 2003 and each
subsequent year through 2007, inclusive.
Because 2008 is the last year in the trend, no constant dollar
adjustment was needed for that year. The
calculation of the input indices and values used are shown in Table A. The 2008
output index was developed from the costed waybill sample, a commonly used data
source. The costed waybill sample
excludes movements originating in Using the
costed waybill sample as a base, each movement is assigned to one of the
189 segments or categories used to develop the output index. Segmentation is based on three mileage
blocks, seven car types, three weight brackets, and three shipment sizes. The output index is a composite of the
year-to-year change in ton-miles for each of the 189 segments weighted by each
segment’s base-year share of total revenues.
The
change in productivity is calculated by dividing the output index by the input
index. The multi-year average for the
period 2004-2008 is calculated by taking a geometric mean, which was found to
be 1.010 (1.0% per year). The input
index, the output index, the annual productivity change, and the calculation of
the 2004-2008 average are shown in Table B.
The
5-year (2004-2008) productivity trend calculated using a geometric average is
1.010, or 1.0% per year. |