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 PROPOSES TO ADOPT 1.014 (1.4% PER YEAR) AS THE MEASURE OF AVERAGE CHANGE IN RAILROAD PRODUCTIVITY FOR THE 2005-2009 (5-YEAR) PERIOD. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||

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

41416 SERVICE
DATE – LATE RELEASE FEBRUARY 7, 2011 EB SURFACE TRANSPORTATION BOARD DECISION Docket No. EP 290 (Sub-No. 4) RAILROAD COST RECOVERY PROCEDURES—PRODUCTIVITY ADJUSTMENT
Decided: February 7,
2011 We
propose to adopt 1.014 (1.4% per year) as the measure of average (geometric
mean) change in railroad productivity for the 2005-2009 (5-year) period. This represents a 0.2% increase over the
average for the 2004-2008 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. Productivity
change for the year 2009 is 0.984 based on changes in input and output levels
from 2008 and represents a decrease of 3.7% from the rate of productivity
growth in 2008 relative to 2007 (1.021).
Incorporating the 2009 value with the values for the 2005-2008 period produces a geometric average productivity growth of
1.014 for the 5-year period 2005-2009, or 1.4% per year. As the new geometric mean was computed by
replacing the 2004 figure of 0.977 with the higher figure of 0.984 for 2009,
there was a 0.2% increase 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. This decision will not significantly affect the quality of
the human environment or the conservation of energy resources.
1. Comments are due by 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, 2011. By the Board, Chairman Elliott, Vice Chairman Nottingham,
and Commissioner Mulvey. 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 available as the base,
and updating the base by the Series Rail Cost Recovery (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 2009 constant dollar adjustment factor for each of the 6 years was
calculated by dividing the 2009 RCR index value (434.5) by the RCR index values
for 2004 and each subsequent year through 2008, inclusive. The calculation of the input indices and
values used are shown in Table A. The 2009 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
2005-2009 is calculated by taking a geometric mean, which was found to be 1.014
(1.4% per year). The input index, the
output index, the annual productivity change, and the calculation of the
2005-2009 average are shown in Table B.
The 5-year (2005-2009) productivity trend calculated using a geometric
average is 1.014, or 1.4% per year. |