The Pennsylvania Public Utility Commission’s General Assessment Factor for the Railroad Transportation Group dropped about 10.5% this fiscal year over last, with payments on each $1,000 of intrastate revenue dropping from $15.08 to $13.47.  At the same time, the industry assessment factor in the current fiscal year is about the same as it was in 2007-2008, when the assessment factor was $13.23 for each $1,000 in intrastate revenue.

The railroad assessment factor had substantially increased in 2007-2008 over the prior fiscal year, when the Transportation Public Utility Group was divided into three separate groups, Railroad, Motor Carrier Passenger and Motor Carrier Property.  Each group received a different General Assessment Factor, based on the allocated share of Commission expenditures attributable to that group and each group’s gross intrastate operating revenues.  That division resulted in an approximate 350% increase in the assessment factor for railroads in 2007-2008.  After multiple lawsuits were filed against the PUC over the increase, the PUC provided a one time, one-third refund of assessment payments made by railroads for that fiscal year.

Since 2007-2008, assessment rates have ranged from a high of $15.42 per each $1,000 in intrastate revenues in 2008-2009 to a low of $9.14 in 2009-2010.  These assessments are the estimated costs for the PUC to regulate the railroad industry group in the upcoming fiscal year, based upon actual costs for the prior fiscal year, divided among railroads based upon each company’s prior calendar year intrastate revenues.

The amount that each utility group is assessed is a product of a several stage process.  First is the overall PUC budget, which dropped from about $58 million to $57 million this fiscal year.  The overall budget costs are then divided among each utility group, based upon the specific cost to regulate them in the prior fiscal year and a proportionate distribution of general costs.  That percentage distribution for the railroad group fell from 3.80% of the overall PUC budget last fiscal year to 3.54% of the overall budget this year.  The percentage distribution is then applied to the overall PUC budget for the upcoming fiscal year and yields the estimated expenditures for that group.  That amount dropped from about $2.2 million last fiscal year to about $2 million this fiscal year.

The estimated expenditures for the railroad group are then divided by the actual intrastate revenues for that group in the prior calendar year (as reported to the PUC by each railroad) to yield the General Assessment Factor.  The factor is applied to each individual company’s gross intrastate revenues to yield what that railroad will pay in assessments for the upcoming fiscal year.  That factor fell from 0.015083557494 last fiscal year to 0.013467352176 this fiscal year.

As the assessment payments are based upon each railroad’s intrastate revenues, the system will disproportionately affect railroads deriving more of their revenue from intrastate shipments.  The amount of intrastate revenues reported to the PUC by railroads fell from $150 million to $146 million from calendar year 2010 to 2011.  However, in spite of this, the General Assessment Factor for railroads still fell due to lower estimated expenditures by the PUC to regulate the group.

The manner in which these assessments are made is set by statute.  Any change would affect not only railroads, but electric, water, gas and all other utilities.  The Assessment Factor Rates applied to railroads since the 2004-2005 fiscal year are as follows:

            Fiscal Year                               Factor

            2012-2013                               0.013467352176

            2011-2012                                0.015083557494

            2010-2011                                0.014018163397

            2009-2010                               0.009141414491

            2008-2009                               0.015416692482

            2007-2008                               0.013233911957

            2006-2007                               0.002955350628

            2005-2006                               0.003124306985

            2004-2005                               0.003899408218