Monday, May 24, 2010

NS: PTC mandate accelerates track spending

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Meeting the federal government's mandate for installing positive train control by the end of 2015 requires spending that goes far beyond implementation of the technology itself.

In a form 10K filed with the Securities and Exchange Commission, Norfolk Southern identifies PTC and related costs and puts them into the context of total capital spending requirements.


“NS expects total capital expenditures for 2010 to be approximately $1.44 billion,” the filing said. “Furthermore, the railroad expects the implementation of positive train control to result in additional capital expenditures of $700 million in the years 2011 through 2015. In addition, $400 million of upgrades to systems and track structure, required for the implementation of PTC, will be accelerated from future years’ spending.”

Earlier this year NS CEO Wick Moorman said that while PTC is a “great technology,” the unfunded federal mandate “could ultimately mean that we will not be able to invest in other areas, some of which conceivably have as much or more of an impact on safety operations as PTC.”

Railroads also warn that without help on PTC, they may have to divert money from vital capacity projects. NS updated two of these in its 10K report.

One is the federally backed CREATE initiative to ease congestion and add rail capacity in metropolitan Chicago, now in is early stages. A total of $321 million in federal finding and $100 million from the railroads has been pledged; much more is needed.

The other is the NS’s Crescent Corridor Project to create a truck-competitive, high-capacity rail intermodal corridor along Interstate highways in 11 states. NS is working through a series of public-private partnerships. State and federal commitments already total $150 million, with NS currently funding up to $133 million, including $42 million in this year’s capital budget. 

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