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>From the Surface Transportation Board, Washington, D.C.
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The Surface Transportation Board announced today that it has issued its
decision calculating the railroad industry's cost of capital for 2011.
In
Railroad
Cost of Capital—2011
,
Docket
No. EP 558 (Sub-No. 15), the Board found that the rail industry's
after-tax
cost of capital was 11.57 percent. Last year, the cost of capital was
11.03
percent.
The
cost-of-capital
figure represents the Board's estimate of the average rate of return
needed
to persuade investors to provide capital to the freight-rail industry.
Calculated
annually, the cost-of-capital figure is an essential component of many of
the
agency's
core regulatory responsibilities. The Board uses the cost-of-capital
figure
in evaluating the adequacy of individual railroads' revenues each year. It
also
uses
the
figure
when determining the reasonableness of a challenged rail rate, considering
a
proposal
to abandon a rail line, or valuing a particular railroad operation.
The
Board's
decision in Docket No. EP 558 (Sub-No.
15)( http://www.stb.dot.gov/decisions/readingroom.nsf/WebDecisionID/42502?OpenDocument )
is
available
at the Board's website at
www.stb.dot.gov
.
###
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