Bloomberg News

Burlington Northern Rates Get U.S. Review After Buffett Takeover

September 28, 2011

Sept. 28 (Bloomberg) -- Burlington Northern Santa Fe, purchased by Warren Buffett’s Berkshire Hathaway Inc. last year, is facing scrutiny by the U.S. government after complaints that the railroad tried to pass on $7.6 billion in acquisition costs to shippers.

The Surface Transportation Board said today it will examine regulatory effects of the price Berkshire paid for Burlington Northern, including the railroad’s rates. Coal shippers said earlier this year that Fort Worth, Texas-based Burlington Northern is seeking to use government accounting methods to recoup some of Berkshire’s costs from railroad customers.

“We’re looking at what effects the purchase of Burlington Northern Santa Fe by Berkshire” could have on regulations and shipper rates, said Eric Weiss, a spokesman for the government agency.

Entergy Corp. and 15 other electric utilities said the company would be able to raise rates and make challenges more difficult if its regulator allows some of the acquisition cost over book value to be part of Burlington’s rate-cost base.

Executives of six other utilities and their coal supplier wrote to Buffett on May 12, saying Burlington’s effort “is not consistent with Berkshire’s values and its historic reputation for making fair and moral business decisions.” The six utilities estimate their rates would increase $34 million over 13 years.

A Burlington Northern spokeswoman couldn’t immediately comment.

--With assistance from Lisa Caruso in Washington, D.C. Editors: James Langford, Bernie Kohn

-0- Sep/28/2011 17:47 GMT

To contact the reporter on this story: Natalie Doss in New York at ndoss@bloomberg.net

To contact the editors responsible for this story: Ed Dufner at edufner@bloomberg.net Bernie Kohn at bkohn@bloomberg.net


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