Rail cost of capital fell slightly in 2012



The Surface Transportation Board announced Friday, Aug. 2, 2013, that it has determined that the rail industry’s after-tax cost of capital was 11.11%. Last
 year, the cost of capital was 11.57%.

The cost of capital represents the STB’s estimate of the average rate of
 return needed to persuade investors to provide capital to the freight rail
 industry. STB said 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. 16) is available at the
STB website at www.stb.dot.gov.