The Surface Transportation Board on Wednesday ordered BNSF Railway to pay $345 million in damages and rate relief to two utilities that had challenged rates for hauling coal from mines in Wyoming. The board said it was its single largest award to a captive shipper.

Western Fuels Association Inc. and Basin Electric Power Cooperative Inc. had challenged rates charged by BNSF for hauling 8 million tons of coal each year from mines in Wyoming's Powder River Basin to an electric-generating plant in Moba Junction, Wyo.

The utility plant is captive to Burlington Northern (BNI) unit BNSF and provides electricity to grids that serve consumers in Colorado, Iowa, Minnesota, Montana, Nebraska, New Mexico, North Dakota, South Dakota, and Wyoming, the Surface Transportation Board said.

The board found the railroad's transportation rates to be unlawfully high and ordered the company to lower the rates by 60%.

BNSF is obligated to promptly reimburse the utilities for about $100 million in overcharges from 2004 through 2008. The exact amount of damages will depend on the volume of coal transported from the various Powder River Basin mines between 2004 and 2008. Following usual practice, the board instructed the parties to resolve the precise amount of damages due the utilities and bring any disputes to the board's attention for resolution.

"Today's unanimous and bipartisan decision demonstrates the board's commitment to delivering strong regulatory oversight over the freight rail market when necessary to protect captive shippers from monopoly pricing," board Chairman Charles D. Nottingham said in a statement, adding that electricity customers have been "bearing the burden of these unreasonably high transportation rates in their monthly electric bills."

-By Josh Mitchell, Dow Jones Newswires; 202-862-6637; joshua.mitchell@dowjones.com