Dakota, Minnesota

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Dakota, Minnesota Eastern RailroadIowa,
Chicago Eastern Railroad2006 Midwest Regional
ShortlineRailroad Annual Conference
July 18, 2006
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History Of Growth Has Created

• Largest Class II Contiguous Railroad System in
  the U.S.
• 2,500 Miles of Track in 8 States
• 250,000 Carloads of Freight
• 8,000 Freight Cars
• 150 Locomotives
• 1,000 Employees

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DME/ICE Ethanol Plants

• Production Capacity
• (Millions of Gallons)
• 6 Existing Plants 265
• 4 Building/Expanding Plants 235
• Subtotal 500
• 7 Announced Plants 600
• 10 Potential Plants 900
• Total Potential 2,000

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DME/ICE Considerations for Prospective Ethanol
Plants (Continued)

• Is existing rail infrastructure adequate to
  support the potential traffic
• Is there a reasonable expectation of success
• Number of plants in close proximity - too many
  plants in too small an area can create a problem
• What is the quality of the business plan and do
  the investors understand the business and its
  risks
• Effect on current customers

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DME/ICE Considerations for Prospective Ethanol
Plants (Continuation)

• Rail Infrastructure Required
• Must have adequate track/yard capacity to store
  private rail equipment, as well as allow
  switching of all commodities.
• Must be able to clear the mainline track quickly
• Must have ability to weigh rail shipments
  (potential overloads)

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DME/ICE Considerations for Prospective Ethanol
Plants (Continuation)

• Track Designs
• Minimize road crossings
• Minimize rail grade issues
• Locate switches on straight track
• Sufficient trackage for locomotives and railcars
  to clear mainline track
• Safety clearances at road crossings

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DME/ICE Considerations for Prospective Ethanol
Plants (Concluded)

• Logistical Considerations Involved
• Single car versus unit train service
• Targeted markets and anticipated rail car cycle
  times drives fleet sizing issue
• Rail car ownership/supply issues
• Private vs railroad
• Lead times for new rail equipment
• Implications on existing railroad grain car fleet
  sizing

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Track Capital Expenditures

• 3-Year Average of Track Capital Expenditure
  Dollars as a Percentage of Total Revenue
• DME/ICE 23
• Class Is 13

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DME/ICE Significant Track Projects2004 2006
Construction Years

• 210 miles of new 136 lbs continuous welded rail
• 580,000 ties installed
• 650,000 tons of ballast
• 2,600 miles of track surfaced
• 6 new or extended passing tracks

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Powder River Basin Expansion and Rehabilitation
Project

• 280 miles of new main line construction
• 600 miles of rebuild of DME existing main line
• Construction cost 2 billion
• Construction timeline 3 seasons
• 100 million tons of new capacity

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Rehabilitated Rail Advantages (Continued)

• Better service to ethanol and agricultural
  customers
• Improved safety
• Faster trains (customer efficiency traffic
  improved)
• Quieter trains (CWR, wayside noise)
• Reduced truck traffic less highway deterioration
• Greater reliability of rail service

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Rehabilitated Rail Advantages (Concluded)

• Improved grain prices
• Energy efficiency
• Expanded market reach
• Long-term infrastructure stability
• Economic Development
• Existing customer expansion
• New customer additions

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Supporters of PRB Expansion and Rehabilitation
Project

• 55 out of 56 communities on the line support
• Agreements with majority of landowners
• Current shippers
• Agriculture community (local, state national)
• Business economic development community
• Energy industry (on and off line)
• National organizations
• State Federal political leaders

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GOTRAC Support Organization Formed

• Growth Opportunities Through Rail Access
  Coalition
• GOTRAC has nearly 90 members that actively
  support the PRB expansion and rehabilitation
  project.
• Communities
• Economic Development Organizations
• Shippers
• Associations Trade Organizations

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Summary (Continued)

• Rebuilt DME/ICE Railroad system provides growth
  opportunities for agriculture and rail-served
  industries
• Will correct decades of railroad track deferred
  maintenance
• Ensure long-term rail viability at higher
  standards of performance and service

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Summary (Concluded)

• Will allow continued expansion of ag processing
  and related industries major growth area for
  rail industry
• Will improve competitive transportation options
  for our customers and improve financial returns
  for all stakeholders