ACE Insider - SPECIAL ANNOUNCEMENT

October 20, 2006

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Urgent Message From ACE Regarding On-Time Performance
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The Altamont Commuter Express prides itself in being a premiere alternative
transportation, service-oriented agency. We exist because of the faithful
patronage of our passengers, and we continually strive to make our rail service
the best in its class. However, our on-time performance is not where it needs
to be, and this serious issue needs to be addressed immediately.

As of today, the ACE train is running at 52% on-time for the month of October
and 77% for the year thus far. This is unacceptable considering Union
Pacific’s contractual obligation to dispatch the ACE trains at 95% on-time.
Industry standard allows for a leeway of 5 minutes for scheduled
arrival/departure times. According to ACE’s contract with the Union Pacific
Railroad, “San Joaquin Regional Rail Commission shall have absolute
priority” on the tracks until the trains reach 95%. Due to this detrimental
trend in dispatching, ACE understands the urgency of this matter and the
importance this issue holds for the service to our passengers. We offer the
following information on the reasons for the dip in performance and information
on what ACE is doing to resolve the obstacles.

The Altamont Commuter Express, in a sense, rents track from the Union Pacific
Railroad and is at the control of UP’s dispatching and maintenance. In
addition to signal- and dispatch-related failures, the ACE train experiences a
high amount of slow orders, which, because of poor track and tie conditions,
forces the train to travel at speeds below the normal scheduled speeds. Recent
developments along the ACE corridor have also added to the failing on-time
performance. The ACE corridor has experienced the traditional seasonal increase
in freight traffic. In addition, the new Capitol Corridor schedule has created
additional schedule conflicts for the ACE train.

The above listed challenges to ACE’s on-time performance are no excuse for the
current level of service that our passengers are facing. The San Joaquin
Regional Rail Commission (SJRRC) takes these issues very seriously and is
working to rectify the challenges that stand in our way of achieving at least
95% on-time performance. ACE staff is on the phone daily with UP’s operating
personnel concerning the dispatching of our trains. On Monday, ACE’s Director
of Operations will be meeting with the Union Pacific System Director of
Passenger Operations and the Union Pacific System Director of Dispatching in
order to resolve key issues. The SJRRC will participate in a high-level meeting
that will take place within the next two weeks at the Union Pacific headquarters
in Omaha, Nebraska, between ACE’s Director of Operations and UP’s Senior
Management in order to specifically address ACE operational issues and to
develop a strategic plan to return ACE to positive performance.

The San Joaquin Regional Rail Commission remains appreciative of the tremendous
outpouring of support during this challenging season of adjustment. For updated
information on the status of our negotiations and progress, stay tuned for more
Insider announcements and check out the ACE website for up-to-the-minute
reports.

For updates on ACE’s performance and progress, go to www.acerail.com, or
contact Thomas W. Reeves at thomas@... or (209) 944-6242.




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