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1997-12-10 ORR-001
Office of the Rail Regulator

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Rail Regulator launches review of Railtrack's access charges


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Office of the Rail Regulator

Rail Regulator launches review of Railtrack's access charges
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related documents


Periodic review of Railtrack's access charges: a proposed framework and key issues: a consultation document (ORR, 1997)

1997-12-10 Statement on the Periodic Review of Railtrack's access charges from the office of the Rail Regulator (Railtrack plc)

1997-11-13 Rail Regulator comments on Railtrack's interim results (Office of the Rail Regulator)

1997-08-06 Railtrack investment programme: Regulator publishes proposed new powers (Office of the Rail Regulator)

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date
10 December 1997
source Office of the Rail Regulator
type Press release

note ORR/97/35


The Rail Regulator, John Swift QC, today published a consultation document launching the periodic review of Railtrack's access charges. He said, "The review will be a major exercise between now and 2000. This is the first opportunity for a full assessment of the way these charging arrangements are working in practice, and I want to allow time for full consideration of the issues which will need to be decided, and effective consultation on them."

The consultation document sets out the objectives for the Regulator's review. Mr Swift said : "My overall objective for the review is to establish a financial framework which provides challenging targets for future efficiency and for improvements in network performance and capability, and strikes an appropriate financial balance between Railtrack, its customers and its funders. The periodic review therefore needs to be a full and comprehensive reappraisal not only of Railtrack's access charges but also of the overall framework for regulating Railtrack. The review will also need to identify changes which will promote the objectives of investment, growth and improvements in operating performance that rail users and funders are entitled to expect from Railtrack."

Mr Swift proposes an open approach to the review. "Delivering this objective will require a considerable amount of work, and will involve consideration of possibly radical and innovative changes to the current charging framework. I will want to take into account the views of all relevant parties in reaching decisions, and to be able to explain those decisions. To achieve this, I will want the process to be open and transparent, with much of the analysis published for public scrutiny."

In the consultation paper, Mr Swift notes that establishing the overall level of Railtrack's access charges involves many of the same considerations that have featured in the price control reviews of other privatised network industries, and that the review will need to identify the minimum sums necessary to finance the functions of an efficient operator. He will, for example, need to review Railtrack's forward plans, and take a view on the operating and capital cost efficiencies the company can achieve. In considering the appropriate return on capital, he will need for the first time to consider market evidence on Railtrack's asset value and cost of capital, and whether these point to the need for a further rebasing of charges.

"However, Railtrack has a central and unique position in the railway industry, and its security of income depends on the continuation of payments of substantial public subsidy. So this review will involve Government critically. Achieving a robust financial framework beyond 2001 requires clarity on the improvements in network capability and performance that users and funders expect, and are prepared to finance. Government, and local authority funders of rail services, have a critical role to play in supporting the rail network and in deciding on the volume and pattern of both services and infrastructure they wish to underwrite. I shall, therefore, work with OPRAF, Government and local authority funders in carrying out this review," Mr Swift added. The consultation paper asks for initial responses by 27 March 1998.

"The Periodic Review of Railtrack's Access Charges : A consultation document" is available on-line, and also from Sue MacSwan, ORR Library, 1 Waterhouse Square, 138-142 Holborn, London EC1N 2ST (Tel: 0171 282 2001; Fax: 0171 282 2045; or e-mail orr@dial.pipex.com).

Notes to editors

1. Railtrack owns, operates and maintains almost all the railway infrastructure in Great Britain. It also has a key role in managing safety on the network including safety matters affecting the use of its network by train and station operators.

2. Following his initial review of the structure and level of Railtrack's access charges in 1994, the Regulator approved access charges to Railtrack's network for franchised passenger operators for the period until 31 March 2001. Under the terms set out in these track and station access agreements for franchised passenger operators, the Regulator is required to produce final proposals, on the charges which will apply from 1 April 2001, by 31 July 2000.

3. Under the current regime the Regulator specified the fixed and variable charges in the track access agreements and the station Long Term Charge in the station access agreements. From 1996-97 to 2000-01, these charges fall by 2% a year in real terms (ie RPI-2).

To give the Regulator powers of investigation and enforcement if Railtrack fails to deliver without good reason;
To establish explicit obligations on Railtrack both to consult with train operators and funders and to meet their reasonable expectations to the greatest extent reasonably practicable.
Railtrack has to publish the Criteria it will adopt to comply with the General Duty by 26 December 1997 and, after consultation with train operators and funders, publish its annual Network Management Statement - the form and period of which has to be approved by the Regulator - by the end of March. A reconciliation statement - setting out delivery against plans - must be published by the end of July each year.


Railhub Archive ::: 1997-12-10 ORR-001





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