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2014-05-15 RDG-001
Rail Delivery Group

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Rail Delivery Group launches review of track access charges


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Rail Delivery Group

Rail Delivery Group launches review of track access charges
_______________________________________________________________


date
15 May 2014
source Rail Delivery Group
type Press release



The Rail Delivery Group is launching a detailed cross-industry review of track access charges.

The review, which will be carried out in close conjunction with the government, devolved administrations and the Office of Rail Regulation, will enable the rail industry to take a fresh look at how rail operators are charged to run trains on track infrastructure.

It will aim to reduce red tape around track access charges and align the industry’s efforts to improve value for money and performance.

The review team will bring together owners of Britain’s passenger train and freight operating companies with Network Rail, engaging closely with other industry parties, including local transport executives and passenger groups.

The project will be supported by a consortium of experts lead by global economic and finance advisor FTI Consulting including Amey, global law firm Dentons and TRL engineering advisors. The consortium will offer a wide range of economic, regulatory, legal and operational know-how to support the group’s work.

The review is being launched following the Brown review of the Rail Franchising Programme, published in 2013. It recommended a full review of the track access charging regime to be carried out ahead of the rail industry’s next five-year funding period known as Control Period 6 (CP6), which begins in 2019.

Track Access charges are set by the Office of Rail Regulation (ORR) and paid by train operators to Network Rail. They are designed to encourage the industry to use, and develop, the rail network efficiently and to deliver the best value for money. The Brown review concluded the current incentives need revisiting.

The completed study will enable the industry to provide recommendations and industry views to the ORR that will help shape a new framework for track access charges in CP6 and beyond.

The review will explore likely future scenarios around franchising, freight, competition and European and domestic legislation and examine a full range of options for track access charging in the long-term.

Michael Roberts, director general of the Rail Delivery Group which speaks on behalf of the rail industry, said: “The Review of Charges is a good example of how the rail industry is coming together to work on key issues. The review will take a fresh look at the complex structure of access charges to establish how far it can be improved to incentivise better value for money in rail.”

Paul Plummer, Network Rail group strategy director, said: "Network Rail sees the structure of charges as an important question in the context of how we make best use of available capacity and continue to fund further growth in capacity across the network. We are therefore keen to engage with the rest of the industry through the RDG to help inform a debate about this issue."

The first phase of the review will work to define the long-term vision for charges and incentives and will be completed by the summer of 2014. The full Review of Charges work programme is expected to be complete by early 2016.

ENDS

Note to editors

Track Access charges

Track access charges are determined by the Office of Rail Regulation every five years, in a periodic review. The periodic review is a process which determines the outputs Network Rail will need to deliver over the next five-year funding period, taking into account projected capacity requirements, and how much this will cost.

Track access charges are paid by train operators to Network Rail for running rail services on the network. The level at which they are set allow Network Rail to recover costs incurred due to use of the rail infrastructure, but not to charge more than its allowed revenue requirement.

The Brown Review of the Rail Franchising Programme (2013) found there were misaligned commercial incentives in the current charging framework, and recommended that a full review of the track access charging regime was undertaken ahead of the next control period (CP6), which will run from 2019 – 2024.

The ORR’s consultants, Credo, are undertaking a piece of work examining the effectiveness of the current charges and incentives mechanisms. Whilst that work is backward looking, this piece of work is largely forward looking.

The Review of Charges study – key dates

The first phase of the study will work to define the long-term vision for charges and incentives and will be completed the summer of 2014.

The full Review of Charges work programme is expected to be complete by early 2016.

Quarterly workshops will be held to test priorities and gather industry feedback.

FTI Consulting

FTI Consulting is a leading global advisory firm, providing solutions to stakeholders in all areas of interest to public and private bodies and institutions. With more than 4,000 professionals in 26 locations across the world, FTI Consulting operates in five segments: Economic and Financial Consulting (EFC), Corporate Finance, Forensic and Litigation Consulting, Strategic Communications, and Technology.

The Economic and Finance team in the UK, which will be responsible for the RoC assignment, employs more than 100 professionals with expertise in competition and regulatory economics, accounting and finance, providing advice to regulators and regulated companies in energy (power and gas), water, post, airports, telecommunications and rail.


Railhub Archive ::: 2014-05-15 RDG-001





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