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1999-07-13 ORR-001
Office of the Rail Regulator

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New Rail Regulator voices concern over Railtrack’s plans for freight


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Office of the Rail Regulator
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Office of the Rail Regulator

New Rail Regulator voices concern over Railtrack’s plans for freight
_______________________________________________________________


date
13 July 1999
source Office of the Rail Regulator
type Press release

note ORR/99/27


The Rail Regulator, Tom Winsor, has today told Railtrack that he is not satisfied with its plans for rail freight , as set out in its recently published 1999 Network Management Statement (NMS).

In a letter to Gerald Corbett, Railtrack's Chief Executive, the Regulator says: "The NMS does not convince me that Railtrack has a coherent and deliverable strategy to meet the reasonable requirements of freight operators".

He told Railtrack that his key concerns are:

(a) the robustness of the statements about the availability of capacity for freight;

(b) the absence of any costed options for a freight routing strategy; and

(c) the robustness of the gauging proposals.

He has asked Railtrack to respond to him by 13 August on a set of questions he has asked on these and associated issues. A copy of the letter and the full list of questions is attached.

Notes

1.The Network Management Statement (NMS) is published annually by Railtrack in accordance with its Network Licence. It sets out Railtrack plans for the maintenance, renewal, enhancement and development of the network, over a ten year period, to meet the needs of its customers and funders.

2. Tom Winsor took up the position of Rail Regulator on July 5 1999.



TEXT OF LETTER TO GERALD CORBETT, CHIEF EXECUTIVE, RAILTRACK



13 July 1999

NETWORK MANAGEMENT STATEMENT - FREIGHT

1. ORR has been considering the references in the Network Management Statement to freight, and we have now received responses from freight operators to our NMS consultation. I am now writing to you to set out my preliminary conclusion, and some questions to which I am seeking answers to enable me to consider the next steps.

2. My preliminary conclusion is that the NMS does not convince me that Railtrack has a coherent and deliverable strategy to meet the reasonable requirements of freight operators, which (as Martin Brennan wrote to Robin Gisby on 15 October 1998) would be necessary to demonstrate compliance with its network licence requirements. I am therefore seeking the answers to the questions contained in the Annex to this letter.

3. My key concerns are:

- the robustness of the statements about the availability of capacity for freight;

- the absence of any costed options for freight routeing strategy;

- the robustness of the gauging proposals.

4. Issues specifically related to the West Coast Main Line are not covered in these questions, but are being pursued separately. Similarly, the freight economics issues are being pursued alongside the broader analysis forming part of the Periodic Review process. In the meantime I consider that the validity of the statements made in the NMS about the attractiveness of freight infrastructure investment remains to be determined.

5. I am seeking responses to these questions by 13 August 1999. I am copying this letter to the Deputy Prime Minister, Sir Alastair Morton and Mike Grant. A copy of the letter and your response will be placed in the ORR library, so please in responding indicate which if any information you consider to be commercially confidential. I intend to publish the contents of this letter tomorrow Tuesday 13 July following disclosure to the Stock Exchange at 0730.



THERE FOLLOWS A SERIES OF QUESTIONS FROM THE RAIL REGULATOR IN RESPECT OF

RAILTRACK'S FREIGHT STRATEGY

CAPACITY FOR FREIGHT

1. Railtrack states (page86 of the NMS) that it has confirmed that it can accommodate the forecast demands of its freight customers for at least the next five years across the network. Please explain the basis on which Railtrack has made the statement, covering:

- the analysis and process by which Railtrack has satisfied itself that the statement is true including assumptions about the quality and timing of the paths, the effect on performance, and the impact of growth in demand by passenger operators;

- the extent to which this analysis includes detailed timetabling solutions and, to the extent that it does not, proposals and timescales for refining the analysis;

- the process by which Railtrack has sought to agree that this is a robust conclusion with freight operators and Railtrack's plans for any further work to do this.

2. Railtrack states (page 86 of the NMS) that on 38 of its 45 routes it has committed to its customers that it can carry forecast volumes of freight, together with declared passenger requirements within existing capacity and planned investments for the next ten years. Please explain the basis on which Railtrack has made the statement, covering:

- a listing of the 38 routes;

- the analysis and process by which Railtrack has satisfied itself that the statement is true, including assumptions about the quality and timing of the paths and the effect on performance;

- the meaning of "all declared passenger requirements" and the process by which they have been established (including the role of Railtrack's own forecasts of passenger demand, discussions with train operators and discussions with funders including the Franchising Director);

- the meaning of "planned investments". Please identify any routes where the conclusion would be different if investments over and above those in the £16.4 billion expenditure for sustaining the network were not included;

- the timescale within which it is proposed to have detailed timetabling solutions;

- the process by which Railtrack has sought to agree that this is a robust conclusion with freight operators, and Railtrack's plans for any further work to do this.

3. For the remaining 7 routes please state whether Railtrack will be able, by implementation of the proposals on pages 87 - 88, to accommodate the forecast demands of its freight customers over a five to ten year horizon. Please outline the basis of this statement including:

- a listing of the 7 routes;

- the analysis and process by which Railtrack has satisfied itself that the statement is true, including assumptions about the quality and timing of the paths, known bottlenecks, the effect on performance and the impact of growth in demand by passenger operators;

- whether Railtrack's declared policy (1998 NMS, Robin Gisby's statement at the Regulator's PUG 2 hearing) of providing capacity in advance of demand will be adhered to, and how Railtrack has satisfied itself that the necessary capacity enhancements can feasibly be delivered in the necessary timescale.

4. Please state and explain the analysis Railtrack has carried out of the position in respect of freight capacity over the next 10-25 years.

5. Our understanding of the NMS is that Railtrack has carried out no independent assessment of forecasts of freight demand, and for the purpose of planning has assumed that the level of access charges remains close to the present. Please confirm that this is the case and, if not, please supply any independent assessments of demand made over the past year. To what extent is Railtrack's view dependent on an assessment of the effect of Government transport policies, including road taxation policies, on likely freight demand? Please state the criteria used by Railtrack in making decisions on agreeing access rights to the network and on maintenance renewal and development of the network in respect of freight volumes and access charges, and set out how these are implemented both centrally and at zonal level.

Freight routing strategy (note West Coast Main Line issues covered separately)

6. Please set out the process by which it has been established the East Coast Main Line upgrade proposals will meet freight operator requirements in terms of capacity and capability, and the timescales and content of further work to confirm this. How is it expected that the freight specific elements of the upgrade will be funded? (Please advise separately for those required to maintain existing freight capability, and those providing additional freight capability.)

7. Please state the planned content of the proposals for Felixstowe Port traffic to be produced in July 1999. To what extent have these been discussed with freight operators and to what extent is it expected they will be agreed with freight operators? Please confirm that they will contain costed proposals (covering implications for operators) and indicate the proposed quality of the cost estimates.

8. Please state the process and timescales for the work on London area capacity. What is the timescale for the production of costed options and what will be the quality of the cost estimates?

9. Please state the process and timescales for the Dibden Bay feasibility work. How has Railtrack satisfied itself that this work is sufficiently timely to meet reasonable requirements of customers?

10. Please state the process and timescales for the work on options for freight traffic between the Channel Tunnel and London. How has Railtrack satisfied itself that this work is sufficiently timely to meet reasonable requirements of customers?

11. Please explain the apparent discrepancy between the references in Chapter 7 to the potential use of the Midland Main Line (MML) for freight to be transferred from other routes, and the statements in the Chapter dealing with Route 5 which suggest that the MML is already effectively full at its southern end, and at Leicester, and that infrastructure enhancement is necessary to permit increased use.

12. Please state the process and timescales for Project Elephant which we understand is the project to assess the opportunity for customers to run heavier freight vehicles.

13. Please provide a definition of the term 'priority freight route'. Please explain how this concept is consistent with the presumptions in legislation and the contracts which Railtrack has which give automatic precedence to neither freight nor passenger traffic. What do you consider to be the benefits (and any potential drawbacks) of this approach to routing strategy? To what extent has this approach been agreed with passenger and freight train operators and funders? Please state the process and timescales for the development of costed proposals for priority freight routes.

Gauging

14. Please state the process by which Railtrack has established that the proposals on gauging are consistent with the needs of freight operators and freight users.

15. Please provide the analysis by which Railtrack has established that routes other than West Coast Main Line will require grant funding for clearance to W10 gauge.

16. What is the quality of the cost and timescale estimates in Table D on page 91?

17. Why is there no reference in para 7.5 to the introduction of "piggyback gauge"?.

18. Please indicate whether the information in the charts on pages 56-57 of the 1999 NMS requires to be validated by the full gauging analysis referred to in the footnote on page 57. If so, what is the full extent of Railtrack's current certain knowledge of the gauging capability of its network?

19. Please indicate when Railtrack plans to complete and publish a full gauging analysis of its network containing complete and accurate information on which train operators, rolling stock manufacturers and others may with confidence rely.

Investment in freight

20. Please state the basis on which the definition in table H between investment to be funded by Railtrack and that which is to be funded externally has been made. To what extent have freight operators been consulted on this?

Customer Requirements

21. We note that agreement is outstanding on a number of freight customers requirements, and that this covers a range of significant subjects, including systems development, electric traction capability for Class 92 and double headed Class 86 operation and quality standards for freight-only infrastructure. Please provide a report on the progress Railtrack has made towards meeting all the outstanding requirements, including those not formally in dispute, and indicating the framework within which decisions will be made and expected timescales for reaching agreement.


Railhub Archive ::: 1999-07-13 ORR-001





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