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PR13 closed consultations

Full list of closed consultation documents and responses

In July 2013, we appointed Steer Davies Gleave to review our spreadsheets that calculate the charges for Control Period 5 (1 April 2014 to 31 March 2019), and the spreadsheets used to determine the Network Rail Schedule 8 benchmarks in CP5.

Steer Davies Gleave reviewed the spreadsheets for correctness of calculations and fitness for purpose. The final report is available at the link below.

Steer Davies Gleave final report – Review of income and Schedule 8 benchmark models (PDF, October 2013)

Capacity charge

The capacity charge allows us to recover additional costs beyond the Schedule 8 baseline due to the increased difficulty of recovering from incidents of lateness as the network becomes more crowded. Therefore, the charge helps neutralise the increased Schedule 8 risk to Network Rail of accommodating additional traffic.

This is a regulated charge which is approved and fixed by ORR at each periodic review for the forthcoming control period.

Coal charges

The coal spillage charge (CSC) and the coal spillage reduction investment charge (CSRIC) are freight-specific track access charges that were introduced as part of the 2008 Periodic Review (PR08). Both charges are levied as a mark-up on the variable usage charge on freight traffic carrying coal, and equate to approximately 10 per cent of total income to Network Rail from freight operators.

The coal spillage charge recovers the cost impact of coal spillage on the network, and the coal spillage reduction investment charge finances a fund that can be used to invest in equipment at coal terminals in order to reduce coal spillage on the network.

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On 11 January 2013 we presented an overview of the variable usage charge consultation to stakeholders at the monthly variable track access charges developments meeting.
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Following the publication of our consultation, ORR and Network Rail commissioned the independent reporter, Arup, to review the methodology and assumptions used to calculate our initial estimate of the cost impact of coal spillage on the network.

Fixed track access charges

Fixed track access charges (FTAC) are payable by franchised passenger operators and recover our net revenue requirement. The net revenue requirement is the revenue required to run our business, after accounting for the income we expect to receive from charges, other single till income and the network grant.

Freight specific charge

In May 2012 the Office for Rail and Road (ORR, then the Office of Rail Regulation) consulted on introducing a new freight-specific charge that would recover freight avoidable costs that are not currently recovered through existing track access charges.

In its January 2013 decision document, the ORR decided that it would introduce this new charge during Control Period 5 on certain rail freight market segments. It also stated that it would make a decision on whether to levy a freight specific charge on biomass, and consulted on its proposals to do so.

In its conclusion document the ORR requested that we consult on the phasing in of the freight specific charge during Control Period 5. We do this in this consultation. In addition, we discuss the following issues:

  • Putting a cap on average freight variable usage charge rates
  • Updating our freight avoidable cost estimate
  • Remedying the spent nuclear fuel charge rate error
  • Updating our freight-only line cost estimate
  • The interaction between the freight-only line charge and the freight specific charge
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To inform the ORR’s decision on the freight specific charge, we commissioned LEK Consulting (LEK) to estimate and allocate freight avoidable costs between freight market segments. Freight avoidable costs are defined as the long-run average annual cost saving that would result from removing commercial freight traffic from the network on a permanent basis.
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ORR and Network Rail appointed the independent reporter Arup to review key aspects of LEK’s estimate of freight avoidable costs.
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In May 2013, the Rail Freight Operators’ Association wrote to the ORR and Network Rail regarding LEK’s report on freight avoidable costs.

Schedules 4 and 8

Schedule 4 of the track access contracts between Network Rail and train operators sets out the arrangements for compensation paid to operators when Network Rail takes possession of the network.

The Schedule 8 performance regime is designed to compensate train operators for the financial impact of poor performance attributable to Network Rail and other train operators by ensuring the financial impact of performance on revenue and/or costs is incurred by the organisation the disruption is attributable to.

Station charges

The station long-term charge allows us to recover the efficient maintenance, renewal and repair costs associated with the stations we own.

This is a regulated charge which is approved and fixed by ORR at each periodic review for the forthcoming control period.

Structure of charges for charter operators

Charter services are typically one-off, bespoke operations, rather than regular passenger services. Due to the bespoke nature of charges for charter operators, we did not propose revised charge rates in our other conclusions documents to ORR. Rather, we set out our proposed approach in this letter, ahead of ORR’s Draft Determination in June 2013.

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In our August 2013 conclusions document we stated that we would further consider EC4T charges and charging for light locomotive movements for charter operators. This document sets out our proposals in relation to these.
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On 23 August 2013, the ORR published its draft conclusions document regarding the structure of charges for charter operators in CP5.

Traction electricity

As part of the ORR’s October 2013 consultation on implementing the EC4T cost reconciliation, Network Rail issued a note which suggested changes to the legal drafting. This is available at (the ORR’s website).

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In December 2013, Network Rail issued a clarification note which sets out some updated legal drafting.
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In January 2014, we wrote to charter operators setting out the proposed methodology to calculate a rate for their use of EC4T.

Traction electricity and electrification asset usage charges full consultation (closed 12 October 2012)

Around 50 per cent of traffic operated on the GB rail network is electrically powered. Traction electricity charges recover the costs of electricity supplied by us to train operators for their use of traction electricity. Electrification asset usage charges recover the variable costs of maintaining and renewing electrification assets.

These are regulated charges which are approved and fixed by ORR at each periodic review for the forthcoming control period.

Variable usage charges

Variable usage charges are designed to recover our operating, maintenance and renewal costs that vary with traffic.

The charges ensure that we recover the wear and tear costs that result from additional traffic on the British rail network. These are regulated charges which are approved and fixed by the ORR at each periodic review for the forthcoming control period.

Variable usage charge consultation (closed 11 January 2013)

This consultation was issued with several supporting documents. Serco also conducted Vehicle Track Interaction Strategic Model (VTISM) analysis to inform the allocation of variable usage costs to individual vehicles.

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Network Rail presentation slides for Variable Usage Charge (May 2013)
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Following publication of the Variable Usage Charge conclusions document, ORR wrote to Network Rail, requiring it to provide ORR with information about how the SERCO work on the Variable Usage Charge (VUC) would impact charges if it were adopted in CP5
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On 7 December 2012 we held a Vehicle Track Interaction Strategic Model (VTISM) workshop where Serco gave an overview of VTISM and held a tutorial
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Morgan Tucker was commissioned by freight operators to review our initial estimate of Control Period 5 variable usage costs. We wrote to the ORR in response to this report
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We also wrote to the ORR to set out in more detail our ‘top down’ cost variability assumptions

Freight caps consultation (closed 27 January 2012)

We issued this consultation to inform the ORR’s decision in relation to placing an early cap on freight variable usage charges. The costs estimates provided in these documents inform the variable usage charge consultation.

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