The Office of Rail and Road says renewals charges on High Speed 1 should be £12 million less than the line’s operator proposes under the 2019 Periodic Review.
HS1 wants to charge operators £38.2m per year for the five-year Control Period 3, which runs from April 1 2020 to March 31 2025, but the regulator believes that addressing its concerns could bring the final figure down to £26.1m.
In its draft determination published on September 30, the ORR says it proposes to accept the majority of HS1’s proposals, but that it does not accept certain aspects of its plan. These include:
- Deficiencies in the approach to asset management, such as how further sensitivity analysis could be done and how costs could be benchmarked.
- The proposed classification of the planned implementation of European Train Control System signalling as a renewal rather than an upgrade.
- Assumptions for efficiency and productivity.
- Interest rate assumptions.
- How to address underfunding of the escrow account which caters for renewals in Control Periods 1 and 2.
The regulator says addressing these aspects would reduce the proposed annual renewals annuity charge to £26.1m ,which would reduce the proposed increase in the charges paid by train operators.
For the FULL story, read RAIL 889, published on October 9, and available digitally on Android, iPad and Kindle from October 5.