Content archived on 21 October 2020
This letter expanded on the discussion of the capacity charge in chapter 16 of ORR's draft determination of Network Rail's outputs and funding and, in particular, on the proposal put forward by the Rail Freight Operators' Association (RFOA).
The changes in the estimates of the capacity charge resulting from the review conducted as part of PR13 were very material and, since it is undesirable for track access charges to fluctuate significantly from one periodic review to the next from the perspective of industry investment and planning, we concluded in our draft determination that we would not implement the recalibrated capacity charges as part of PR13. We would instead either implement an alternative proposal put forward by the RFOA (possibly applying it also to open access passenger operators and/or franchise passenger operators, having regard to their views on this), or approve capacity charge rates that have been calculated using the methodology established in CP4, uprated for inflation.
The alternative proposal and variants of it were discussed in more depth in this letter, which presented two options for consideration. There are important implications for the incentives on Network Rail and all train operators and we were keen to understand stakeholders' views. Stakeholders were asked to comment as part of their response to the draft determination.