R A I LT R AC K - The Railways Archive

1.4
1.4 Context
The periodic review of Railtrack’s access charges
The Rail Regulator has a statutory duty ‘not to make it
unduly difficult’ for Railtrack to finance its activities.In turn,
we must ensure that we meet the reasonable requirements
of our customers and funders and satisfy our stewardship
obligations for the network.
This is our fourth Network Management Statement and
the second produced under Licence Condition 7.Although
the NMS is produced annually, the context of the 1999 NMS
is rather different.It represents a Strategic Business Plan on
which the Rail Regulator is to make decisions on access
charges for the five years from April 2001.
The periodic review involves key decisions on future
track access income and investment.Broadly, the more track
access charges are reduced,the less our ability to fund a
growing programme of investment.Uniquely among
regulated utilities,reductions in access charges (through the
‘RPI-X’ formula) do not affect our direct customers (train
operators),or end users (passengers) but are passed back to
the Franchising Director, and can either be used to reduce
overall Government support for the industry or be
reinvested in network development.
We will follow up the NMS with a submission on
detailed projections of capital and operating-cost
expenditures,together with income forecasts.These will be
used to inform the Rail Regulator’s decisions on allowed
revenue and access charges for the next Control Period.
It will be up to the Franchising Director and the
Shadow Strategic Rail Authority, in light of the NMS,to
advise the Government on national priorities for
development of the network and the prioritisation of
schemes for support on social grounds.
Our aspirations for the periodic review can be summarised as:
• alignment of growth and performance incentives
between Railtrack and its customers.
• a financial framework with incentives for Railtrack to
take greater commercial risk in developing the network.
• an agreed framework for remunerating different types of
enhancement projects which allows us to initiate such
schemes to develop the network to meet customer and
funder requirements.
• a well-specified regulatory contract which focuses on the
outputs to be delivered for the period 2001–06.
The Rail Regulator expects to reach provisional conclusions
in December 1999,and finalise these in summer 2000.The
2000 NMS will set out the implications of the Regulator’s
draft conclusions for investment and outputs to be delivered
over the ten years from 2001.It will be important to ensure
that the outcome of the review provides flexibility to
accommodate enhancement proposals that emerge from
Account Plans and the development of Route Strategies
during the next Control Period.
The more track
access charges are
reduced, the less
our ability to fund a
growing programme
of investment
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