ORR increases freight access charges

Freight operators could see the variable access charge they pay to run on Britain’s rail network increase by up to 23 per cent under a new directive from the ORR.

The regulator has announced a new package of charges for freight operators to access the network, which will be come into effect from 2016.

The cost of transporting coal for the electricity supply industry (ESI), spent nuclear fuel and iron ore will also increase with the introduction of a new additional charge.

For ESI coal, the charge will be capped at a maximum of £4.04 per 1,000 gross tonne mile (kgtm), for nuclear fuel the charge will be capped at £11.64 per kgtm, and for iron ore at £2.96 per kgtm.

ORR’s director of markets and economics, Cathryn Ross, said: “Today, we have confirmed new charges for freight operators, to be gradually introduced from 2016, which better reflect the costs created by running freight services on the rail network and provide early certainty for business to plan for the future.

“The new charges, capped at manageable levels, will mean freight operators paying, at most, a third of the costs their services create. This will help to ease some of the burden from taxpayers’ and passengers’ shoulders.”

ORR has made some welcome decisions, but the overall package of conclusions does not give the comfort and confidence necessary for rail freight to fulfill its potential in the next five-year period.

Maggie Simpson, RFG

A new maximum cap of £1.68 per 1,000 gross tonne kilometre (kgtkm) has been set on the average variable usage charge that freight operators will pay to access the rail network in Control Period 5 (CP5).

In May 2012, ORR launched a consultation seeking views on charges freight operators must pay to use Britain’s rail network, as part the regulator’s assessment of what Network Rail must achieve during CP5.

ORR’s analysis showed that rail freight traffic creates costs of £280-400 million each year through factors such as the wear and tear on the tracks.

The regulator said that under the current charging structure freight companies only pay a small proportion of those costs, around 21-28 per cent, with passengers and taxpayers covering the shortfall.

Maggie Simpson, Rail Freight Group (RFG) executive director, said: “The rail freight sector is committed to increasing its efficiency and contributing to a lower cost railway. But significant increases in access charges – such as the potential 23 per cent rise for all traffic – risks destabilising the sector and forcing business back to road.

“ORR has made some welcome decisions, but the overall package of conclusions does not give the comfort and confidence necessary for rail freight to fulfill its potential in the next five-year period.

“We will be pressing ORR and Network Rail to ensure that a more satisfactory position can be reached by the summer.”