Periodic review 2013: consultation on electricity for traction charges for control period 5

This was a consultation on charges for electric current for traction (EC4T). We consulted on assumed levels of transmission losses for CP5 and how we propose to reform the volume wash-up.

On behalf of its customers, Network Rail is already the single biggest user of electricity in the UK. By the end of CP5, it expects electricity consumption to have increased by around 25% on current levels, which (applying government forecast electricity prices) implies a doubling of expenditure on EC4T. The effect of rising electricity prices increases the need for the rail industry to use electricity efficiently. Promoting more efficient energy use in the railways supports our statutory due to contribute to the achievement of sustainable development. Therefore, it is critical that we have a charging framework in place for electricity usage that incentivises Network Rail and operators to manage electricity as efficiently as possible. We continue to see on-train metering of EC4T as a key enabler of this.

We consulted on a framework for charging for EC4T that:

1. exposes Network Rail to a proportion of the volume wash-up, this is consistent with our view that transmission losses can be efficiently managed by Network Rail, which means that it should be incentivised to manage these costs efficiently in the same way as the other costs that are controllable by Network Rail. This change would also mitigate risks to unmetered operators of inaccuracies in the estimate of transmission losses; and
2. gives operators greater certainty to invest in on-train metering, by fixing particular charges for transmission losses for the whole of CP5 and exempting metered services from the year-end reconciliation of consumption (“the volume wash-up”), irrespective of the proportion of consumption that is metered.