Regulatory accounts

The regulatory accounts of Railtrack/Network Rail prior to the periodic review final conclusions were of very limited use to either the then Office of the Rail Regulator (ORR) or investors. In particular, the level of information that they gave was clearly inadequate to provide ORR and investors with adequate information on how the company was performing against the assumptions made at the time of privatisation, and thus inform the periodic review.

A new licence condition was introduced on 11 April 2001 which required the network operator to provide more detailed and disaggregated information in a way which is consistent with the approach and assumptions adopted in the periodic review. The company is also now required to provide an explanation of material variances between the periodic review assumptions and what actually happens in terms of expenditure and revenue in particular areas. This will help to establish whether these variances are due to differences in the companys efficiency, prices or outputs.

Railtrack delivered the first set of regulatory accounts, for 2001/02, to ORR on 29 November 2002.

On 11th July 2003 ORR issued updated regulatory accounting guidelines (including template financial statements) and a covering letter to Network Rail. The updating was necessary to bring the accounts in line with the structure of the interim review, especially the presentation of the regulatory asset base. The 2002/03 regulatory accounts can be found on Network Rail's website.

Network Rail's licence was further modified in July 2004 to ensure that the regulatory accounts will include financial information on their proposed new financing company Network Rail Infrastructure Finance.