Skip to main content

Skip to main content

Access charges review 2000

In this section

Background

The access charges review that was finalised in October 2000 and which took effect from 1 April 2001 was the first full regulatory review of Railtrack's access charges since its privatisation in 1996. The review provided the opportunity for a comprehensive reappraisal of the financial and regulatory framework within which the company operated. 

Scope of review

The Regulator's objective in the access charges review 2000 was to provide Railtrack, and through it, the railway industry and those who fund, use and depend on it, with a sound and fair financial settlement which would enable and incentivise the company to operate the network safely and efficiently and to invest in enhancing its capacity.

The aim of the access charges review 2000 (ACR2000) was to determine the income that Railtrack needed to obtain from charges from franchised passenger services to operate, maintain and renew the existing infrastructure as well as to undertake a certain number of enhancements.

The  review came into effect on 1 April 2001. In general terms, it provided for Railtrack to receive a 50% increase in its allowed expenditure for operating, renewing and maintaining the network.

The review

ACR2000 focused on a number of key areas:
  • The revenue requirement (including consideration of levels of activity and expenditure, efficiency, the cost of capital and financial indicators, the Regulatory Asset Base (RAB), and other single till income);
  • The incentive framework (the structure of charges, operational performance, possessions, the Property Allowance Scheme, station charges, baseline outputs, information reporting, interim reviews and the next review, enforcement and monetary penalties and the enhancement framework); and
  • The enhancement of the West Coast Main Line.

Conclusions of review

The Regulator's final conclusions, published on 23 October 2000 (a few days after the Hatfield derailment), established the revenue Railtrack was entitled to earn from franchised passenger train operators at £14.9 billion (in 1998-1999 prices) for the period 2001-2006 (control period 2), an increase of nearly £5 billion over the first five years from privatisation (control period 1). Together with other income, this gave Railtrack a total of £17.5 billion revenue over the 5-year control period.

Railtrack formally accepted the conclusions of the access charges review 2000 on 15 January 2001.

In the immediate aftermath of the Hatfield derailment, in respect of the period between January and October 2001, the Regulator consistently made clear his view that the immediate focus for Railtrack's senior management should be network recovery. Railtrack confirmed that the cost of the immediate consequences of Hatfield would be borne by its shareholders, and that it intended to approach the Regulator for an interim review to address the longer-term implications of Hatfield, once the picture was clearer and the company had assembled the appropriate evidence to support its case. Railtrack did not however submit an application for an interim review. The circumstances of Railtrack's failure to apply for such a review were explained in the Regulator's oral evidence to the House of Commons Select Committee on Transport on 7 November 2001.

Related documents