Advisory support on 2013 Periodic Review

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Client Office of Rail Regulation (ORR)
Dates 2013
Service(s)Policy & Economics, Review & Evaluation, Strategy & Finance

Gaynor Mather, CEPA Associate Director, was seconded part-time to the ORR to provide senior level oversight on aspects of the 2013 Periodic Review.

ORR's objective for the charging review was that access charges become more reflective of the impact that each user of the network has on the infrastructure. Although the overall approach/structure of charges was not changing this objective was at the centre of the review of each existing charge and formed the basic criterion for new freight charges.

Gaynor reported on findings to the ORR Board and attended Board discussions in the following areas of work:

  • Reviewing existing charges and designing new charges e.g. the freight specific charge, better to recover a greater proportion of freight’s cost impact on the rail network. The charge implemented in the direction is directed at those sectors of the freight market where demand for railway access is inelastic.
  • Considering the case for levying additional charges on new commodities such as biomass, which is a growing market segment
  • Considering the cumulative impact of the overall charging review on rail market segments; considered especially important for freight where profit margins are small.
  • Considering wider market impacts e.g. the effect of the charging review on industry e.g. Scottish coal where freight charges might adversely affect the viability of coal fields and local economies

In addition to supporting the review of charges, Gaynor worked on a range of wider issues covered by the price control such as:

  • Building on earlier work for ORR, reviewing the efficiency proposals developed by Network Rail as part of the strategic business plan. As part of this Gaynor contributed to benchmarking of Network Rail’s costs including the re-establishment of earlier route based international analyses that covered Network Rail, Sweden, France and Italy.
  • Undertaking ad hoc analyses of components of the Strategic Business Plan including preparing for the ORR Board an analysis of the robustness of the plan to further economic shocks and comments on overall deliverability.

Gaynor also worked with the ORR team in 2014 to design the first HS1 concession price control, in a manner which respected the existing contractual arrangements. Gaynor drew upon previous experience of designing regulatory regimes around PPP contracts to assist with the development of a process, ensuring proportionality and consistency with the contract. Gaynor also advised on benchmarking of HS1's performance against peer high speed railways.