REG - Office of Rail&Road High Speed Rail Fin1 - HS1 Ltd told to lower charges for train operators

HICL InfrastructureAnnouncement

06/01/2025 08:15

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RNS Number : 1605S  Office of Rail and Road  06 January 2025

 

Rail Regulator orders HS1 Ltd to further lower charges for train operators

The Office of Rail and Road announced today that it is directing HS1 Ltd to
lower its charges for passenger and freight train operating companies to use
the high speed rail line from London to the Channel Tunnel, from April 2025.

The regulator's decision, published in its Final Determination of HS1 Ltd's
spending plans for the next five years, follows a thorough review of the
company's proposals, which had already proposed some reductions in costs
relative to today.

The regulator has determined that overall charges should come down by 3.8%
(£5m per year) compared to HS1 Ltd's latest plans, which were published in
November as a response to the regulator's Draft Determination in September. As
part of this, the company is being directed to reduce its charges for renewing
its track assets and its stations, including St Pancras. It must also reduce
its charges for its day-to-day operating and maintenance of the railway.

ORR was able to identify specific areas in the company's spending plans where
further improvements can be made, resulting in savings to passenger and
freight train operators. ORR's view is that better management of the track and
station assets can result in lower charges, ultimately benefiting customers.

In its response to the Draft Determination, HS1 Ltd disagreed with the amount
of ORR's proposed reductions in charges. The regulator took additional
evidence from HS1 Ltd and other stakeholders into account, but ultimately
determined that the company's spending plans did not meet its duties for
efficient spending.

Feras Alshaker, director, planning and performance, said: "Our thorough,
independent review of HS1 Ltd's spending plans has resulted in significantly
lower costs for passenger and freight train operators using the high speed
line from April 2025. Although, overall, HS1's original plans were good, the
company must now change specific areas of those plans to account for our
decisions, which should benefit everyone who uses this railway."

Notes to editor

1.         ORR's PR24 Final Determination
(https://www.orr.gov.uk/media/26478)

2.         Regulated charges - comparison between last control period,
HS1's latest plans and ORR's final determination:

 £m / year (Feb 2023 prices)           Last control period (CP3)    HS1 Ltd's latest plans    ORR Final Determination    Change from CP3 to FD
 Route Operations & Maintenance        95.8                         92.4                      90.1                       -5.9%
 Route renewals                        34                           29.9                      28.1                       -17.4%
 Stations renewals                     11.6                         9.3                       8.5                        -26.7%
 Total regulated income                141.4                        131.6                     126.7                      -10.4%

 

3.   ORR's review found that HS1 Ltd's latest plans did not meet its General
Duty under the HS1 Concession Agreement. As such, we are instructing HS1 Ltd
to make material changes in two key areas:

a.   Its charges for renewals were not efficient and HS1 Ltd must reduce
them by £1.9m per year for the HS1 Route and £0.9m per year for Stations;

b.   Its charges for operations & maintenance on the HS1 Route were not
efficient and HS1 Ltd must reduce them by £2.3m per year.

4.   Passenger and freight operator growth

a.   ORR's determination assumes there will be no freight traffic on HS1 in
this control period, based on information provided by HS1 Ltd and freight
operators. However, we have determined the charges which would apply to
freight on HS1, and these charges are significantly lower than in previous
control periods, which we expect to support the growth of freight.

b.   While ORR's determination is separate from decision on access to HS1,
it assumes long-term growth in passenger traffic, including the introduction
of new operators, and ORR hopes that its determination of lower charges will
support this growth.

5.   About the periodic review process:

a.   The periodic review 2024 (PR24) of HS1 Ltd covers funding for the
period from 1 April 2025 to 31 March 2030, also known as control period four
(CP4).

b.   ORR issued its Draft Determination on 30 September, followed by a
6-week consultation. In response, stakeholders provided feedback and new
evidence which supported ORR's approach and HS1 Ltd was required to revise its
plans to reflect the Draft Determination, which it did not fully do. Where ORR
found its plans were not acceptable, it consulted stakeholders again from
12-19 December and took any new evidence into account in developing its Final
Determination.

6.   About the HS1 Network:

a.   The HS1 network is a 109km high-speed rail line that connects London St
Pancras through Kent to the Channel Tunnel.

b.   There are four stations on the line: London St Pancras, Stratford
International, Ebbsfleet International and Ashford International.

c.   The network is used by domestic Southeastern 'Javelin' services between
London and Kent and within Kent; and Eurostar passenger trains, as well as
freight operations heading to and from the Channel Tunnel.

 

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