Green light for lower HS1 charges

The Office of Rail Regulation has completed its first periodic review of HS1 (High Speed One) and has endorsed its proposals to reduce both passenger and freight charges in Control Period 2 (1 April 2015-31 March 2020). Domestic passenger charges will be cut by 13%, and international passenger journeys by 12%. Freight charges will be lowered by 34%.

The reductions are subject to provisions that traffic levels keep within prescribed parameters and could be adjusted to accommodate future GSM-R (signalling) improvements.

“These reductions represent a lower cost base and will not result in a loss of revenue,” an HS1 spokesperson told LTT. “CP2 costs are down on CP1 (October 2009 – 31 March 2014): These include a 22% reduction with Network Rail High Speed (our key supplier), and a 16% reduction in operations and maintenance costs. Cost reductions in CP1 have already been passed to operators.”

Projected total HS1 expenditure in CP2 has been set at £408m, and should be covered by access charges of £442m during the same period. Domestic passenger journey will account for more than half with £228.2m; the proceeds from international passenger journeys (£142m), electric traction current (£69.9m) and freight (£1.9m) will fund the rest.

A bench-marking study of ten ‘comparators’  in  Europe and Asia carried out on HS1’s behalf found  – after exceptional factors had been excluded – that during CP1 it had “a cost level 39% higher than average when calculated on a  per line basis, or 14% above average on a per country basis”. This discrepancy is now being addressed.

647/May 14

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