Train operators using High Speed 1 (HS1) should pay £26 million each year to keep its assets in good condition, the Office of Rail and Road (ORR) has proposed.
The regulator has published its Draft Determination – which scrutinises the final Five Year Asset Management Statement (5YAMS) for the next control period to run from 1 April 2020 to 31 March 2025.
There are many of the proposals from HS1 Ltd accepted by the ORR; however, there are aspects of the plan that are not accepted.
This includes deficiencies in the approach to asset management, such as how costs could be benchmarked; assumptions for efficiency and productivity; the classification of planned implementation of a new signalling system as a renewal; interest rate assumptions; and how to address underfunding of the escrow account in Control Period 1 (CP1) and Control Period 2 (CP2).
In order for these issues to be addressed, the annual charge set for train operators would be £26.1 million, which would keep assets in good condition.
This would help to review the approach to asset life on HS1, seek efficiencies in its supply chain, and also improve the approach to research and development.
Although the costs are high to keep the assets in good condition – and future costs will rise too – the £26 million is actually £9 million less than was originally requested by HS1 to maintain the 67 miles of high-speed track linking London with the Channel Tunnel.
John Larkinson, Chief Executive for the ORR, said: “High Speed 1 is a valuable public asset and our role is to provide independent assurance that High Speed 1’s assets can be kept in good condition over the long term at the lowest possible cost.
“This is important to make sure that operators and, in turn, passengers and freight users get a good deal now but not at the expense of future generations.”
The Final Determination will be released in January.