“How charging can contribute to boost rail traffic”

Torben Holvad, Economic Adviser, European Railway Agency

Access charging concerns pricing in relation to the use of railway infrastructure. The possible effects on rail traffic depends primarily on the type of charging framework considered, the level of charges and the schemes (if any) in place for other (competing) modes. As such it would be important to ensure a level playing field between competing modes such that infrastructure charging is applied across modes where all transport users of infrastructure pay the costs incurred of their usage.
Considering only charging within railways a framework based on Short Run Marginal Costs (SRMC) should promote the efficient use of the existing network. This should prevent that traffic is priced off the network or that trains are allowed on the network with benefits lower than the costs of providing the access. Furthermore, SRMC charging should help opening up the rail market to new entrants which would not bear the fixed costs of infrastructure provision. Unless there are capacity constraints such that new traffic is prevented from using the network the result is likely to be that the available infrastructure will be better utilised thereby realising economies of density benefits of the network.
Removing capacity constraints in situations with growing demand for rail services may be resolved through Long Run Marginal Costs (LRMC) where the costs of expanding the capacity are taken into account. These charges could introduce investment incentives for the infrastructure manager to address capacity bottleneck faster and thereby facilitating traffic boost on the expanded network with spare capacity.
The scope for boost of rail traffic would be enhanced if the context is one where a change in charging framework involves going from fully-distributed costs pricing to SRMC. As such the effect of such a change should not be underestimated as SRMC may at most bring up to 20% of the infrastructure costs. The result would be substantially lower charges to be paid by operators and this is likely to lead to increased rail traffic. Similar results are likely if there is a change from multi-parts charging to SRMC. However SRMC-based charging may imply the need for substantial subsidies for the covering the infrastructure costs (or accumulation of debt for the infrastructure manager).
Therefore, it may be necessary to settle for intermediate approaches (between fully-distributed cost pricing and SRMC charging) with mark-ups on SRMC to ensure part or full cost recovery.

In a pure SRMC-based charging scheme the following items are foreseen:

•  Use-related track wear and tear costs
•  Marginal costs related to signaling etc.
•  Any additional train planning or management and administration costs
•  Any traction current provided
•  External accident costs
•  Environmental costs

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