Fixed track access charge (FTAC) annual adjustment mechanism in control period 6 - Published 26 October 2020 (pdf 236.22 KB)More infoDownload
| Date | 26 October 2020 |
| Section | Fixed track access charge (FTAC) annual adjustment mechanism in control period 6 |
Head Office: 25 Cabot Square, London E14 4QZ T: 020 7282 2000 www.orr.gov.uk
26 October 2020
Dear Network Rail and Train Operators,
FTAC annual adjustment (‘wash-up’) mechanism in Control Period 6
I am writing to you regarding the fixed track access charge (FTAC) wash-up
mechanism, a charging mechanism created in our 2018 periodic review (PR18) for
control period 6 (CP6)
1
.
I indicated in my letter of 12 August 2020 that ORR was minded to suspend the
mechanism for the remainder of CP6 due to the effect of the on-going exceptional
circumstances in the industry. We set out why this had significantly changed the
effects of the mechanism compared to what had been expected at the time of PR18.
We are now formally confirming our decision not to apply the FTAC wash-up
mechanism during CP6.
Responses to our letter, from Network Rail and TOCs, were mostly in support of the
minded to position, reiterating that the industry’s changed circumstances had
reduced the mechanism’s expected effects and made implementation very
challenging. This broad message was in line with the informal engagement we had
carried out in advance of writing the minded to letter.
One operator raised a concern that, without the mechanism in place, Network Rail
lacked a financial incentive to accommodate new services during the control period;
the operator gave an example of where it believes this to be a concern. We
acknowledge this general issue – indeed it is consistent with the original purpose of
the mechanism. However, on balance this does not change the analysis
underpinning the minded to position, which had taken account of the expected (but
now reduced) effects of the policy. In addition, in a context of lower traffic and the
effect on the network, it is not clear how significant the additional financial incentive
of the wash-up mechanism would be in Network Rail’s considerations.
I stress that, in our 2023 periodic review (PR23), we will consider the value of the
mechanism within our work on charges and incentives: our decision does not
prejudice any future policy work on the mechanism.
1
Control Period 6 runs from 2019-20 to 2023-24. The wash-up mechanism is another name for the
‘annual adjustment’ referenced in ORR’s final determination (e.g. paragraphs 3.119 and 3.120).
Carl Hetherington
Deputy Director, Economics Markets & Strategy
carl.hetherington@orr.gov.uk
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