Further representations from Abellio East Midlands Limited (redacted) – 23 October 2020
| Date | 23 October 2020 |
| Section | Depot access applications and decisions |
East Midlands Railway Limited
1 Prospect Place
Millennium Way
Pride Park
Derby
DE24 8HG
James Osborn
Executive, Access & Licensing
Office of Rail and Road
25 Cabot Square
London
E14 4QZ
23 October 2020
Dear James
Re: Hitachi Rail Limited - Application for Directions under Section 17 of the Railways Act
1993.
Abellio East Midlands Limited (AEM) hereby presents its response to the request made by ORR for the
completion of a Draft DAA in respect of Hitachi Rail Limited’s application for directions under Section
17 of the Railways Act 1993. EMR has completed the Draft DAA as laid out by the ORR and note that
this meets the MSL values for steady state services post fleet introduction and removal of legacy fleet
from 01/04/2020 as included under Appendix 4 to HREs Section 17 application.
In addition to the completed Draft DAA AEM is pleased to present further documentation to aid
understanding of the basis of AEMs pricing in relation to the activities referenced within the Draft DAA –
this is in the form of a tabular breakdown of Direct and Indirect Costs per activity. Direct costs being
those specifically employed in delivering the activities, indirect being an apportionment of both the
base overhead (excl direct costs) of Neville Hill Depot along with an apportionment of the cost of the
wider business support functions centrally held overhead.
In order to arrive at an authorised completed Draft DAA AEMs finance function employed the services
of Business Analysts and Finance Managers with particular responsibility for, and knowledge of, Neville
Hill Depot and the fleets and associated services provided. The base costs used to drive both the
direct and indirect costs have been prepared, peer reviewed and authorised as true and fair
representation by AEM of the current (2020/21) forecast cost to the business.
It should be noted that in reaching the proposed pricing as seen within the Draft DAA AEM has not
then added a profit margin. This is in recognition of the fact that the total overhead of the depot is
higher than might otherwise be expected due to the fluidity and uncertainty of the fleet cascades
over the course of the introduction of IEPs. Additionally AEM has had very limited ability to address the
changing production environment of the depot due to the expected (and franchise mandated)
change to the DFO in the very near future. To that end AEM has treated the pricing proposal to HRE as
purely a recovery of costs/contribution rather than a traditional profit based sales activity.
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