Challenges of Track Access Charges Model Redesign

It has been exactly 20 years since the common grounds for the design of track access charges (TAC) were laid for the European railways by the publication of Directive 2001/14/EC. However, these grounds were defined broadly, thus resulting in significant divergence both in the models applied by countries and during the model redesign within one country over the course of time. The participants in the process of charge system redesign includes all stakeholders from a country’s railway sector (infrastructure manager, train operating companies, the ministries responsible for transport, finance and economy, government, and regulatory bodies). Their opinions and requirements are often opposed, and they all need to be acknowledged simultaneously. This paper aims to solve the issue of ensuring continuity in the charge model redesign while achieving a balance between the requirements of all stakeholders. Moreover, it tackles the issue of producing a sustainable long-term TAC model by using survey methods and statistical analysis. The proposed approach was tested in practice during the access charge model redesign for the railways of Montenegro. The results show the importance of continual enhancement in TAC model development as one of the challenges and key precursors for the harmonization of all stakeholders’ requirements.

Comparative analysis of TAC on railway freight corridors between North Adriatic ports and Žilina

In recent years, European ports have, due to the increasing traffic between the Far East and Europe, become increasingly important. Large volumes of freight come to ships and it is important to have a link to the mainland via railway, which should have a functional overall system. This research compares three variants of possible routes for railway freight transport from the North Adriatic ports of Rijeka, Koper, and Trieste to Žilina, in the north of Slovakia. The methodology for calculating the minimum package of train access charges for the countries covered by these routes is presented. A comparative analysis of train access charges (TAC) for the minimum access package for the corridors between North Adriatic ports and City of Žilina has also been conducted. The result entailed in this research is the most favourable railway route for freight transport from the North Adriatic ports to the City of Žilina.

A Theoretical Approach to Welfare-Optimal Calculation of Direct Costs in European Rail Regulation

The regulation of track access charges within the European Union is based on the economic principles of first and second best pricing. In order to obtain an allocative efficiency it is crucial to determine the marginal costs of operating the train services – the so-called direct costs. Even though the Implementing Regulation (EU) 2015/909 specifies the modalities for the calculation of direct costs, a broad range of different values for direct costs can be observed across Member States. However, the discussion of the level of direct costs is driven in particular by econometric, engineering and cost accounting aspects – an economic analysis is missing despite the welfare-economic concept of track access charges. For that reason, this paper discusses the welfare economic effects of different suitable values for direct costs.It will be shown that both a welfare maximising first best track access charging and, in most cases, also a second best charging will result in boundary solutions for direct costs. However, it also becomes obvious that from a welfare-economic perspective there is no general recommendation for adopting the lowest suitable direct costs. Any allocatively efficientregulation of track access charges must consequently consider the specific situation of each market segment separately.

Estimating the marginal maintenance cost of different vehicle types on rail infrastructure

In this paper, we combine engineering and economic methods to estimate the relative maintenance cost of different types of damage on the Swedish rail infrastructure. The engineering method is good at predicting damage from traffic, while the economic method is suitable for establishing a relationship between damage and cost. We exploit the best features of both methods in a two-stage approach and demonstrate its applicability for rail infrastructure charging, based on a sample of 143 track sections comprising about 11,000 km of track. The paper implements for the first time the method previously proposed in Smith et al., whilst also enhancing the method in several respects. We demonstrate how the estimated relative maintenance costs related to different damage mechanisms can be used to calculate the marginal cost of different vehicle types. The results are relevant for infrastructure managers in Europe who wish to differentiate their track access charges such that each vehicle pays its short run-marginal damage cost, which can support more efficient use of the rail infrastructure and influence vehicle design to minimize system costs.

Nonlinear Pricing with Reference Dependence

Many utilities, including water, electricity, and gas, use nonlinear pricing schedules which replace a single uniform unit price, with multiple elements such as access charges and consumption blocks with different prices. Whereas consumers are typically assumed to be utility maximizers with nonlinear budget constraints, it is more likely that consumer behavior shows limited-rationality features such as reference dependence. Recent studies of water demand have explored consumer reactions to social comparison nudges, which can moderate consumption and might be a useful tool given low demand-price elasticities. Other authors have noted the difficulties of correct price perception when tariff schedules are complex, and attributed those low elasticities to a lack of information. Nonetheless, it is also possible that consumers form reference prices, relative to which the actual price paid is compared, in a way that affects consumption choices. Faced with a nonlinear price schedule, such as increasing block tariffs, consumers could evaluate their actual marginal price as a loss or a gain relative to a particular reference price that is derived from the schedule. Introducing gain/loss terms into the utility function, in the discrete/continuous model of consumer choice that has been widely used for water demand analysis, leads to consumption decisions that vary when a higher-than-reference price is seen as a loss and a lower-than-reference price as a gain. Utilities might wish to explore these reference-price effects according to their strategic goals. For example, if there are capacity constraints or water scarcity problems, potential water savings can be achieved from highlighting the first-block price as a reference and framing higher-block prices as losses, inducing conservation even without raising overall prices. Furthermore, if higher-block prices are subsequently raised the demand response could be stronger.

Noise Related Rail Access Charges in Europe: Aspects of Interoperability and Competitiveness

Noise reduction of rail transport in Europe is an important step toward enhancing quality of life. According to the estimation of the European Environment Agency 14 million people are affected by rail noise in the European Union. Since the 1990s numerous measures have been taken by legislators but in practice noise levels did not lowered significantly. The changing regulations and upgraded standards have direct costs on rail freight transport and it is affecting its competitiveness. Some key countries in the European rail freight transport – Germany, Switzerland, Austria and the Netherlands – have already introduced Noise Differentiated Track Access Charges (NDTAC), which makes higher noise traffic more expensive, and encourages wagon owners to invest in low noise braking systems. Railway undertakings will face higher costs either due to higher network access charges or due to higher costs of low noise braking system. The higher costs will affect the competitiveness of rail freight transport compared to other modes of transport. Furthermore, the diverse regulation of European countries will restrict the interoperability and selective funding favors local corporations and can reduce competition. The aim of this paper is to show the possible effects of the current NDTAC regulation on the European rail freight market.