A new perspective on tunnel vision

14 March 2017

Daniel Brown, Director of Strategy and Policy, blogs about how we work with our French counterparts to regulate the Channel Tunnel.

Daniel BrownThe striking view from the 48th floor of the Montparnasse Tower has come to be a common sight for a select group of ORR officials over the last few months. Unfortunately, this is usually as much of Paris as we get to see on our visits to the French rail and highways regulator’s (Arafer - Autorité de Régulation des Activités Ferroviaires et Routières) office when we work on jointly overseeing economic regulation of the Channel Tunnel.

Last month, together with Arafer, we published our views on Eurotunnel’s 2018 Network Statement. We identified several areas for improvement for the document, particularly around clarity and detail on how Eurotunnel calculates the costs it incurs. In our statement, we said that Eurotunnel needs to explain how capacity and costs are fairly allocated to different users in order to comply with legislation. This matters because some of the freight operators and the entire shuttle operation are controlled by Eurotunnel, and it is important to be able to demonstrate the absence of cross-subsidy or discriminatory access terms. The tunnel also sees lower usage than was expected when it was built, and we want to ensure the right conditions exist to allow its use to grow by existing and new operators.

This is a step-change in the level of scrutiny applied to the tunnel’s economic regulation, following the introduction of new legislation in France and the UK last year. Regulatory responsibility for all aspects of the tunnel used to sit with the British and French governments through the Inter-Governmental Commission (IGC). The IGC still oversees safety, security and operational issues for the tunnel. However, when the UK and France implemented the EU’s ‘Recast’ of rail regulation last year, ORR and Arafer took on new roles for economic regulation independent of the two governments.

This presented a major challenge, as the UK and French regulators could have taken different approaches to regulating their two halves of the tunnel. We agreed that we needed consistency, transparency and legal certainty for Eurotunnel and its customers in order to encourage more cross-channel rail traffic. So to ensure that ORR and Arafer reach aligned decisions, we established a bi-national committee with three members from each side and a rotating chair, which I will adopt in April. Through the bi-national committee we have agreed a common set of objectives.

This framework will remain in place after the UK leaves the European Union. The practical experience of working together with Arafer this year has given me confidence that we have a sound basis for maintaining strong regulatory co-operation in the interests of both countries, and importantly in the interests of the tunnel’s users.