Model connection contract – Transitioning to CPI

Consultation conclusions

We have decided to go ahead and replace RPI with CPI in the ORR model connection contracts.

Model connection contracts - switching to CPI - Consultation conclusions - Published 14 March 2019

Consultation responses

Model connection contracts - switching to CPI consultation responses - Published 14 March 2019

February 2019 consultation

Date published: 6 February 2019
Closing date: 6 March 2019

Consultation to change ORR’s model connection contract. Our model connection contract sets out the rights and obligations of parties for the ongoing operation and maintenance (including renewal) of connections between railway networks. Our model is only designed for connections to Network Rail network.

As part of the 2018 periodic review (PR18) we said that we would use the Consumer Price Index (CPI) for Network Rail’s track access contracts in CP6 (2019-24). We recognise that CPI is a better and more robust measure of inflation than the previously used Retail Price Index (RPI). Connection contracts are outside of the PR18 process and therefore are not automatically updated as a consequence of our PR18 Determination. However there is an established link between the Determination and efficiencies expected of Network Rail through the adjustment factor in the model connection contract. This allows charges for the connection to be increased by inflation but less an amount determined by ORR as the efficiency factor.

We consider it appropriate to amend the model connection contract so that CPI is used for new contracts, rather than RPI in the adjustment factor, as with track access contracts. For CP6 we will set an efficiency factor for these contracts that would minimise differences between contracts using either CPI or RPI. From CP7, the intention is that we would only calculate the efficiency factor assuming that CPI is the only inflation measure used. Parties with existing contracts would therefore have CP6 to modify their contracts, if they wished to.

Consultation letter

ORR model connection contract – switching to CPI pdf icon PDF, 294 Kb
6 February 2019