Aligning incentives to improve efficiency

Reference: ORR/003/2012
Date published: 3 May 2012
Start date: 3 May 2012
Closing date: 12 July 2012 (extended from 28 June 2012 – see below)

On 3 May 2012, we published a further consultation on the alignment of incentives between Network Rail and train operators to improve cost efficiency.

This PR13 consultation provided an update on our position on the introduction of route-level efficiency benefit sharing (REBS) in CP5, following earlier consultation, and consulted on options for how REBS interacts with alliancing.

We also consulted on our proposals to introduce a new regulatory mechanism to expose train operators to changes in Network Rail's costs at future periodic reviews, and an alternative proposal (in a supplementary consultation) for exposing franchised train operators to changes in the variable usage charge.

The consultation period closed on 12 July 2012 and after taking into account consultees' views, we have now set out our decisions  on the majority of these issues. As we are setting out our decisions early in the periodic review, there are some aspects of REBS (e.g. how we will set REBS baselines and then monitor performance within CP5) that we cannot yet confirm. We will consult on these issues in our draft PR13 determination (June 2013) and set out our decisions in our final determination (October 2013).

Decisions

• Aligning incentives: decisions on route-level efficiency benefit sharing (REBS) and train operator exposure to Network Rail's costs at a periodic review – December 2012

Consultation document

• Consultation on aligning incentives to improve efficiency – May 2012 
• Supplementary option to our consultation on aligning incentives – 1 June 2012 

These decisions will be of particular interest to you if you are a passenger or freight train operator, Network Rail or a franchise authority.