Charges for stations

Network Statement 2022 Bane NOR Charges for stations

Charges for stations

Contents

1. Background ...... 2 1.1 Legal basis ...... 2 2. Stations ...... 2 2.1 Breakdown of station services ...... 2 2.1.1 Minimum access package ...... 3 2.1.2 Station services ...... 3 2.1.3 Commercial services ...... 3 2.2 Breakdown of stations ...... 3 2.1.1 Single-user and multi-user stations ...... 3 2.2.2 Station services ...... 4 2.2.3 Charging system ...... 4 2.3 Cost overview ...... 5 2.3.1 Operation and maintenance, digitisation and customer information ...... 5 2.3.2 Capital costs and reasonable profits ...... 6 3. Results ...... 7 4. Implementation and recommendations ...... 8 5. Charge change mechanisms ...... 9 6. Bibliography ...... 10 Annex 1 – Breakdown of stations included in each package ...... 10 Annex 2 – Overview of traffic packages ...... 13

1

Bane NOR Charges for stations

1. Background Bane NOR conducted a project in 2020 concerning charges for station services. This report comprises the data basis, outcomes and general assessments made as part of this work. Systematic charging for station services was first introduced on 01/01/2018. A “Service Directory” with associated charges was also prepared at the time. The Service Directory stated that the cost calculations would be updated at least every four years. This is the background to Bane NOR’s current review of the charges for station services. The charges addressed in this report will apply from 1 January 2022. 1.1 Legal basis Passenger stations are railway services pursuant to Section 4-2, letter a) of the Norwegian Railway Regulations. The provider of this service shall be obliged to provide the service to all railway undertakings on non-discriminatory terms. It follows from Section 6-9(2) of the Norwegian Railway Regulations that “The fee imposed for track access in service facilities as mentioned in Section 4-2 and to perform services in such facilities shall not exceed the cost of providing such services plus a reasonable mark-up for profit.”

It is up to Bane NOR whether or not to charge for passenger station services and how much to charge, as long as the maximum charge limitations set out in Section 6-9(2) of the Norwegian Railway Regulations are complied with. In addition, it is important that the service charge is designed in such a way that it does not violate the requirement set down in Section 4-2 of the Norwegian Railway Regulations that the service must be provided to all railway undertakings on non-discriminatory terms.

It is important to differentiate the passenger station service pursuant to Section 4-2, letter a) from the minimum access package pursuant to Section 4-1 of the Norwegian Railway Regulations and services that fall outside of the Railway Regulations (commercial services). The minimum access package is subject to special charge adjustments pursuant to Sections 6-2 to 6-5 of the Norwegian Railway Regulations, while commercial services can be charged at market rates.

2. Stations 2.1 Breakdown of station services As mentioned in Item 1.1, it is important to differentiate between station services, the minimum access package and commercial services.

The illustration below shows how, in the opinion of Bane NOR, the boundaries are drawn between station services and the minimum access package.

2

Bane NOR Charges for stations

Figure 1: Breakdown between the minimum access package and station services

The illustration has been prepared by other European infrastructure managers.

2.1.1 Minimum access package Access services at stations are linked to the minimum access package and are not additionally charged through station services. For an illustration of what is included in the minimum access package, see Figure 1, where the contents of the minimum access package are highlighted in red. Access services include costs associated with wear-related renewal and maintenance of passenger platforms for disembarkation and embarkation, access roads for passengers and safety and technical equipment at stations associated with the operation of the railway infrastructure. These costs are kept outside of the calculation of charges for station services. 2.1.2 Station services Station services consist of waiting rooms/platform shelters, communication of travel information, suitable premises for ticket sales, etc. Only station areas that are used by passengers are included in the costs. 2.1.3 Commercial services Bane NOR offers some services to railway undertakings and passengers at market terms, including parking at stations. These fall outside of what is defined as station services pursuant to Section 4-2 a of the Norwegian Railway Regulations and are therefore not addressed further in this report. 2.2 Breakdown of stations 2.1.1 Single-user and multi-user stations The railway network consists of stations that are used only by a single railway undertaking (hereinafter referred to as single-user stations) and stations used by multiple railway undertakings

3

Bane NOR Charges for stations

(multi-user stations). Nearly all stations used to be single-user stations as VY1 ran almost all passenger trains in . In 2019, the first traffic package was introduced, allowing for competition within passenger traffic in the railways. Going forward, additional packages will be added and the number of railway undertakings will likely continue to increase. This means that the number of stations at which multiple operators stop will increase. In 2020, there was a total of 334 stations2. After SJ Norge has started operating on the and more traffic packages are announced, there could be a total of 37 multi-user stations and 297 single-user stations. Bane NOR has therefore elected to operate with 37 multi-user stations and 297 single-user stations3. 2.2.2 Station services Bane NOR determines which individual elements to include in the station services, as well as service quality and standards. The railway undertakings may report needs and desires concerning service content but Bane NOR will decide on their own independent basis which requests to accommodate.

Railway undertakings cannot make reservations against individual elements included in the station service. This is in accordance with the same principle used when the charging system for stations was introduced in 2018. Bane NOR has investigated the possibility of changing this model and making some aspects of the station service optional. Following a thorough review, it is clear that most services associated with stations are necessary, either for reasons of security or due to statutory considerations. It will therefore not be appropriate to separate out any aspects of the service other than commercial services in an optional package. 2.2.3 Charging system The charges associated with the station must reflect the costs plus a mark-up for reasonable profits. An alternative could be to set the charge as equal to the cost for each station, but this would have resulted in somewhere in the region of 334 unique charges. The reason why Bane NOR chooses not to do this is that this would result in an extremely high difference in charges between stations. Additionally, Bane NOR uses cost data for 20194 when calculating the charges. Since there may be differences from year to year, it is more appropriate to apply portfolio charges. The charge for each portfolio group will then correspond to the average charge for the group concerned.

2.2.3.1 Portfolio charges Single-user stations

Bane NOR has chosen to use portfolio charges for single-user stations based on the traffic packages5. As of August 2020, it has not been finally determined how many traffic packages there will be. Nevertheless, the first four packages have been determined and it is clear that there will be at least five packages. Single-user stations have therefore been divided into five groups for the estimation of

1 Former NSB 2There are certain stations where several trains stop sporadically, such as tourist trains, but since we are talking about very few departures we consider these stations to be single-user stations. The trains that sporadically stop at these stations pay a charge per stop corresponding to the average charge in the portfolio to which the station belongs. 3Please refer to Annex 1 for an overview of the stations defined as multi-user stations and the traffic packages the remaining stations are associated with. 4The reason for not using multiple years in the calculation includes the fact that the 2018 data quality is inadequate, since there was a transfer from Rom Eiendom to Bane NOR AS and a desire to use the most up-to- date figures available. 5 Please see Annex 2 4

Bane NOR Charges for stations

charges. If, as an example, there ends up being six traffic packages, package five and six will have the same average charge per station.

One advantage of being able to split stations into traffic packages is that a railway undertaking pays only for the stations at which they stop and there is no subsidy for individual stations.

Multi-user stations

Multi-user stations will be grouped together in a portfolio. The costs will be allocated between railway undertakings based on each railway undertaking’s share of the number of scheduled stops in the annual timetable.

2.2.3.2 Charge unit Annual subscription-based charges will apply to all stations, single-user and multi-user stations alike. The charge for each company will be determined based on the company’s share of the total number of stops according to the timetable. Moving from a system of charging per stop to a subscription system may result in increased predictability on the part of Bane NOR and the railway undertakings. It will also prevent station charges from reducing the railway undertakings’ incentives to increase the number of departures. Otherwise there is little correlation between the costs associated with stations and the number of stops. 2.3 Cost overview 2.3.1 Operation and maintenance, digitisation and customer information The maximum charge for covering costs shall be based on the costs associated with the provision of the service, including reasonable profits. Only costs associated with the operation and maintenance of station areas used by passengers will be included. Station areas that are not used by passengers, e.g. technical rooms, txp rooms, etc., have not been included in the calculations.

Table 1: Cost elements included in the calculation of charges

Cost element Description Public areas Bane NOR costs associated with public areas Cleaning Exterior and interior cleaning Maintenance Corrective and preventive maintenance of the station Safety Internal and external security services, surveillance, etc. Outdoor lighting Energy costs for lighting Other electrical Other energy costs, including platform heating Snow clearance/gritting Clearing and gritting of platforms and access areas Information systems Costs associated with customer information systems and monitors/markers Customer information Costs associated with customer information Other costs Refuse collection, waste management, toilet costs, fire protection, etc.

5

Bane NOR Charges for stations

Cost element Description Capital binding Return on capital tied up in platforms, buildings, monitors and other technical equipment

Table 2: Costs divided by area

2019 Operating and maintenance expenses 408,144,240 Administrative costs associated with 35,000,000 stations Digitisation costs 19,993,989 Costs associated with customer 40,987,282 information Depreciation costs 30,100,000 Reasonable returns 25,642,825 Total costs 559,572,923

Costs associated with the operation and maintenance6 of stations account for the largest proportion of the costs by far. This includes caretaker services, cleaning, rent and security.

Administrative costs associated with the non-commercial aspects of station operations and a share of communal costs have also been included in the cost basis.

The costs associated with customer information are part of the station services.

The digitisation costs associated with stations consist of information elements at stations, such as monitors/markers and information systems such as KARI7 and the NÅ8 mobile application.

Table 2 shows the total costs. The costs per station vary depending on standard, size, etc. Additionally, the need for snow clearing, gritting, etc., will vary from station to station. The costs for operation and maintenance at each station also vary from year to year. When cost calculations are based on a single year, 2019, the variation in costs between stations may not necessarily represent subsequent years. This variation will reduce in connection with the portfolio charges. 2.3.2 Capital costs and reasonable profits Capital costs and reasonable profits are made up of two components: depreciation and a mark-up for reasonable profits.

2.3.2.1 Depreciation Book depreciation of buildings and infrastructure associated with stations was NOK 30.1 million in 2019. Depreciation of technical rooms at stations and other infrastructure not used by passengers has not been included in our calculations.

6Only costs associated with public areas are included 7Bane NOR’s customer and traffic information system 8Shows whether trains are running on schedule, whether there are any platform alterations or other changes 6

Bane NOR Charges for stations

2.3.2.2 Reasonable profits Section 6-9(2) of the Norwegian Railway Regulations includes “a reasonable profit”. A reasonable profit is defined as a reasonable return on invested capital. Bane NOR has used a WACC approach to calculate the capital cost. Nominal WACC before tax was 4.8 per cent9.

3. Results When single-user stations are segmented by traffic packages and multi-user stations are grouped together, there will be a total of six different charges for station services. There is quite a large difference in the charges per stop between the cheapest and the most expensive station groups, but this reflects the fact that there is great difference in costs.

Table 3 Costs and charges per station Traffic package Total costs Number of departures in 2019 Costs per departure Traffic package 1 38,807,095 726,769 53 Traffic package 2 93,465,818 635,385 147 Traffic package 3 34,407,907 285,593 120 Traffic package 4 82,299,303 2,387,425 34 Traffic package 5 69,837,078 1,144,612 61 Multi-user stations 240,755,723 2,270,309 106

The multi-user station portfolio has fewest stations, but, as shown in Figure 2, more than one third of the costs are linked to multi-user stations. Nevertheless, the charge per stop is not the highest in this group since there are many departures at these stations. Please refer to Figure 3 for the number of departures per portfolio.

9According to a report from IRG-Rail from 2019, a WACC approach is the most important/most common method for calculating capital return in the EU. The following parameters have been used in Bane NOR’s calculations: Risk-free interest rates have been set to a normalised long-term interest rate, slightly above the 10-year interest rate swap: 1.8 per cent. The beta value is a measure used to determine the volatility of an asset relative to market situation. The beta value has been set at 0.6. PwC’s annual survey shows that the risk premium in the Norwegian market was 5 per cent in 2019. The borrowing margin above risk-free interest has been set at 1 per cent and the loan-to-asset value ratio is 40 per cent. This resulted in a return requirement of 4.8 per cent. 7

Bane NOR Charges for stations

Figure 2: Costs allocated by multi-user stations and traffic packages Allocated costs

7 %

17 % Trafikkpakke 1

43 % Trafikkpakke 2 Trafikkpakke 3 6 % Trafikkpakke 4 Trafikkpakke 5 Flerbrukerstasjoner

15 %

12 %

Figure 3: Number of departures per portfolio in 2019 Number of departures in 2019 3 000 000

2 500 000

2 000 000

1 500 000

1 000 000

500 000

- Antall avganger 2019

Trafikkpakke 1 Trafikkpakke 2 Trafikkpakke 3 Trafikkpakke 4 Trafikkpakke 5 Flerbrukerstasjoner

4. Implementation and recommendations The results addressed in the report will apply from and including the 2022 timetable period and the report is included in the consultation on Network Statement 2022.

8

Bane NOR Charges for stations

Bane NOR has chosen to opt for segmentation of stations on the basis of traffic packages. This segmentation will ensure that no railway undertaking subsidises others and that each party pays a charge equivalent to the costs.

The charging system will be based on annual subscriptions linked to the scheduled annual timetable. At single-user stations, the railway undertaking that stops at each station will cover the costs associated with the station. For multi-user stations, the annual charge per railway undertaking will be determined based on the scheduled number of stops according to the timetable. This solution will result in predictability both on the part of Bane NOR and the railway undertakings. It also avoids creating financial incentives for fewer stops at certain stations. Subscription charges are also a good solution when there is no particular correlation between costs associated with a station and the number of stops.

5. Charge change mechanisms Bane NOR SF generally intends for the charges to be adjusted periodically. In the event of significantly improved base data or other larger changes, the charges could, however, be changed on such a basis.

Period, etc. Description Cost calculations will be updated at least every five years based on Five-year equivalent or improved methods and more up-to-date data may be used adjustments as the basis for estimations. Between the five-year adjustments, charges will be changed annually in accordance with an appropriate index from Statistics Norway. The cost index for operation and maintenance of road systems will be used. The actual price adjustment will be performed according to the following principle (1):

 KI Q2  P = P  t  (1) t+1 t  Q2   KIt−1  Annual adjustment where: Pt+1 = charge next year Pt = charge this year KIQ2 = Statistics Norway’s index as at second quarter for the present year (t) and previous year (t-1)

This means that charges will be adjusted in arrears but it also provides great predictability for railway undertakings, as the following year’s charges will be ready during Q3 of the previous year. At the same time, it will be possible to monitor the index throughout the year. New constructions ordered by the Norwegian Railway Directorate New, rebuilt or involving the completion of new objects, major rebuilds or demolition of demolished old objects during a four-year period will be included in the cost data objects when the construction or object is commissioned/decommissioned.

9

Bane NOR Charges for stations

6. Bibliography Bane NOR SF, Service Directory, Final 17/03/2017

Independent Regulators’ Group – Rail, IRG–Rail, Subgroup Charges for Service Facilities “An overview of charges and charging principles for passenger stations, 25/11/2019

PwC, “Risikopremien i det norske markedet” (Risk premiums in the Norwegian market), December 2019 https://www.pwc.no/no/publikasjoner/pwc-risikopremie-2019.pdf

Norwegian Ministry of Transport, “Railway Regulations”, 20/12/2016. [internet]. Available: https://lovdata.no/dokument/SF/forskrift/2016-12-20-1771?q=jernbaneforskriften.

Independent Regulators’ Group – Rail, Subgroup Charges for Service Facilities, “Initial report

On the charging principle of Article 31 (7) of Directive 2012/34/EU”, 25 November 2019

Norwegian Railway Directorate, traffic packages: https://www.jernbanedirektoratet.no/no/togkonkurranse/aktuelle-konkurranser/

European Parliament, “2012/34/EU - establishing a single European railway area,” 21/11/2012. [internet]. Available: https://www.regjeringen.no/globalassets/upload/sd/vedlegg/jernbane/hoering_02122013/hdirectiv e212.pdf

Annex 1 – Breakdown of stations included in each package

Multi-user Package 1 Package 2 Package 3 Package 4 Package 5 Alvdal Arna Alna Auli Bjørnfjell Audnedal Atna Bergen Askim Berekvam Brumunddal Blakstad Auma Bolstadøyri Billingstad Blaker Dombås Breland Bellingmo Bulken Bleiken Blomheller Dovre Brusand Bergsgrav Dale Blommenholm Bodung Drammen Bryne Berkåk Evanger Bondivann Brakerøya Bråstad Bjerka Finse Bryn Dal Fredrikstad Bø Bjorli Flå Eidsberg Darbu Gardermoen Bøylestad Bodø Geilo Eina Eidsvoll Verk Halden Drangedal Drevvatn Gjerdåker Fjellhamar Fetsund Hamar Egersund Dunderland Gol Gjøvik Flåm Hokksund Flaten Elverum Hallingskeid Gran Frogner Hunderfossen Evenstad Haugastøl Grefsen Gulskogen Katterat Ganddal Fauske Hønefoss Greverud Haga Gausel Glåmos Kløve Grorud Hauerseter Kongsvinger Gjerstad Grong Ljosanbotn Grua Holmestrand Kvam Gyland Gudå Mjølfjell Gullhella Håreina Lillehammer Hellvik Haltdalen Nesbyen Hakadal Jessheim

10

Bane NOR Charges for stations

Multi-user Package 1 Package 2 Package 3 Package 4 Package 5 Lillestrøm Jåttåvågen Hanestad Reimegrend Hanaborg Kjosfossen Klepp Harran Seimsgrend Harestua Kløfta Moelv Hegra Skiple Haugenstua Larvik Moss Lunde Stanghelle Hauketo Leirsund Myrdal Mariero Hell Trengereid Heggedal Lier Narvik Marnardal Hjerkinn Upsete Heia Lindeberg Nationaltheatret (the Moi Hommelvik Urdland Holmlia stop Lunden National Theatre) Nordagutu Hovin Ustaoset Hvalstad Mjøndalen Central Station Neslandsvatn Ilseng Vaksdal Høn Nerdrum Otta Nodeland Jørstad Vieren Høvik Nisterud Ringebu Nærbø Kongsvoll Vikersund Høybråten Nordby Rombak Ogna Koppang Voss Jaren Sandvika Paradis Kopperå Ygre Kambo Porsgrunn Sarpsborg Rise Kotsøy Ørneberget Kjelsås Reinunga Ski Sandnes Kvål Øyeflaten Knapstad Rånåsfoss Skøyen Sira Ål Kolbotn Sande

Stabekk Sirevåg Langlete Kråkstad Sandefjord

Søsterbekk Skeiane Lassemoen Langhus Skarnes

Vinstra Snartemo Ljan

Stavanger Ler Lunner Skoppum

Stoa Lørenskog Stange

Storekvina Movatn Steinberg

Varhaug Lesjaverk Myrvoll Stokke

Vegårshei Mysen Svingen

Vennesla Lilleby Nittedal Sørumsand

Vigrestad Lundamo Nordstrand Tangen

Øksnavadporten Lønsdal Nydalen Torp

Løten Nyland Trykkerud

Majavatn Oppegård Tuen

Marienborg Rakkestad Tønsberg

Melhus Raufoss Vatnahalsen

Meråker Reinsvoll Vestfossen

Mo Roa Årnes

Mosjøen Rosenholm

Mørkved Rygge

Namsskogan Røyken

Oppdal Råde

Opphus Sagdalen

Os Skotbu

Oteråga Slependen

Reitan Slitu

Rena Snippen

11

Bane NOR Charges for stations

Multi-user Package 1 Package 2 Package 3 Package 4 Package 5

Rognan Solbråtan

Rognes Sonsveien

Ronglan Spikkestad

Rotvoll Spydeberg

Røkland Stryken

Røra Strømmen

Røros Tomter

Røstad Tøyen

Selsbakk Vakås

Singsås Varingskollen

Skansen Vestby

Skatval Vevelstad

Skogn Åneby

Skonseng Ås

Snåsa

Sparbu

Stai

Steinkjer

Steinvik

Stjørdal

Støren

Tolga

Trofors

Trondheim

Tverlandet

Tynset

Valnesfjord

Verdal

Vikhammer

Værnes

Ålen

Åndalsnes

Åsen

12

Bane NOR Charges for stations

Annex 2 – Overview of traffic packages

Traffic package 1, South, includes intercity trains on the Sørland Line from via Kristiansand to Stavanger, local trains running between Stavanger - Sandnes - Egersund and regional trains on the .

Traffic package 2, North, includes intercity trains on the Dovre Line, which is one of the main lines in the country. The same applies to traffic on the , while there is extensive regional traffic in Trøndelag on the Trønder Line and on the Røros Line in Østerdalen. Additionally, regional traffic on the , Meråker Line to Sweden and regional traffic on the northernmost part of the Nordland Line, including the Salten commuter trains, have also been included in this package.

Traffic package 3, West, consists of the and Vosse Line.

Traffic package 4 includes the , , Østfold Line, Østfold Line Eastbound, Gjøvik Line, Main Line and Spikkestad Line.

Bane NOR has defined all other stations at which only one railway undertaking stops as traffic package 5.

Annex to Network Statement 2022

Bane NOR 10. December 2020

13