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V/Line Access Arrangement June 2012

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V/Line Access Arrangement June 2012 Level 2, 35 Spring St Melbourne 3000, Australia Telephone +61 3 9651 0222 +61 1300 664 969 Facsimile +61 3 9651 3688 V/LINE ACCESS ARRANGEMENT FINAL DECISION JUNE 2012 An appropriate citation for this paper is: Essential Services Commission, V/Line Access Arrangement, Final Decision, June 2012. Essential Services Commission. This publication is copyright. No part may be reproduced by any process except in accordance with the provisions of the Copyright Act 1968 and the permission of the Essential Services Commission. CHAIRPERSON’S INTRODUCTION The Rail Management Act 1996 (RMA) sets out the Victorian rail access regime that applies to providers of declared rail infrastructure. The RMA prescribes that the Commission is responsible for administering the Victorian Rail Access Regime. Through Declaration Orders, the Victorian Government determines which infrastructure services are declared for access. The Victorian regional rail network is declared for access and V/Line is the operator and access provider for this rail network. Under the RMA, V/Line must at all times have an approved access arrangement in place with the Commission. Access arrangements encourage competition and efficiency in the rail freight industry by allowing freight operators to access certain declared infrastructure. This enables freight operators to compete in markets where competition is dependent on such access. On 30 March 2012, the Commission received an application from V/Line to renew its access arrangement. On 5 April 2012, the Commission published a notice in the Melbourne Age and Herald Sun newspapers regarding V/Line’s application and undertook a stakeholder consultation process whereby stakeholders and the public were invited to make a submission regarding the application. Two submissions were received from stakeholders and these submissions were considered in preparing the Commission’s draft decision. The Commission’s draft decision regarding V/Line’s proposed access arrangement was published on 31 May 2012 and a further round of consultation undertaken. Two submissions to the draft decision were received (one from the Public Transport Development Authority, operating as Public Transport Victoria, and one from a member of the public) and those submissions were considered in preparing the Commission’s final decision. In response to the draft decision, V/Line submitted a revised access arrangement on 14 June 2012. In making its final decision, the Commission has had regard to whether the revised access arrangement contains the specific elements and meets the relevant requirements of the RMA. The Commission has made its final decision to approve V/Line’s revised access arrangement. This final decision outlines the Commission’s reasoning for deciding to approve the revised access arrangement. ESSENTIAL SERVICES COMMISSION V/LINE ACCESS CHAIRPERSON’S III VICTORIA ARRANGEMENT INTRODUCTION The Commission thanks V/Line and stakeholders for their contributions through this approval process. This has assisted the Commission to make its final decision on V/Line’s access arrangement. Dr Ron Ben-David Chairperson ESSENTIAL SERVICES COMMISSION V/LINE ACCESS CHAIRPERSON’S IV VICTORIA ARRANGEMENT INTRODUCTION CONTENTS Chairperson’s introduction III Contents v Acronyms vii Glossary viii 1 Introduction 16 1.1 V/Line’s access arrangement 16 1.2 Commission’s role and approval process 17 1.3 Timelines 17 1.4 Commission’s final decision 18 1.5 Structure of the Commission’s final decision 18 2 V/Line and the regional network 20 2.1 Who is V/Line? 20 2.2 Declaration orders 20 2.3 Leases 21 2.4 What infrastructure is subject to access? 21 2.5 Users of the regional rail network 24 3 Price issues 26 3.1 Commission’s approach 26 3.2 Commission’s assessment of access prices 27 3.3 Commission’s maximum efficient access prices 29 3.4 V/Line’s response to the draft decision 30 3.5 Commission’s final conclusion 31 4 Track standards 33 4.1 V/Line’s initial proposal 34 4.2 Commission’s draft proposal on track standard variations 34 4.3 V/Line’s response to the Commission’s draft proposal 37 4.4 Stakeholder views 37 4.5 Commission’s final conclusion 37 5 Non-price issues 38 5.1 Information to be made available to an access seeker 38 ESSENTIAL SERVICES COMMISSION V/LINE ACCESS CONTENTS V VICTORIA ARRANGEMENT 5.2 Confidential information 39 5.3 Capacity Use Rules 40 5.4 Negotiation Guidelines 42 5.5 Network Management Rules 43 5.6 Other matters in the access arrangement 44 5.7 Access agreement terms and conditions 47 Appendix A Legislative requirements 57 Appendix B Commission approval process 61 Appendix C Matters to be taken into account 63 Appendix D V/Line’s revised access Arrangement (marked up) 65 Appendix E Revenue cap and weighted average cost of capital 203 Appendix F GHD report 209 Appendix G Booz & Co. report 233 ESSENTIAL SERVICES COMMISSION V/LINE ACCESS CONTENTS VI VICTORIA ARRANGEMENT ACRONYMS CPA Competition Principles Agreement CPI Consumer Price Index DoT Department of Transport EMCMP Emergency Management and Crisis Management Plan ESC Essential Services Commission (Victoria) GTK Gross Tonne Kilometres MPM Major Periodical Maintenance MSIS Mode Shift Incentive Scheme NSP Network Service Plan PIL Primary Infrastructure Lease PTDA Public Transport Development Authority (operating as Public Transport Victoria) RIL Regional Infrastructure Lease RMA Rail Management Act 1996 TEU Twenty-foot Equivalent Unit TK Train Kilometres VRAR Victorian Rail Access Regime WACC Weighted Average Cost of Capital ESSENTIAL SERVICES COMMISSION V/LINE ACCESS ACRONYMS VII VICTORIA ARRANGEMENT GLOSSARY Above rail Refers to activities associated with the provision and operation of train services including provision of rolling stock and freight handling. Above rail costs Costs related to train operation, rolling stock and related activities/services. Above rail operator A person or company that operates (runs) rolling stock (trains) for movement of freight/cargo. Usually a train/freight operator. Access The use of infrastructure owned and/or operated by another party. Access agreement A standard (pro forma) agreement between an access provider and an access seeker that sets out the contractual terms of access. Can be negotiated between the parties. Once signed becomes contractual. Access arrangement Sets out the process and protocols and information for obtaining access to the rail network. It includes the access agreement. Also referred to as an access undertaking by the Commonwealth (ACCC) and other State regulators. Access arrangement Information provided by the access provider to an access information seeker. Access charge A price paid in return for access to infrastructure. Access holder A freight operator (i.e. network user) who has signed an access agreement with V/Line and thus holds access rights (i.e. entitlements to train paths) to the rail network. Access provider A provider of declared rail transport services (i.e. V/Line). Access regime The overarching legislative framework for access (see Part 2A of the Rail Management Act 1996). ESSENTIAL SERVICES COMMISSION V/LINE ACCESS GLOSSARY VIII VICTORIA ARRANGEMENT Access seeker A person seeking access to a declared rail transport service. Usually an above rail operator. Becomes an access holder once they sign an access agreement with the access provider. Account Keeping Rules A Commission Instrument which requires access providers to maintain and provide the Commission with accounting records and accounts. Ballast The material upon which the sleepers bear. It is used to form the road bed of a railway track. It is laid on the base formation with the rack laid on top of it and provides a storm water drainage medium. Ballast cleaning The process of extracting the ballast from the railway track and shaking or washing the ballast to remove detrimental material, and then returning it back to the track. The process improves the performance of the ballast by removing the material that tends to lubricate the ballast particles. The process is most commonly performed using a track mounted machine and the track is relatively undisturbed while it occurs. Below rail The rail track infrastructure, including rail, sleepers, signals, overhead power systems and track fencing. Below rail costs Costs related to the rail track and related structures. Bridges (over and under the Overbridges are those that go over the track and are track) typically pedestrian footbridges or road bridges. Underbridges are under the track and typically convey rivers, subways, or roadways. The bridge structure is separate from the earth formation that is usually under the track but abuts the earth formation at the ‘abutments’. Capacity Use Rules A Commission Instrument which improves the functionality of a third party access regime by ensuring a fair and reasonable allocation of network capacity to access seekers and users. Commission Instruments Rules and guidelines made by the Commission which are intended to ensure that the Victorian Rail Access Regime is efficient and effective. Culvert A form of underbridge conveying a stream, but with a ESSENTIAL SERVICES COMMISSION V/LINE ACCESS GLOSSARY IX VICTORIA ARRANGEMENT construction that is integral to the formation or embankment consisting of the earth under a railway track. Declaration Order An Order of the Victorian Governor in Council pursuant to section 38I of the Rail Management Act 1996 that is the mechanism by which certain transport infrastructure services are declared (made available) for access. Diamond crossing The cross-over railroad structure of two rail tracks is sometimes called a diamond junction or diamond crossing in reference to the diamond-shaped centre. The two tracks need not be the same gauge. Draft decision A decision of the Commission made under section 38ZB of the Rail Management Act 1996. Final decision A decision of the Commission made under section 38ZF of the Rail Management Act 1996. Freight Operators A person or company that operates (runs) rolling stock (trains) for movement of freight/cargo.
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