Application for Certification of the Victorian Intra-State Rail Access
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Victorian Intra-State Rail Access Regime: Application for Certification Victorian Government July 2001 Table of Contents Section Page 1. Application and prescribed information...................................................... 1 1.1. Applicant State or Territory................................................................. 1 1.2. Responsible Minister........................................................................... 1 1.3. Contact Officers.................................................................................. 1 1.4. Address of Responsible Minister ......................................................... 2 1.5. Description of access regime ............................................................... 2 1.6. Description of the services................................................................... 2 1.7. Grounds in support of application ....................................................... 2 2. Introduction............................................................................................... 3 2.1. Background ........................................................................................ 4 3. Victorian Government policy perspective.................................................... 7 3.1. Vertical integration ............................................................................. 8 3.2. The Victorian access regime ................................................................ 9 3.2.1. Key policy objectives relevant to the access regime ..................... 10 3.2.2. What were bidders told about the access regime? ........................ 13 3.3. The Victorian Government’s ongoing commitment to investment and competition in rail ....................................................................................... 14 3.4. Appropriate for State to retain regulatory control............................... 15 July 2001 i Table of Contents Section Page 4. The Victorian intra-State rail access regime............................................... 16 4.1. Declaration....................................................................................... 16 4.2. Administration of the regime............................................................. 17 4.2.1. Negotiations.............................................................................. 18 4.3. Arbitration........................................................................................ 18 4.4. Pricing principles .............................................................................. 20 4.4.1. Pricing principles for Freight Australia’s leased network ............. 20 4.4.2. Pricing principles for the Bayside network .................................. 21 4.4.3. Access pricing principles relating to the Dynon Terminals .......... 22 5. The Victorian regime is effective............................................................... 24 5.1. Appropriate coverage of services ....................................................... 24 5.1.1. Are the facilities ‘significant’?..................................................... 26 5.1.2. Is it economically feasible to duplicate the facilities? ................... 27 5.1.3. Is access to the service necessary in order to permit effective competition in a downstream or upstream market? ................................... 30 5.1.4. Can the safe use of the facility by access seekers be ensured at an economically feasible cost? Do appropriate regulatory arrangements for safety exist?.............................................................................................. 32 5.1.5. Summary................................................................................... 33 5.2. Negotiation framework ..................................................................... 34 July 2001 ii Table of Contents Section Page 5.2.1. The Victorian regime meets criteria (a) to (c) .............................. 34 5.2.2. Competitive neutrality ............................................................... 36 5.2.3. Service quality ........................................................................... 39 5.2.4. Timepath management .............................................................. 41 5.2.5. Safety accreditation ................................................................... 42 5.2.6. Pricing principles ....................................................................... 42 5.2.7. Dispute resolution mechanisms.................................................. 43 5.3. Clause 6(4)(d) – Expiry date.............................................................. 43 5.4. Clause 6(4)(e) – Reasonable endeavours to negotiate.......................... 44 5.5. Clause 6(4)(f) – No requirement for identical terms and conditions..... 44 5.6. Clause 6(4)(g) – Dispute resolution.................................................... 44 5.6.1. Power to issue Orders-in-Council ............................................... 45 5.6.2. Requirement to seek and consider submissions from the Director of Public Transport ...................................................................................... 50 5.6.3. Possible conflict between pricing principles and the CPA principles 50 5.7. Clause 6(4)(h) – Appeal rights ........................................................... 50 5.8. Clause 6(4)(i) and (j) – Matters to be taken into account..................... 51 5.8.1. Treatment of sunk costs ............................................................. 53 July 2001 iii Table of Contents Section Page 5.8.2. Average cost pricing .................................................................. 57 5.8.3. Recovering the costs of new investments .................................... 60 5.8.4. Pricing issues raised in the NCC Issues Paper ............................. 62 5.9. Clause 6(4)(k) – Material change in circumstances ............................. 63 5.10. – Existing users ............................................................................. 63 5.10.1. Clause 6(4)(m) – Hindering access.............................................. 63 5.11. Clauses 6(4)(n) and (o) – Ring fencing............................................ 64 5.12. Clause 6(4)(p) – Multiple jurisdictions............................................ 64 5.12.1. Consistency with other regimes.................................................. 65 Appendix A: Relevant legislation Appendix B: Orders in Council issued under Part 2A of the Rail Corporations Act 1996 Appendix C: Guidelines issued by the Office of the Regulator-General Appendix D: Information provided to bidders regarding the rail access regime July 2001 iv Victorian Intra-State Rail Access Regime: Application for Certification 1. Application and prescribed information This application is made under section 44M(2) of the Trade Practices Act 1974. The following supporting information is submitted for the National Competition Council’s (NCC’s) consideration in accordance with Regulation 6B of the Trade Practices Regulations. It seeks a recommendation from the NCC to the Relevant Minister that the Victorian rail access regime is an effective access regime in relation to the service of providing railway infrastructure facilities necessary for the operation and use of a railway by a person for the purpose providing a service of carrying freight. 1.1. Applicant State or Territory This application is made by the State of Victoria. 1.2. Responsible Minister The Responsible Minister concerning this application is: The Hon. Stephen Phillip Bracks, MP Premier of Victoria 1.3. Contact Officers The relevant contact officer concerning this application is: Ms Mary Potter Assistant Franchise Manager Office of the Director of Public Transport Department of Infrastructure Level 25, Nauru House 80 Collins St MELBOURNE VIC 3000 ph: (03) 9655 6418 fax: (03) 9655 6426 Email: [email protected] July 2001 1 Victorian Intra-State Rail Access Regime: Application for Certification 1.4. Address of Responsible Minister The Responsible Minister’s address for the delivery of documents, including the notification of any decision or recommendation of the Relevant Minister or the NCC relating to this application is: The Hon. Stephen Bracks, MP Premier of Victoria Level 1, 1 Treasury Place MELBOURNE VIC 3002 1.5. Description of access regime A description of the access regime is at Section 4 of this document. A copy of the relevant legislation, Orders-in-Council and Guidelines is attached at Appendices A, B and C. 1.6. Description of the services As required under Regulation 6B(f), this application includes a description of the services covered by the access regime (see Section 4.1). 1.7. Grounds in support of application As required under Regulation 6B(g), this application includes argument in support of the application (see Section 5 of this application). July 2001 2 Victorian Intra-State Rail Access Regime: Application for Certification 2. Introduction This application seeks certification of the access regime relating to Victoria’s intra-state rail freight network (Victorian rail access regime). The Victorian rail access regime commenced on 1 July 2001. The regime enables operators to gain access to a number of services necessary for the provision of rail freight services. The Victorian Government considers that the Victorian rail access regime meets all of the criteria for effectiveness contained in the Competition Principles Agreement (CPA). The facilities covered by the regime are significant The declared services under the regime involve the use of the country