Review of the Western Australian Rail Access Regime Final Decision Paper February 2020 Review of the Western Australian Rail Access Regime – Final Decision Paper © Government of Western Australia 2020 Further information relating to this report may be obtained by emailing [email protected] Contents Executive Summary ............................................................................................................................1 Importance of an effective access Regime ....................................................................................1 Objectives of the Regime and the review ......................................................................................1 Current strengths of the Rail Access Regime ................................................................................2 What are the issues that have been identified? .............................................................................2 Recommendations .........................................................................................................................2 1. Purpose and scope of this paper ...............................................................................................5 1.1. Purpose ................................................................................................................................5 1.2. Application of the Regime .....................................................................................................5 1.3. Review process .....................................................................................................................6 2. Asset valuation .............................................................................................................................7 2.1. Problem ................................................................................................................................7 2.2. Options considered ...............................................................................................................8 2.3. Assessment and recommendation........................................................................................8 2.3.1. Status quo – GRV .....................................................................................................8 2.3.2. Building block with a ‘line in the sand’ valuation .................................................... 10 2.3.3. Building block with DORC...................................................................................... 11 2.3.4. DORC with trigger to determine when regulatory obligations are implemented ... 20 2.3.5. Transitional arrangements for change in asset valuation ...................................... 24 3. Pricing guidance ....................................................................................................................... 29 3.1. Problem ............................................................................................................................. 29 3.2. Options considered ............................................................................................................ 29 3.3. Assessment and recommendation..................................................................................... 29 3.3.1. Status quo .............................................................................................................. 29 3.3.2. Indicative tariffs ...................................................................................................... 30 3.3.3. Standing offer ........................................................................................................ 32 3.3.4. Competitive imputation pricing .............................................................................. 34 3.3.5. Guidance on allowable price changes ................................................................... 35 4. Quantification of costs and benefits of changes to pricing mechanisms .......................... 37 4.1. Assumptions ....................................................................................................................... 37 4.2. Results ............................................................................................................................. 39 5. Ability to opt out ........................................................................................................................ 40 5.1. Problem ............................................................................................................................. 40 5.2. Options considered ............................................................................................................ 40 5.3. Assessment and recommendations ................................................................................... 40 5.3.1. Requiring unfair discrimination provisions to include consideration of agreements made outside of the Code ................................................................. 40 5.3.2. Applying Part 5 instruments to agreements outside the Code .............................. 42 5.3.3. Fast track negotiation ............................................................................................ 43 6. Extensions and expansions ..................................................................................................... 45 6.1. Problem ............................................................................................................................. 45 6.2. Options considered ............................................................................................................ 45 6.3. Assessment and recommendations ................................................................................... 46 6.3.1. Amending the current process ............................................................................... 46 6.3.2. High level guidance ............................................................................................... 49 6.3.3. A more detailed process ........................................................................................ 49 7. Efficiency of the regulatory process ....................................................................................... 51 7.1. Problem ............................................................................................................................. 51 7.2. Options considered ............................................................................................................ 51 7.3. Assessment and recommendations ................................................................................... 51 7.3.1. Preventing frivolous or vexatious access requests ............................................... 51 7.3.2. Improving timeframes in the Code ......................................................................... 53 7.3.3. Publishing standard information package and regulator approved access agreement .............................................................................................................. 54 7.3.4. Standardise access seeker obligations ................................................................. 57 7.3.5. Consistent consultation on Part 5 instruments ...................................................... 59 7.3.6. Model set of Part 5 instruments ............................................................................. 60 7.3.7. Allow arbitrator to make interim order on access arrangements ........................... 61 7.3.8. Allowing parties to agree on an arbitrator .............................................................. 62 8. Railway owner accountability .................................................................................................. 64 8.1. Problem ............................................................................................................................. 64 8.2. Options considered ............................................................................................................ 64 8.3. Assessment and recommendations ................................................................................... 64 8.3.1. Regular and consistent reporting on compliance with Part 5 instruments ............ 64 8.3.2. Reporting on outcomes of access negotiations ..................................................... 65 8.3.3. Reporting on service quality indicators .................................................................. 66 9. Regulator Accountability .......................................................................................................... 68 9.1. Problem ............................................................................................................................. 68 9.2. Options considered ............................................................................................................ 68 9.3. Assessment and recommendations ................................................................................... 68 9.3.1. Merits review for all regulatory decisions ............................................................... 68 9.3.2. Merits review for certain decisions ........................................................................ 70 9.3.3. Up front direction and expert advice ...................................................................... 71 10. Transparency ............................................................................................................................. 73 10.1. Problem