Railways: Electricity

(asked on 15th October 2021) - View Source

Question to the Department for Transport:

To ask the Secretary of State for Transport, what impact assessment his Department has made of Network Rail’s increase in electricity charges on (a) the running of passenger rail services and (b) the financial resilience of Train Operating Companies to absorb those increased costs.


Answered by
Chris Heaton-Harris Portrait
Chris Heaton-Harris
Secretary of State for Northern Ireland
This question was answered on 22nd October 2021

The recent increase in electricity prices is part of a wider trend that has affected a number of European countries and industry sectors. It is too early to predict when prices will stabilise.

The Government does not intervene in setting the price Network Rail (NR) charges train and freight operating companies for electricity and NR does not set traction electricity charges for train operators. NR procures traction electricity on behalf of the rail industry, which is then charged to operators at the price that NR pays. This means that Network Rail does not set the price or make a profit or loss in this process. If market electricity prices change, the risk or benefit rests with train and freight operators. For the vast majority of operators, the price has risen 6% for this winter compared to last winter.

Each train and freight operator is responsible for determining its own strategy for locking into future traction electricity prices. These strategies are then enacted by Network Rail according to the Traction Electricity Rules referenced in Track Access contracts. The process replicates what operators would need to do if they bought directly from an energy supplier. The Department now operates a business planning process with train operators agreeing annual business plan budgets which will also include the planned costs of electricity used by relevant operators. Any emerging increases in NR electricity charges will be considered by operators themselves and absorbed as part of their agreed overall business plan outputs and budget available. The Department does not currently consider this a material financial risk to currently agreed budgets.

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