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Designing the regulatory regime for a new piece of rail infrastructure

Our client asked us to help them design a regulatory regime for a new piece of rail infrastructure that would maximise whole-system efficiency, while protecting the commercial interest of the infrastructure manager.

  • We designed, and set the level of access charges to be levied on rail operators; and
  • We designed and implemented a performance regime that would provide financial incentives to operators and the infrastructure manager to prevent delay on the network.

We drew on our in-depth understanding of the rail industry and rail regulation, as well as our familiarity with regulatory regimes in other sectors, to develop the best options for our client.

The challenge in designing a charging regime for a rail infrastructure manager is how prescriptive the rail regulatory framework is about the conditions for applying different charges (especially the recovery of fixed cost), in the context of an industry that is heavily subsidised. Drawing on our detailed understanding of the regulations, we worked with our client and the Office of Rail and Road (ORR) to develop an innovative charging regime that both delivered our client’s objectives and met the regulator’s requirements.

The challenge of designing a performance regime for new rail infrastructure is to make one that both reflects the particular needs of the new network, as well as integrating with the established, if imperfect, regime that operates on the wider network. We drew on our detailed understanding of the existing regime to design a bespoke regime for our client that would provide the right incentive to all parties on its network, as well as meeting the demands of both the wider network and ORR.

Across this work we supported our client throughout with testing, agreeing and disseminating the proposals with their stakeholders, including train operators, other networks and ORR.

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