Rail access pricing

Rail Access Maximum Prices

The Victorian Government is proposing new rail access maximum prices that rail line providers such as Metro Trains Melbourne and V/Line can charge operators that wish to use their rail lines for freight services.

Rail access maximum pricing will form part of the Victorian Government’s Rail Access Guidelines, which will also be open for public consultation in the months ahead.

It is proposed that the new access pricing aligns with current costs, while introducing a more uniform structure.

Notice of public consultation - proposed rail access maximum prices

Background

Section 38J of the Rail Management Act 1996 (Act) jointly allows the Minister for Public and Active Transport and the Minister for Ports and Freight to specify maximum prices for declared rail transport services provided by an access provider by means of a declared rail network. Before doing so, section 38N of the Act requires the responsible Minister to prepare a draft of the notice specifying the maximum prices (consultation draft) and invite submissions and comments from the public on that draft.

The purpose of this notice is to provide a summary of the content of the consultation draft and to invite questions and comments on the proposed rail access maximum prices. The consultation draft is at the end of this notice.

Submissions and comments

Submissions and comments on the consultation draft are now closed. All submissions and comments will be considered in finalising the notice under section 38J that will specify the maximum rail access prices.

Overview of the Victorian Rail Access Regime

The Victorian Rail Access Regime (VRAR) is set out in Part 2A of the Rail Management Act 1996 (the Act). The Act allows the responsible Ministers to set rail access maximum prices and establish rail access guidelines, which replaces the previous access regime administered by the Essential Services Commission.

To fulfil its policy commitments, the Victorian Government has reformed the access regime under which freight services are provided on the rail network.

The reforms are designed to regulate rail access in Victoria in the interests of competition and economic efficiency.

Proposed rail access maximum prices

Rail access pricing is a charge imposed on those who want to run a train on the declared rail network (called “access seekers” in the Act) by providers of declared rail transport services (“access providers”, e.g., Metro Trains Melbourne (MTM), V/Line). The declared rail network means the rail infrastructure used to provide declared rail transport services.

In 2020, the Department engaged specialist advisors to conduct a study of freight rail access pricing to support the implementation of the VRAR, which included development of a new pricing structure for rail freight access. In considering the new pricing structure, an extensive desktop research of freight rail access in Victoria and across other Australian States was conducted. The study also considered findings from consultation with key stakeholders, an assessment of potential pricing options, and economic and financial modelling of the potential implication of these options, based on the data provided by access providers. The study recommended a two-part tariff (flagfall and variable rate) regime across the freight network, as well as a penalty for cancelling pre-booked train paths.

The Department then had that work independently validated. The Department has considered the findings of both studies and now proposes a new pricing structure that will deliver, as far as practical:

• a revenue neutral position for MTM and V/Line
• a cost neutral position for access seekers.

No change is proposed for Pacific National and VicTrack.

The proposed new pricing structure will introduce for MTM:

• a unification of maximum prices across all access seekers

The proposed new pricing structure for V/Line is a simplified version of the current pricing structure, based on Gross Tonne Kilometre (GTK), designed to generate the same revenue as the current pricing structure.

This will”

• Remove the flag fall fee for all intermodal trips
• Increase the GTK rate for intermodal trips to generate the same revenue as the ‘base’ price structure
• Maintain GTK rate for grain
• Maintain the Geelong Grain Loop fixed fee

Prices to increase every year by CPI Melbourne.

For this pricing structure it is recommended that prices are adjusted each year:

1. Adjust indexation of annual price increases to CPI for Melbourne – Series ID – A2325811C
2. Remove the discounted “x factor” on prices each financial year currently valued at 1% to reflect potential efficiency gains that may be realised.

The formula for this annual variation is:

A_n = _An−1∗CPI

Where:

A_n= The access fees to apply from the year from the relevant Review Date;

A_n−1= The access fees that applied in the year prior to the relevant Review Date; and

CPI= The annual change in the consumer price index all groups for Melbourne, as measured at the March quarter each year (Series ID - A2325811C).

The notice which specifies the maximum prices must be published before 1 June 2024. It is proposed that the notice will commence operation on 1 July 2024.

Maximum prices for declared rail transport services

The prices for the FY 2024/2025 will be calibrated at the release of the March 2024 CPI (scheduled to be on Wednesday 24 April 2024).

For the purposes of this consultation draft, the prices below display the maximum prices that would apply in the present financial year (2023/2024).

Maximum prices for services provided by V/Line

Maximum prices for services provided by MTM

Maximum prices for V/Line’s access to MTM’s network

Maximum prices for services provided by VicTrack

Maximum prices for services provided by Pacific National

In the Schedule to this notice:

Cancellation Fee means a fee payable by an access seeker to compensate the access provider for its administrative costs and loss of amenity in reserving a path for an access provider. It is imposed if a booked train path which is subsequently cancelled by the access seeker and not used. This includes scheduled paths which are not used, as well as cancellation of ad hoc paths.

Grain loop means the North Geelong Grain Loop, which is a balloon loop that provides access to the GrainCorp grain rail unloading facility at the Port of Geelong.

Reference service 1 comprises two components:

(a) One off services:

The services which are provided on a one-off basis are:

1. the establishment of an IT system interface between the access seeker and Pacific National; and
2. system set up services which are provided for by an Operator Establishment Fee.

(b) Loading and unloading services in respect of trains of up to 1500 metres in respect of trains of up to 1500 metres, these services comprise:

1. shunting - Break up of trains on arrival of up to four shunts to place onto loading roads or marshalling yard, removal of red cards and marshalling of train for departure. The Access Seeker (also known as “Access Holder”) can choose to have either Pacific National provide locomotive(s) and crew for only two of the four shunts (Option A) or for all four shunts (Option B) provided for in this service.
2. truck in-gate process - Process to collect customer booking information, weigh the truck/trailer to obtain accurate container weight, integration of electronic information, inventory management of the container and notification by the Access Holder of the nature and description of any Dangerous Goods (which must be provided on arrival of the Dangerous Goods).
3. unloading of train process - Unloading of containers from wagons onto truck or onto ground, moving of containers to storage area.
4. loading of train process - Unloading containers from truck to ground, moving of containers to storage area if required, load containers from ground or storage area to wagon in compliance with the indicative load plan subject to the terms of the Terminal Protocol.
5. attaching and detaching locomotives - Coordination of the detaching of locomotives on arrival and coordination of the attaching of outgoing locomotives before departure. Locomotives are to be crewed by the Access Holder.
6. truck out-gate process - Completion of the truck visit to the terminal, matching of release numbers to container numbers and integration of electronic information for ending possession of the container.
7. ongoing administration related to the management of Access Holder;
8. customer interface; and (ix) basic container storage - Provision of an allowance of storage time for a container from time of arrival into the terminal till departure. For outgoing containers by rail 12 hours and incoming containers by rail 24 hours.

Reference service 2 comprises extended container storage beyond the allowance in basic container storage.

Reference service 3 comprises dangerous goods management - Management of dangerous goods in the terminal or on wagons in line with the Australian Dangerous Goods Code.

Reference service 4 comprises locomotive storage - Provision of track space for locomotives during the loading/unloading process.

Reference service 5 comprises wagon storage - Storage of any wagons not required for the outgoing service or any lay-over sets in line with the Access Holder's timetable.

Reference service 6 comprises truck driver induction - Truck driver inductions for any drivers not currently registered with Pacific National.

Reference service 7 comprises locomotive driver induction- Access Holder train driver inductions, yard familiarisation and Safety Interface Agreement procedures.

Reference service 8 comprises shunting in addition to that provided as part of Reference Service 1, with the locomotive and crew either provided by the Access Holder (Option A) or by Pacific National (Option B).

Reference service 9 comprises administration services if additional manual administration is required by the access seeker.

Services means the declared rail transport services for which maximum prices are specified.

TEU stands for Twenty-Foot Equivalent Unit - the dimensions are equal to that of a standard 20 foot shipping container.

Variable Non-Grain means a charge per 000 Gross Tonne Kilometre for all trains other than bulk (hopper wagon) grain trains.

Variable Grain means a charge for hopper wagon trains carrying all forms of grain.