Railways: Electricity

Department for Transport written question – answered at on 22 October 2021.

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Photo of Ian Mearns Ian Mearns Chair, Backbench Business Committee, Chair, Backbench Business Committee

To ask the Secretary of State for Transport, whether the Government took steps to prevent Network Rail from increasing the electricity prices it charges Freight Operating Companies and Train Operating Companies to operate electric train services.

Photo of Ian Mearns Ian Mearns Chair, Backbench Business Committee, Chair, Backbench Business Committee

To ask the Secretary of State for Transport, what estimate his Department has made of the duration of the increase Network Rail has made to its charges for electricity to Freight Operating Companies and Train Operating Companies; and what his most recent estimate is of the anticipated length of time it will take for those electricity prices to stabilise.

Photo of Ian Mearns Ian Mearns Chair, Backbench Business Committee, Chair, Backbench Business Committee

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.

Photo of Ian Mearns Ian Mearns Chair, Backbench Business Committee, Chair, Backbench Business Committee

To ask the Secretary of State for Transport, whether the price increases to operate electric freight and passenger train services is (a) restricted to the UK or (b) has been seen to affect other European countries.

Photo of Chris Heaton-Harris Chris Heaton-Harris Minister of State (Department for Transport)

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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