1. W I PW I P - 1 - Berlin University of Technology Workgroup for Infrastructure Policy (WIP) 16 /10/2003 Benedikt Peter Rail Infrastructure Charging in the European Union W I PW I P Berlin University of Technology W orkgroup for I nfrastructure P olicy Benedikt Peter bp@wip.tu-berlin.de, http://wip.tu-berlin.de

2. W I PW I P - 2 - Berlin University of Technology Workgroup for Infrastructure Policy (WIP) 16 /10/2003 Benedikt Peter Objectives of this Presentation Is the EC legislation in line with economic theory? Structure of EU15-tariff systems Recommendations for rail infrastructure tariff systems

3. W I PW I P - 3 - Berlin University of Technology Workgroup for Infrastructure Policy (WIP) 16 /10/2003 Benedikt Peter EC Policy on Track Charges Directive 2001/14/EC Charges are to be set at the cost directly incurred as a result of operating the train service Mark-ups can be applied to recover the total costs, if the market can bear this External costs can be charged for Further exemptions for investment projects Marginal costs with mark-ups

4. W I PW I P - 4 - Berlin University of Technology Workgroup for Infrastructure Policy (WIP) 16 /10/2003 Benedikt Peter Objectives of Pricing Efficient resource allocation Static perspective: welfare maximization Dynamic perspective: incentives for dis(investment) Cost recovery Cost Components of Rail Infrastructure C(z,q,v) = F 1 (z) + F 2 (z,v) +c(z,v,q) q: traffic volume z: characteristics of the infrastructure v: characteristics of the vehicles F 1 : common fixed costs F 2 : blockwise variable costs c: variable costs

5. W I PW I P - 5 - Berlin University of Technology Workgroup for Infrastructure Policy (WIP) 16 /10/2003 Benedikt Peter Pricing Principles I 1. Short Run Marginal Cost Pricing Allocative efficiency (static) Welfare maximisation, minimal exclusion Allocative efficiency (dynamic) Only little information about z and v in price Cost recovery Deficit 2. Ramsey Pricing Allocative efficiency (static) & cost recovery Maximization social welfare under the constraint of deficit coverage Allocative efficiency (dynamic) Only little information about z and v in price

6. W I PW I P - 6 - Berlin University of Technology Workgroup for Infrastructure Policy (WIP) 16 /10/2003 Benedikt Peter Pricing Principle II 3. Fully distributed costs (FDC)-pricing Allocative efficiency (static) Less than MC- and Ramsey-pricing Allocative efficiency (dynamic) Only little information about z and v in price Cost recovery full deficit coverage 4. Non-linear tariffs Allocative efficiency (static) and cost recovery Maximize social welfare under the constraint of deficit coverage Pareto superior to linear tariffs, if cost-coverage ratio is defined Allocative efficiency (dynamic) Fixed parts, blockwise fixed parts and variable part: information on z, v, q Problem Price Distortions on downstream market welfare loss

7. W I PW I P - 7 - Berlin University of Technology Workgroup for Infrastructure Policy (WIP) 16 /10/2003 Benedikt Peter Result 1 No dominant pricing principle FDC can be ruled out A pricing system has to be adapted to the specific situation of the infrastructure manager Directive 2001/14/EC: SRMC with mark-ups EC legislation in line with economic theory non-linear pricing only as an exception?

8. W I PW I P - 8 - Berlin University of Technology Workgroup for Infrastructure Policy (WIP) 16 /10/2003 Benedikt Peter Marginal Cost Pricing in the EU I Examples Sweden and Finland A circulation fee is charged in both countries: for freight transport in Finland 0.001223 per gross tkm, in Sweden 0.0003 per gross tkm (Finland: additionally 0.19 per ton transported) for passenger transport in Finland 0.001189 per gross tkm, in Sweden 0.00093 per gross tkm (cf Austria: 0.001 per gross tkm for both freight and passengers) Finland: charge for environmental and accidental costs 0.000182 per gross tkm for electric freight transport 0.000584 per gross tkm for diesel freight transport 0.000098 per gross tkm for passenger transport Sweden Diesel charge of 0.036 per litre for old passenger and freight vehicles and 0.018 per litre for newer vehicles Accident charge of 0.118 per train-km for passenger transport and 0.059 per train- km for freight transport

9. W I PW I P - 9 - Berlin University of Technology Workgroup for Infrastructure Policy (WIP) 16 /10/2003 Benedikt Peter Evaluation No differences of MC according to infrastructure characteristics Only rough differentiation according to vehicle characteristics Differences in the height of the mc per gtkm between Finland and Sweden Freight Train (690 gt, 342 km) - Sweden: approx 100 - Finland: 204 Marginal Cost Pricing in the EU II

10. W I PW I P - 10 - Berlin University of Technology Workgroup for Infrastructure Policy (WIP) 16 /10/2003 Benedikt Peter Linear Tariffs in the EU I Fplus 8,30 /train-km F1 3,38 /train-km F2 2,24 /train-km F3 2,17 /train-km F4 2,07 /train-km F5 2,05 /train-km F6 1,92 /train-km steam traction 1,20 out-of-gauge-load 1,50 regional factors 1,05- 2,45 Germany Source: DB Netz

11. W I PW I P - 11 - Berlin University of Technology Workgroup for Infrastructure Policy (WIP) 16 /10/2003 Benedikt Peter Evaluation Regional passenger trains: around 2 – 10+ per train-km Freight trains (less than 1200 t and less than 160 km/h): approx. 1 - 4.5 per train-km max price for a long-distance passenger train path (not from Koeln-Frankfurt) 7.3 per train-km Freight Train (690 gt, 342 km): 657 - 1469 Cross-subsidization or demand-based pricing? Linear Tariffs in the EU II

12. W I PW I P - 12 - Berlin University of Technology Workgroup for Infrastructure Policy (WIP) 16 /10/2003 Benedikt Peter Non-Linear Tariffs in the EU I Price in Line Categories B: Suburban lines with average traffic C: Major intercity lines with average traffic N1: High speed lines with high traffic Access fee[1] (per track-km used and month)[1] 373.1243.1104475.912 Reservation fee (per path- km and timetable period) Normal time1.2440.0829.780 Peak time 06:30- 09:00, 17:00- 20:002.4880.08211.544 Weak time 00:30- 04:300.6220.0004.813 Usage fee (passengers) (per train-km) 0.806 Usage fee (freight) (per train-km) 0.235 Variation of the access fee (on some line categories: modulation factor reaches from 0.03 (for ten paths per months or less) to 1.5 (for more than 1000 path per month) Freight trains (train-run >= 300 km or average speed < 70 km/h) 60 % access fee reduction Reduction of access fee for long-term contracts Example France Source: RFF

13. W I PW I P - 13 - Berlin University of Technology Workgroup for Infrastructure Policy (WIP) 16 /10/2003 Benedikt Peter Evaluation Freight Train (690 gt, 342 km): variable part 80, reservation fee 0-28, access fee (major intercity line) 0-638 per month (incl. 60% reduction) No variation according to train weight Access fee per section, not for the network as a whole ( Spain) Access fee neutral according to the operators choice of route ( Italy) Non-Linear Tariffs in the EU II

14. W I PW I P - 14 - Berlin University of Technology Workgroup for Infrastructure Policy (WIP) 16 /10/2003 Benedikt Peter Tariffs in the EU I Pricing Principles SRMC-pricing: Finland, Sweden, Netherlands FDC-pricing: Portugal, partly in the UK Non-linear tariffs: UK, France, Italy, Spain, Luxembourg, partly in Denmark Ramsey-elements: in many countries for freight, German regions, … Structure of tariff system stretches from … One linear price in the Netherlands (passenger and freight) … to Self-selecting tariff with peak-load pricing and network segmentation in France (approx 200 different tariffs) Height of charges (Freight train, 690 gt, 342 km) stretches from … Approx 100 in Sweden (0.28/km) …to 1980 in Switzerland (5.80/km)

15. W I PW I P - 15 - Berlin University of Technology Workgroup for Infrastructure Policy (WIP) 16 /10/2003 Benedikt Peter Tariffs in the EU II

16. W I PW I P - 16 - Berlin University of Technology Workgroup for Infrastructure Policy (WIP) 16 /10/2003 Benedikt Peter Tariffs in the EU III

17. W I PW I P - 17 - Berlin University of Technology Workgroup for Infrastructure Policy (WIP) 16 /10/2003 Benedikt Peter Tariffs in the EU IV

18. W I PW I P - 18 - Berlin University of Technology Workgroup for Infrastructure Policy (WIP) 16 /10/2003 Benedikt Peter Recommendations A tariff system should consider the costs of use and the demand Costs of use Short run marginal costs as base price, including renewal Considering different infrastructure and vehicle characteristics Demand-based mark-ups According to origin and destination Considering intermodal competition Time-based variation: time of day, week, season according to train-types and respective capacities Further research necessary for the charging of scarcity

19. W I PW I P - 19 - Berlin University of Technology Workgroup for Infrastructure Policy (WIP) 16 /10/2003 Benedikt Peter Elements of Variable Costs Internal Costs Operating costs, that can be traced to a particular train movement, e.g. for personnel and signalling, Wear and tear costs for maintenance and renewal of the infrastructure Costs for energy consumption (electricity or diesel) Additional timetable planning and administration costs External Costs Accidents Pollution Global warming Capacity costs - Congestion? - Scarcity