ESB Sessions, The Hague 22 June 2018

European railway legislationOptions for the NetherlandsDidier van de Velde

Director of inno-V consultancy (Amsterdam, the Netherlands)Researcher at the department of Organisation and Governance, Delft University of Technology (Delft, the Netherlands)

22 June 2018

Contents

EU legislation• A bit of history

− From 91/440 to the 4th RP• Main components

Wide variety of arrangements elsewhere

− Competition model− Separation model

Some interesting developments• Open Access• Competitive Tendering• Reintegration debate

What next for the Netherlands?

22 June 2018

Phot

o: T

rein

reiz

iger

.nl(

2017

)

22 June 2018

Reform of RU and market opening Licences Safety Infrastructure Interoperability

Directive 91/440• Independence of RU from States • Unbundling accounts RU/IM• Restoring sound finances • Market opening to international groupings and

international freightDirective 95/18• Conditions for granting licences

to rail companies

Directive 96/48• Interoperability of trans-

European HSR

Directive 95/19• User-charges and allocation of

infrastructure capacities

Directive 2001/12• Reinforcement of account unbundling (State/IM,

IM/RU)• Unbundling accounts freight - passengers • Greater opening to international freight

Directive 2001/13• Conditions for granting licences

to rail companies

Directive 2001/14• User-charges and allocation of

infrastructure capacities• Safety certificate

Directive 2001/16• Interoperability of trans-

European conventional rail

Directive 2004/51• Opening of national and international freight

market

Directive 2004/49• Definition of safety rules

Directive 2004/50• Harmonization and clarification

of interoperability requirements

Directive 2007/58• Allocation of capacity and access charges• Opening of international passenger transport

Directive 2007/59• Certification of train drivers

Directive 2008/110• Update of safety rules

Directive 2008/57• Update of interoperability

requirements

1st RP

Regulation 881/2004• Setup ERA to co-ordinate safety

and interoperability

2nd RP

Directive 2012/34• Recast 1st railway package

Regulation 1371/2007• Rail passengers’ rights and obligations

Regulation 2016/796• Setup EU Agency for Railway

Directive 2016/797• Update of interoperability

requirements

Directive 2016/798• Update on safety rules

Directive 2016/2370• Opening national passenger transport• Governance of railway infrastructure

Directive 2016/2337• Accounting rules

Regulation 2016/2338• Opening national passenger transport 4th RP

3rd RP

European legislation railway sectorThe origins and the credo

The Swedish separation in 1988• All infrastructures equal• Marginal social cost pricing

The original aims of the EU railway policy (1991)• Healthy financial management of RU• Improve competitiveness with international road freight

The current “EC-credo” (put simply) (≠ EC-requirements!)• Railways are inefficient and not sufficiently customer-focused• Competition will help to improve this situation• Open access and competitive tendering should [can?] be used• But then all operators should have equal access to infrastructure• The only [preferred?] way to realise this fairly, is full infrastructure

separation

22 June 2018

European legislation railway sector The 4th Railway Package

Market Pillar• Tendering of railway contracts

(Public Service Obligations)− But direct award still permitted (under

conditions)• Open access (OA)

− But restriction such as not to endanger Public Service Obligations contacts

• "Impartiality" of infrastructure manager

Technical Pillar• Certification (ERA) valid throughout

the EU• Interoperability of European Rail

Traffic Management System (ERTMS) • Reducing large number of remaining

national rules

Open access international• Already implemented

Open access domestic • 1 Jan 2019 (timetable 2021 = Dec

2020) [HRN-NL 2025]• But can be limited if substantial

influence on existing PSC Public service contracts (PSC)

• 3 Dec 2019: 1370/2007 fully applicable

− PSC required, but Art. 5.6 allows Direct Award (DA) of rail PSC (up to 2023-2033!)

− Gradual opening of PSC (DA for max. 10 years PSC, or competitive tendering (CT)

• 24 Dec 2023: Art. 5.6 disappears− Norm for PSC is CT− DA allowed under “performance

exemption”

“The EC does not ask for more...”

22 June 2018

Summarising the options chosen elsewhereWide variety of competition regimes

Estimated situation(2018)

Open access with entry

Open accessno entry

No open access

Competitive tendering

??

?

22 June 2018

Authority

Infrastructure Transport

NL

ProRail NS

Freight Transport

• Directly awarded concession (2015-2025)

• Annual policy priority letter

• Annual management plan• Management budget

NS ReizigersMain railway network(national passenger services)

• Directly awarded concession (2015-2025)

• Annual policy priority letter

• Annual transport plan• Concession price (to

State)

Ministry of Finance

• Ownership steering• Dividend (to State)

• Access agreements• Track Access

Charges

Stations

NS Stations

Passenger TransportRegional transport

• Competitively tendered regional concessions (10-15 years)

• Concession payment to operator

Ministry of Infrastructure and Water Management

• Ownership steering

Cooperation("Beter & Meer”)

• Budgets

Regional transport authorities

ILT (Inspectorate)

ACM Transport Chamber of Competition Authority

Regulation

Authority

Infrastructure Transport

NL

ProRail NS

Freight Transport

• Directly awarded concession (2015-2025)

• Annual policy priority letter

• Annual management plan• Management budget

NS ReizigersMain railway network(national passenger services)

• Directly awarded concession (2015-2025)

• Annual policy priority letter

• Annual transport plan• Concession price (to

State)

Ministry of Finance

• Ownership steering• Dividend (to State)

• Access agreements• Track Access

Charges

Stations

NS Stations

Passenger TransportRegional transport

• Competitively tendered regional concessions (10-15 jaren)

• Concession payment to operator

Ministry of Infrastructure and Water Management

• Ownership steering

Cooperation("Beter & Meer”)

• Budgets

Regional transport authorities

ILT (Inspectorate)

ACM Transport Chamber of Competition Authority

Regulation

X

Alliancing

ROSCO’s

GB

Authority

Infrastructure Transport

NL

ProRail NS

Freight Transport

• Directly awarded concession (2015-2025)

• Annual policy priority letter

• Annual management plan• Management budget

NS ReizigersMain railway network(national passenger services)

• Directly awarded concession (2015-2025)

• Annual policy priority letter

• Annual transport plan• Concession price (to

State)

Ministry of Finance

• Ownership steering• Dividend (to State)

• Access agreements• Track Access

Charges

Stations

NS Stations

Passenger TransportRegional transport

• Competitively tendered regional concessions (10-15 jaren)

• Concession payment to operator

Ministry of Infrastructure and Water Management

• Ownership steering

Cooperation("Beter & Meer”)

• Budgets

Regional transport authorities

ILT (Inspectorate)

ACM Transport Chamber of Competition Authority

Regulation

X

DE

Authority

Infrastructure Transport

NL

ProRail NS

Freight Transport

• Directly awarded concession (2015-2025)

• Annual policy priority letter

• Annual management plan• Management budget

NS ReizigersMain railway network(national passenger services)

• Directly awarded concession (2015-2025)

• Annual policy priority letter

• Annual transport plan• Concession price (to

State)

Ministry of Finance

• Ownership steering• Dividend (to State)

• Access agreements• Track Access

Charges

Stations

NS Stations

Passenger TransportRegional transport

• Competitively tendered regional concessions (10-15 jaren)

• Concession payment to operator

Ministry of Infrastructure and Water Management

• Ownership steering

Cooperation("Beter & Meer”)

• Budgets

Regional transport authorities

ILT (Inspectorate)

ACM Transport Chamber of Competition Authority

Regulation

CH

Regional operators

Authority

Infrastructure Transport

NL

ProRail NS

Freight Transport

• Directly awarded concession (2015-2025)

• Annual policy priority letter

• Annual management plan• Management budget

NS ReizigersMain railway network(national passenger services)

• Directly awarded concession (2015-2025)

• Annual policy priority letter

• Annual transport plan• Concession price (to

State)

Ministry of Finance

• Ownership steering• Dividend (to State)

• Access agreements• Track Access

Charges

Stations

NS Stations

Passenger TransportRegional transport

• Competitively tendered regional concessions (10-15 jaren)

• Concession payment to operator

Ministry of Infrastructure and Water Management

• Ownership steering

Cooperation("Beter & Meer”)

• Budgets

Regional transport authorities

ILT (Inspectorate)

ACM Transport Chamber of Competition Authority

RegulationSE

Station operator

XCooperation?

Summarising the options chosen elsewhereWide variety of forms of governance

22 June 2018

SE

CHDE

GBNL

For more details, see:Background report to the report “Kiezen voor een goed spoor”

Van de Velde, D. and E. Röntgen(2017). Buitenlandse ervaringenoverheidssturing op het spoor. Amsterdam/Den Haag, inno-V/Rijksoverheid: 34 p.

22 June 2018

More competition for the track or on the track?

What next?The options defined in”Kiezen voor een goed spoor” put in a wider perspective

Mor

e v

ertic

al in

tegr

atio

n an

d co

mpe

titio

n by

em

ulat

ion?

What next?The 4th Railway Package and the Netherlands

What needs to be done? Concession regime

• Regional lines: OK or more?• National network (HRN)

− CT or DA after 2025? Or ...?

Open access regime• Freight: OK• Passengers international: OK/?• Passengers national: ?

Infrastructure manager• OK• TAC?• Capacity allocation?

Main lessons and options Regional lines

• More decentralisation = more integration issues

• More coordination/integration with infrastructure = more optimisation and swifter improvements?

National network• Direct award under performance

exemption (Dutch lobby)• Competitive tendering =

major challenge• Open access instead of DA?• Regulatory/integrative framework if

open access? Infrastructure manager

• ZBO / Status quo / Holding• See the alliancing debate and

reflect!

22 June 2018

What next?Important (forgotten?) themes when designing regimes

Integration and the long run Who/what will take care of service

integration?• Train / Train• Train / Local PT• MaaS

Who/what will ensure system-wide cost/revenue optimisation across the whole value-chain?

• Contractual incentives?• Alliancing?• Vertically integrated concessions?

Who/what will take care of long-term planning?

• Service concepts and infrastructure network development

• Technological progress, R&D, implementation coordination,...

• Land-use and transport system planning (stations and lines as cores of urban development)

The paradox of “more market” More CT = More central planning

• Is government equipped and incentivised for this?

• Was this / What is the intention?

CT = increased short term focus• Where does the knowledge go?• What makes the knowledge flourish?• What about the rail strategy!?

A market of state-owned competitors• Is this a problem (or not)?• (NB: This was not the intention...)

22 June 2018

Improvements are always possible, but current performances are not bad!