HS1 Ltd told to lower charges for train operators

Rail Regulator orders HS1 Ltd to further lower charges for train operators

The Office of Rail and Road announced today that it is directing HS1 Ltd to lower its charges for passenger and freight train operating companies to use the high speed rail line from London to the Channel Tunnel, from April 2025.

The regulator's decision, published in its Final Determination of HS1 Ltd's spending plans for the next five years, follows a thorough review of the company's proposals, which had already proposed some reductions in costs relative to today.

The regulator has determined that overall charges should come down by 3.8% (£5m per year) compared to HS1 Ltd's latest plans, which were published in November as a response to the regulator's Draft Determination in September. As part of this, the company is being directed to reduce its charges for renewing its track assets and its stations, including St Pancras. It must also reduce its charges for its day-to-day operating and maintenance of the railway.

ORR was able to identify specific areas in the company's spending plans where further improvements can be made, resulting in savings to passenger and freight train operators. ORR's view is that better management of the track and station assets can result in lower charges, ultimately benefiting customers.

In its response to the Draft Determination, HS1 Ltd disagreed with the amount of ORR's proposed reductions in charges. The regulator took additional evidence from HS1 Ltd and other stakeholders into account, but ultimately determined that the company's spending plans did not meet its duties for efficient spending.

Feras Alshaker, director, planning and performance, said: "Our thorough, independent review of HS1 Ltd's spending plans has resulted in significantly lower costs for passenger and freight train operators using the high speed line from April 2025. Although, overall, HS1's original plans were good, the company must now change specific areas of those plans to account for our decisions, which should benefit everyone who uses this railway."

Notes to editor

1.         ORR's PR24 Final Determination  

2.         Regulated charges - comparison between last control period, HS1's latest plans and ORR's final determination:  

3.   ORR's review found that HS1 Ltd's latest plans did not meet its General Duty under the HS1 Concession Agreement. As such, we are instructing HS1 Ltd to make material changes in two key areas:   

a.   Its charges for renewals were not efficient and HS1 Ltd must reduce them by £1.9m per year for the HS1 Route and £0.9m per year for Stations; 

b.   Its charges for operations & maintenance on the HS1 Route were not efficient and HS1 Ltd must reduce them by £2.3m per year. 

4.   Passenger and freight operator growth 

a.   ORR's determination assumes there will be no freight traffic on HS1 in this control period, based on information provided by HS1 Ltd and freight operators. However, we have determined the charges which would apply to freight on HS1, and these charges are significantly lower than in previous control periods, which we expect to support the growth of freight.  

b.   While ORR's determination is separate from decision on access to HS1, it assumes long-term growth in passenger traffic, including the introduction of new operators, and ORR hopes that its determination of lower charges will support this growth.  

5.   About the periodic review process: 

a.   The periodic review 2024 (PR24) of HS1 Ltd covers funding for the period from 1 April 2025 to 31 March 2030, also known as control period four (CP4). 

b.   ORR issued its Draft Determination on 30 September, followed by a 6-week consultation. In response, stakeholders provided feedback and new evidence which supported ORR's approach and HS1 Ltd was required to revise its plans to reflect the Draft Determination, which it did not fully do. Where ORR found its plans were not acceptable, it consulted stakeholders again from 12-19 December and took any new evidence into account in developing its Final Determination. 

6.   About the HS1 Network: 

a.   The HS1 network is a 109km high-speed rail line that connects London St Pancras through Kent to the Channel Tunnel. 

b.   There are four stations on the line: London St Pancras, Stratford International, Ebbsfleet International and Ashford International. 

c.   The network is used by domestic Southeastern 'Javelin' services between London and Kent and within Kent; and Eurostar passenger trains, as well as freight operations heading to and from the Channel Tunnel.