Competition & Regulation in the Rail Sector: The European railway s expectations on the fourth railway package

Transcription

1 Competition & Regulation in the Rail Sector: The European railway s expectations on the fourth railway package 31 January 2013, Berlin Dr. Libor Lochman Executive Director 31 January

2 Three key elements of the sustainable rail development Intermodal level playing field Intramodal competition Infrastructure 31 January

3 4 th Railway Package to address three main components of the intramodal competition 1 Additional competences for ERA on authorisation for putting rolling stock in place on safety certification for railway undertakings 2 3 Opening the domestic rail passenger market will define minimum scope of open access and maximum scope for PSO will propose compulsory tendering of PSO with only limited exceptions Railways organisational structures IMs to always have the functions of infra development, maintenance, operations, marketing and charging Explicit choice of models: either total vertical separation, or a holding model with very strict Chinese Walls plus extra measures: Separation of senior management and boards, including cooling-off periods Restrictions on financial flows Subject to Commission approval, a Member State can block access to its market for an RU from another Member State if it is a holding and it is thought that it distorts competition Consultative body of infrastructure users to be established Network of infrastructure managers to be established 31 January

4 view: simplified certification & authorisation: precondition for market opening Additional competences for ERA Additional competences and functions centralised within ERA One stop shop for safety certifications and vehicle authorisations ERA as appeal body in disputes National Safety Authorities to keep the competence in the area of national rules Ensure coherence between environmental directives and technical requirements for interoperability and safety Strategic planning and budgeting of the EC funded research for improved interoperability 31 January

5 ERA: a good example of law making To the problems faced by railway undertaking in the process of authorisation of placing vehicle in service, the EC could have responded putting more responsibility on the national safety authorities Instead, the EC proposes to create a hierarchical link between ERA and NSAs where ERA monitors and coordinates the work of NSAs, so that potential conflicts are solved ex ante There are no doubts that the total costs of the system proposed are lower than the costs related to the several procedures to be repeated for all different Member States and correspondent National Safety Authorities which are in place today There are no doubts that this proposal will ensure non-discrimination with the insertion of the ERA binding coordination foster competition by lowering the total economic costs for the authorisation process 31 January

6 view: Domestic Rail Passenger Market opening Open Access supports a universal adoption of open access competition across the EU for high speed and conventional traffic Public Service Obligations For PSO, free choice of geographical size and award mechanism should be maintained WESTbahn in Austria serving the (Freilassing)-Salzburg-Vienna line NTV in Italy serving (notably) the Milan-Rome line REGIOJET in the Czech Republic serving the Prague-Ostrava line HKX in Germany serving the Köln-Hamburg line 31 January

7 Interactions between open access services and Public Service Obligations: a careful balance Open access should apply on the entire network in every EU Member State, provided that PSO economic equilibrium is preserved Where open access and a PSO overlap on the network, States may take measures to safeguard the economic equilibrium of the PSO Conversely, open access operators should also be protected e.g. where a new PSO is created or the scope of an existing PSO is extended Bundling of viable and non-viable services into single PSO/franchise contracts must remain possible for efficiency reasons Ensuring that national Regulatory Bodies have all means to fulfil their responsibilities, also by a better coordination at EU level And: Financial architecture of national rail sectors must improve Social conditions must be addressed Deepening technical alignment between national rail sectors 31 January

8 view: the structural models Efficient, non-discriminatory access to infrastructure a major enabler of competition in the rail sector Can be achieved with a well-financed and independent regulatory body Allow efficient structural models to support competitiveness agains other modes Both integrated and separated models can perform confirmed by the recent EVES-Rail study results Each Member State should be empowered to reconsider its existing rail sector model have sufficient flexibility to reform the given model switch between models, if national conditions so require New legislation only if seen necessary for the development of the European railway market after a thorough analysis! 31 January

9 The EVES-Rail Study: Goals Analyse the economic effects of vertical separation in the rail sector in the EU context Quantitative analyses: Assess the effect of vertical separation on three measures of economic performance: 1. Efficient use of inputs to produce outputs cost modelling 2. Competitive performance against other transport modes rail modal share 3. Value-for-money for state budgets traffic volume per Euro of state funding Qualitative analyses: Functioning of competition under different structural models System efficiency implications of different structural models 31 January

10 The EVES-Rail Study: Key Findings System cost effects (cost efficiency) Depend on train density and share of freight Negative aggregate effect for the EU if all switch to VS (costs increase) Rail modal share effects (rail sector s competitiveness) No significant difference between VS and holding company model, also when looking at impact with competition Value for money for state budgets No pattern to suggest an advantage from VS (Analysis limited to 5 countries) Market entry (competition) Can be significant and growing both with and without VS Alignment of incentives (system effects) Effects are important and require much more attention New trend towards re-alignment (e.g. GB, NL) 31 January

11 The EVES-Rail Study: Policy Recommendations Free choice of structural model Subject to providing non-discriminatory access Allows for competition between structural models Allow switching from a holding model to vertical separation Allow switching back from vertical separation to a holding model Where vertical separation is adopted Efficient setting of track access charges and performance regimes is necessary but not enough Enable (re)alignment of incentives between IM and RUs For any structure Need for coordination mechanisms must be recognised 31 January

12 Structural organisation and market entry source: EVES-Rail study Many factors affect the % of new entrants vertical separation is NOT one of them 31 January

13 Liberalisation and change in rail freight market share source: LibIndex by IBM; RMMS 2010 by DG MOVE 31 January

14 Essential body: Regulator Regulatory Body (Recast of the 1st rail package) Each Member State shall establish a single rail RB, independent from any other public or private entity, independent from any IM, charging body, allocation body or applicant and from any competent authority involved in the award of PSCs. Network statement Path allocation Charging issues Access to RRS Accounts separation State Aid Cooperation with other RBs Purpose of services PSO economic eqiulibrium 31 January

15 How to ensure sustainable rail future? s vision for better rail legislation Fair intramodal competition is fundamental to push companies efficiency and productivity. Fair intermodal competition is fundamental for growing rail modal share and push each mode in its natural efficiency zone. Market opening is the target not connected with unbundling: a separated system and yet empty market is as non-discriminatory as it gets, but it does not bring any benefits to railway! The concept of regulation must be unpacked in its two different meanings: Regulation as legislation i.e. regulation ex ante Regulation as regulatory monitoring i.e. regulation ex post The right balance between regulation ex ante and regulation ex post must be the golden rule of law-making. Only keeping this balance in mind, the legislator can create antidiscrimination measures which maximise positive outcomes Hence s concept of Efficient Non-Discriminatory Access 31 January

16 Efficient non-discriminatory access Goal: Aim for the highest possible efficiency of the sector Trade-Off: Ensure actual market access under non-discriminatory conditions so as to achieve the benefits of competitive pressure but without causing losses in terms of system efficiency Method: Allow different types of models, including hybrid models, so as to: Ensure alignment of incentives, e.g. a holding model, McNulty-type reforms Ensure an active role of the Regulatory Body in monitoring the functions of the IM and taking rapid corrective action where necessary Monitor and assess performance at national level reform if necessary, based on empirical evidence, not theoretical concepts 31 January

17 Future strategy? Cross-modal EU regulation! Improve EU law-making to ensure a fair intermodal legislative framework Set up EU cross-modal legislative principles Common principle for infrastructure charging Common principle for internalization of negative externalities Common principle for taxation Common principle for passenger rights Common social standards 31 January

18 Conclusions 4RP must be a step towards more rail customers 4RP must bring the necessary stability to the rail regulation - any further legislative proposals should be avoided in the coming years But it seems it is only a step towards a competitive Single Railway Area without a broader view on the entire transport legislation. There is a need to address all the issues to be solved to improve rail competitiveness This should lead to efficient and useful measures able to create the badly needed fair markets conditions between transport modes, rather than theory-based reforms that ignore the inter-modal aspect This shall also be done in a fair and transparent manner and in close cooperation with all stakeholders 31 January

19 Thank you for your attention! Dr. Libor Lochman Executive Director Tel: libor.lochman@cer.be For further information, visit our website: 31 January