Rail Regulator challenged by railfreight industry over legality of price increases
The railways were developed as a result of the industrial revolution and the ever growing need to transport heavy minerals such as iron ore and coal from mining areas to the factories and power stations. These in turn further fed the demand for coal and railways so it was seemingly an inexorably entwined relationship which has lasted just over 200 years.Coal was one of the staple revenue earners for the railways but as industry has changed, demand for coal has dropped, especially in the last 30 years and consequently, the conveyance of coal by rail has declined from pit to power station.The Office of the Rail Regulator ORR and Network Rail NR have to agree fundamental finances for the five years from April 2014 known as Control Period 5 CP5. ORR has proposed a huge hike in access charges payable by freight companies who operate long distance coal trains to the major power stations in Yorkshire.Energy bills to rise – or the end of coal trains?If these charging proposals are implemented, it is likely that power bills will have to be increased to cover the extra coasts or the bulk coal trains will be consigned to history. When this information was imparted to the industry earlier this year, some companies at the ORR briefings said that as they had been given a year’s notice of the increases, it would be cheaper to use lorries so they would order some new ones and switch from rail to road.In their own words, the ORR says that Rail freight plays an important role in Great Britain’s logistics and makes a significant contribution to the economy. Around 25% of the electricity consumed in the UK is generated by coal that has been moved by rail. A further 16% is generated by nuclear power, with spent nuclear fuel being moved by rail for disposal.