A New Rail Access Charging Policy: Hunter Valley Coal Chain Case Study

Abstract

We study a rail track access charging policy proposed by the Australian Rail Track Corporation (ARTC), in which a discount on access charges is offered if above-rail operators employ the “efficient train”. The efficient train is a train with a particular length, which results in the efficient use of a train path. The ARTC uses train paths to allocate access to the rail infrastructure. We discuss the motivation for and the goals of the proposed policy. As the new policy does not allow for differences in the equipment and track section, we argue that it may distort decisions about the net to gross tonne ratio, and it may not give the right incentives for future investment. Therefore, we conclude that defining the efficient train only in terms of length may not achieve its stated short term and long term goals and may have unintended consequences.

Keywords: Common Costs; Shared Infrastructure; Rail Transportation; The Efficient Train; Economic Regulation