June 20, 2013

EC demands cut in "excessive" Channel Tunnel charges

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THE European Commission (EC) has issued a formal request to the French and British governments to enforce European regulations on track access charging for freight and passenger trains in the Channel Tunnel, which have been branded "excessive" by transport commissioner Mr Siim Kallas.

According to the EC, France and Britain have failed to comply with the First Railway Package (Directives 91/440/EEC and 2001/14/EC, now replaced by the Rail Recast) because infrastructure charges are not based on the direct costs of the long-term investment costs of building the tunnel. The EC says it has received numerous complaints about the level of charges, and it argues that the charging structure is too complex.

An EC statement issued on June 20 claims the typical charge for a single path for a passenger train (depending on the time of day) is €4320 plus €16.60 for each passenger on board, while for freight the fee is "at least" €3645. The Commission argues that the current level of charging is stifling traffic growth, with an average of just six freight trains using the tunnel per day and 43% of capacity remaining unused.

Only 2325 freight trains used the Channel Tunnel last year, compared with 2388 in 2011 and 2718 in 2008.

"The Channel Tunnel is not being used to its full capacity because of these excessive charges," says Kallas. "As a result, more freight is being carried on lorries instead of by rail, freight operators and their customers are being overcharged, and passenger are paying over the odds for their tickets. The current regime is also stifling growth in the rail sector."

Eurotunnel points out that unlike most rail infrastructure in Europe, the €15bn investment in the Channel Tunnel was entirely funded by the private sector, and that investment was made on the basis of traffic forecasts calculated by the British and French governments and their state-owned railway companies. It also argues that access charges are proportional to those applied on the British and French networks.

Eurotunnel says Eurostar is contesting a lack of transparency in its access charges for 2014, but it says this is the same contract it has operated under since 1994.

The EC is also critical of the tunnel's regulator, the Intergovernmental Commission (IGC), which it claims does not have the power to adopt decisions on its own initiative without complaint. The IGC is made up of representatives of the British and French governments, and as a result fails to comply with European legislation because it is not fully-independent from train operators and infrastructure managers. The EC notes that Eurostar is controlled by SNCF and London & Continental Railways, which are both state-owned companies.

Eurotunnel says it believes the IGC has delayed the launch of German Railways services through the tunnel. An operating licence was issued last week after three years of studies.

The 1987 usage agreement between Eurotunnel and certain operators, which allocates capacity to these customers for 65 years, is also deemed illegal under European law because of its duration.

The Commission sent a formal notice to the British and French governments on these issues in 2011 and says it hoped at the time to resolve the issues through negotiations, but the infringements have not been addressed. The two countries now have two months to respond to the latest notice, and if they fail to act the Commission could take the case to the European Court of Justice.

Eurotunnel says that if changes are made to its concession which are not in the interests of its 300,000 small shareholders it will seek a legitimate indemnity from the British and French governments.

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