The Office of Rail and Road (ORR) has directed HS1 Ltd to lower its charges for passenger and freight operators from April.
The regulator has made the call in its final Determination of HS1 Ltd’s spending plans for the next five years from April 1 2025 to March 31 2030 in its Control Period 4 (CP4).
ORR has said overall charges should come down by £5 million per year (3.8%) from what HS1 Ltd proposed in November. This includes reducing charges for renewing track assets and stations and reducing charges for day-to-day operating and maintenance of the high-speed line.
It also said it 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”.
A statement from the regulator added: “ORR's view is that better management of the track and station assets can result in lower charges, ultimately benefiting customers.”
In its Final Determination, the regulator assumed there would be no freight traffic on HS1 during CP4 hopes lower charges will “support the growth of freight”.
It added: “Our determination assumes long-term growth in passenger traffic, including the introduction of new operators and we hope that our determination of lower charges will support this growth."
The report also said ORR concluded HS1 Ltd’s operations and maintenance costs were “not efficient”, calling for lower charges. The same applies for renewals. ORR said “improvements in asset management maturity would lead to better understanding of opportunities and better mitigations for risks, which would reduce cost estimates for the 40-year plan”.
ORR said HS1 Ltd disagreed with the amount of the proposed reduction in charges after last year’s Draft Determination. However, despite taking additional evidence from the firm and other stakeholders, the regulator found spending plans did not meet its duties for efficient spending.
Feras Alshaker, Director, Planning and Performance at ORR, 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.”
Responding to the determination, HS1 Ltd’s Chief Strategy and Regulation Officer, Mattias Bjornfors, said the firm was ‘looking forward we now look forward to seeing how the lower cost to operators drives growth on HS1’.
He said: “Our plan for 2025-2030 includes proposals to enhance efficiency and reduce the cost of operating the high-speed line, incorporating innovations like track deterioration modelling to better target renewal investments.
“These innovations have enabled us to propose a 16.5% reduction for operators of international traffic and 11-12% for those handling domestic routes, which we strongly encourage operators to pass on to passengers trough more competitive fares or improved services.”
HS1 Ltd and Network Rail (High Speed) will now review ORR’s determination.
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