Channel Tunnel access charges
60. EWS, in partnership with SNCF in France,
is the only company which provides international rail freight
services through the Channel Tunnel (through its subsidiary EWS
International). The Freightliner Group, a rail freight operator
in Great Britain, told us that access charges for the Channel
Tunnel were, for any operator other than EWS, "way outside
anything you would regard as being reasonable" (Q 230).
61. When the Channel Tunnel was opened in 1994,
the national rail companies of France, Great Britain and Belgium
contracted to buy half of its capacity at guaranteed prices. When
British Rail was privatised, EWS took over its share of the international
freight business through the Channel Tunnel, but charges for the
United Kingdom portion of this are still paid by the residuary
British Railways Board and not by EWS. These charges have three
elements:
- variable tolls relating to the
volume and type of traffic conveyed;
- a contribution to Eurotunnel's operating costs;
and
- a top-up fee known as the Minimum Usage Charge
(MUC) which guarantees Eurotunnel a certain level of income even
if traffic levels through the Tunnel achieved by Eurostar and
the freight operators are below a certain level (DfT written evidence).
62. In the case of freight services, these three
elements amount to a total of roughly £26 million per annum
and last until 30 November 2006, after which the MUC element falls
away leaving an annual charge of around £17 million should
traffic remain at current levels. In order to facilitate the privatisation
of its unprofitable international services, the British Railways
Board had initially agreed to pay these charges until 30 April
2005 with the result that EWS had access to the Channel Tunnel
free of charge for this period (DfT written evidence). EWS told
us that with current traffic levels through the Channel Tunnel
they would not be able to bear the additional £26 million
in Tunnel charges (Q 131) after this date. We heard from the Minister,
however, that he had asked the Strategic Rail Authority (SRA)
to negotiate a fixed term extension to the current funding arrangements
for EWS's Channel Tunnel Freight usage charges through to 30 November
2006 (Q 331).
63. The Minister acknowledged that this extension
would simply prolong the current regime but it would provide a
breathing space whilst greater liberalisation was sought (Q331).
During this period, one operator, EWS, will effectively pay no
access charges, whilst any competitor would have to pay the high
tariff published by Eurotunnel for open access operators. We heard
evidence that the published rates involve charges for rail freight
which are roughly twice those typically paid to the equivalent
freight through the Tunnel by road. Of course, the situation would
be somewhat different if Eurotunnel itself were to become an international
rail freight operator, since it would be paying the charges to
another part of the same organisation; we heard from Mr Hilbrecht
of the European Commission that Eurotunnel has a subsidiary company
which now has the necessary operators licence and safety certificate
and an allocation of paths to run through France (Q 287).
Safety requirements
64. The high access charges to the Channel Tunnel
for new entrants were by no means the only problem we heard about.
There are stringent safety requirements which any locomotive running
through the Channel Tunnel must meet; only 2 fleets of locomotives
currently meet these - Eurotunnel's own locomotives and the Class
92 which are operated by EWS. Mr Goundry of Freightliner hinted
that these safety requirements might be slightly too stringent
because, "there is an emotional response to being under the
sea in a tunnel" and pointed out that the safety requirements
on very long rail tunnels through mountains in the Alps were not
as demanding (Q 236). We recommend that regular consideration
should be given to the licensing of additional models of locomotive
for use in the Tunnel.
65. Given the complex contractual position
surrounding the Channel Tunnel, the issue of compliance with the
First Railway Package in respect of the Channel Tunnel is itself
a complex one, but one which the British and French governments
need to address if international rail freight services between
the United Kingdom and continental Europe are to meet the needs
of British industry and commerce.
66. A way needs to be found urgently of securing
competitive access charges to the Channel Tunnel so that the rail
freight industry as a whole can compete on equal terms with the
freight ferry industry across the Channel.
