Examination of Witnesses (Questions 9820
9820. What you say at 15.8 and 15.9 is in fact
that you are pleased to note that the Regulator had come up with
a much tougher regime which you thought suitable for purpose to
(Mr Smith) That is what it says.
9821. You set out what the concerns were and
you said that it would not necessarily work transparently and
predictably, it could enable Crossrail to use up protected capacity,
there would be an ability to change the model without agreement,
and you say that, given these concerns, this is 15.9, "EWS
firmly supports ORR's proposed changes to the change control mechanism
as set out in paragraph 35 of the proposed decision, particularly
that, if there is a conflict with existing rights or there is
a problem with a model which gives rise to a conflict with existing
rights, then the Crossrail conflicting right is removed permanently
and not just until the existing right expires". In other
words, what the position had been before is that the model had
suggested that, if there was a conflict, the conflict might have
simply put the Crossrail path into abeyance until the paths that
it was in conflict with came forward again for renewal for their
own access options.
(Mr Smith) That is correct.
9822. But what the change control mechanism
in fact now does is say that, if there is a conflict which cannot
be resolved, then the Crossrail path which is in conflict is lost.
(Mr Smith) That is the new position.
9823. So, in other words, not only do you have
the capacity of the output-led model which assumes infrastructure
improvements, but you have a protection for your own paths, do
you not, and for those for the rest of the industry, both passenger
and freight, that, if the Crossrail model cannot resolve conflicts
with protected paths for freight and freight growth, the Crossrail
paths are lost permanently.
(Mr Smith) The concern
9824. Could you answer my question first?
(Mr Smith) Certainly. You have correctly stated the position
that we expressed in our letter. The concern that we have, and
which emerged only yesterday in a discussion at the Timetable
Reference Group, is that Crossrail asked or suggested to the Regulator
that the two off-peak paths that the ORR had asked should be removed
should be reinstated into the timetable model and that not all
of the freight rights of paths should be included. I am sure that
this will be resolved in further discussion, but it is an indication
that, whilst we appear to have a mechanism to be tested at some
point in the future, there are already attempts being made to
try and adjust the underlying assumptions in that mechanism.
9825. Let us just get this clear. So far as
the modelling is concerned, the modelling still continues under
the Regulator's decision on the basis of the full number of paths
applied for and the infrastructure improvements that would have
accompanied the full number of paths applied for. The modelling
does that, even though the Regulator has said, "You may not
at this stage have two off-peak paths".
(Mr Smith) It is very reassuring that the modelling will
continue to assume that all the infrastructure improvements
9826. Well, that is what the decision says.
The modelling continues to assume that the paths that have not
been granted to us are still in there. Of course there could be
no objection if, in due course, it became clear that those paths
could be accommodated without undue impacts on other protected
paths and other appropriate capacity. It may not, but there is
nothing to prevent Crossrail from seeking to persuade the Regulator
that the two off-peak paths that had been lost could be reinstated
if sufficient capacity was found to exist with further modelling.
(Mr Smith) And the Regulator acknowledges that in his decision.
9827. So there is nothing wrong with that process;
it is built into the industry mechanism, is it not?
(Mr Smith) I was surprised that some of the freight rights
were being suggested should be removed, but I am sure that that
will be resolved in discussion as well.
9828. Well, the modelling inputs can only be
changed with the agreement of the parties or, in default of agreement,
by the independent adjudication of the ORR. That is right, is
(Mr Smith) That would be very reassuring.
9829. Well, that is what your letter says.
(Mr Smith) Yes.
9830. So we cannot do it unilaterally. We can
only do it if we either persuade you and your colleagues in the
freight industry or we can persuade the ORR independently to do
so, so you have protections through the output mechanism, which
assumes infrastructure enhancements, you have protection through
the change control mechanism, which will lose Crossrail paths
if there is unresolvable conflict with your protected paths, and
changes to the modelling assumptions can only be made either by
agreement within the industry or by the independent adjudication
of the Regulator.
(Mr Smith) Your statement, including the fact that the infrastructure
is assumed to be there, is correct.
9831. MR ELVIN: Can we just look at the
change control mechanism very briefly just so that their Lordships
see it very briefly before I sit down, and I am sure you will
be pleased to hear that! Can we go to Exhibit 05-113.
9832. LORD SNAPE: We have laid awake
most of the night, Mr Elvin, thinking about it!
9833. MR ELVIN: I will refrain from comment!
This is all part of the final decision dealing with the change
control mechanism and their Lordships can see at paragraph 91
where it moves on to the next page in paragraph 8(2) and says,
"These concerns", and these are the concerns that you
identify in your letter as well, "led to our decision that
we should change the CCM", the change control mechanism,
"to give effect to the following key principles", and
we see clarity, setting out the consequence of conflict for Crossrail
and third parties, but, if we go to the next page where the real
teeth are, the first bullet point, "The effect of an irreconcilable
conflict between a Crossrail right and the rights which we require
to be included", and we know what they are because paragraph
79 tells us, it is existing freight paths and paths to accommodate
freight capacity to 2015 and other passenger paths, do we not?
(Mr Smith) Correct.
9834. "The effect of an irreconcilable
conflict would be that the Crossrail right was lost permanently
not merely for the duration of the conflict", so an irreconcilable
conflict, we cannot sort it out, Crossrail loses a path. Similarly,
the effect of a conflict arising because of an error in the model
or the model assumptions or because of the descoping of the project
would be that the Crossrail right was lost permanently. In other
words, if there remain unsatisfactory elements in the model which
do not deal with the issues properly, then again Crossrail is
penalised by losing any effective paths.
9835. CHAIRMAN: What does "descoping
the project" mean?
9836. MR ELVIN: I was hoping to avoid
answering that question! Let me see if I can find out. (After
a pause). It means removing elements of the project.
9837. LORD YOUNG OF NORWOOD GREEN: For
9838. MR ELVIN: For example, if there
were insufficient infrastructure works to generate the capacity
necessary to deliver the outputs. That is why we say there is
sufficient security for the assumptions and for the infrastructure
built into the mechanism.
9839. LORD JAMES OF BLACKHEATH: Who would
be the judge as to whether the removal of any such action caused
a worsening of the safety implications?
5 Crossrail Ref: P67, Correspondence from EWS Ltd
to the Office of Rail Regulation, Change Control, 17 March 2008
Crossrail Ref: P67, Correspondence from EWS Ltd to the Office
of Rail Regulation, Change Control, 17 March 2008 (LINEWD-34_05-111) Back