09 May 2013

Access to rail and port services: how should capacity expansions and access pricing be treated?

by Paul Burton, Barry Dunphy

The closing date for submissions on the Discussion Paper: Capacity Expansion and Access Pricing for Rail and Ports is 30 June 2013.

Users of rail and/or port infrastructure services will be aware of the importance that capacity expansions play in the life-span of such infrastructure. Similarly, what prices should be charged for access to an expanded service is a highly relevant consideration for both existing users and access seekers.

In Queensland over the last few years, these issues have been raised with greater frequency as the demand for rail and port services has at times exceeded the available capacity.

The Queensland Competition Authority (QCA) has recently released a Discussion Paper that is focused on access pricing and, more specifically, the pricing of access for major capacity expansions. The QCA's Discussion Paper: Capacity Expansion and Access Pricing for Rail and Ports (April 2013) is a reminder of the criticality of balancing the requirements of users and access seekers as well as the interests of owners and operators of rail and port infrastructure services.

Key issues canvassed by the QCA

In the Discussion Paper the QCA investigates options for pricing access to major expansions in rail and port infrastructure. While the QCA recognises that individual circumstances play an important role in each case and that there are no hard and fast rules, it does lay out some key principles based on economic efficiency, fairness and regulatory governance.

The QCA notes that in addressing questions about access pricing for major capacity expansions, information about the following matters will play a significant role:

  • the existing contractual and institutional arrangements between the service provider and the access seeker;
  • details about the access pricing structure, especially whether simple average cost-based prices or a more complex price structure applies;
  • the extent to which new capacity is separable-in-use from established capacity;
  • whether the new tranche of capacity has a materially higher or lower unit cost compared to established capacity; and
  • whether the capacity expansion is driven by general economic growth where it is not practicable to identify those responsible for the expansion.

The QCA considers that the issues raised by these points will be relevant when determining how the cost of a major capacity expansion should be recovered including who should pay for it.

Call for submissions

The QCA has published the Discussion Paper for the purposes of creating discussion from relevant stakeholders in relation to these important regulatory issues. The QCA is inviting interested parties to make submissions to it. The closing date for making submissions is 30 June 2013.

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Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.