Draft decision: Queensland Rail's 2013 DAU

The Queensland Competition Authority (QCA) today released its draft decision on Queensland Rail’s 2013 draft access undertaking (DAU) – the rules  governing competition in freight services on the State’s rail network.

“It is timely for Queensland Rail to amend its undertaking now that it no longer operates freight services,” said QCA chairman Malcolm Roberts.

“Queensland Rail has proposed a simpler, ‘light-handed’ undertaking which will reduce regulatory costs. The QCA accepts many of the proposed changes, such as streamlining audits and removing the now redundant ringfencing restrictions designed to promote competition between Queensland Rail and other freight carriers.

“However, the QCA’s draft decision indicates we do not agree with all of the proposed changes. 

“There are instances where we believe Queensland Rail is seeking to shift risks and responsibilities on to customers which Queensland Rail should manage. In response, we largely propose to continue arrangements under the current undertaking,” said Malcolm Roberts.

Queensland Rail negotiates rail access tariffs with its commercial customers for most of its network.  The QCA only regulates prices on the western system, which connects coal mines west of Toowoomba with the Port of Brisbane. The QCA sets a ceiling price for these tariffs.

“The western system is challenging and expensive to operate as it was not built for heavy-haul coal services,” Malcolm Roberts said.

“We therefore propose to accept a 67% increase in maintenance spending and sustained high levels of capital spending.

“However such significant increases in spending raise questions about an appropriate asset valuation for the western system. The QCA must set an asset value for the system as part of ensuring that Queensland Rail receives a fair return on its investment.

“The QCA proposes in the draft decision a lower asset value than Queensland Rail, in large part because we believe that assets past their expected working lives should be valued at zero.

“The draft decision indicates a tariff of $14.29/’000 gross tonne kilometres for 2013–14 which would be 23% lower than the current tariff.

“The QCA also wishes to give users greater certainty about future tariffs on the Mount Isa line. We propose to limit  price increases at contract renewal,” said Malcolm Roberts.

The paper released today is a draft decision.

We invite everyone with an interest in Queensland Rail’s 2013 DAU to share their views with us.  Submissions on the draft decision are due by 23 December 2014. The QCA will consider all submissions as it prepares a final decision.

Queensland Rail runs the commuter trains in south east Queensland and operates more than 7,000 kilometres of track across the state, used by trains carrying freight, bulk minerals and passengers.  

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