29 Jul Cost Assurance Review of HS1
High Speed 1 (HS1) is a 109 km high-speed railway linking St Pancras International station in London to the Channel Tunnel. The line is owned by the Department for Transport (DfT) but is operated and maintained by HS1 Company Ltd (under a 30-year concession) which has, in turn, contracted a subsidiary of Network Rail to maintain and renew its assets on its behalf. Under the terms of the concession, HS1 Ltd must make 5-yearly submissions to the Office of Rail and Road (ORR) to justify its track access charges which are paid by operators using the route (such as Eurostar and Southeastern).
An important factor, when assessing the track access charges, is the residual lives of infrastructure assets and the cost of renewing them. These are well understood for the mainline network but HS1 operates at higher speeds (up to 300 kph) and is relatively new (the first stage was opened in 2003 with the line being completed in 2007). Since there is little experience of renewing HS1’s long-lived assets, the ORR appointed Frazer Nash Consultancy (FNC) to provide technical support to its review of HS1 Ltd’s submission for control period 3 (CP3) from 2020 to 2025. As part of the FNC team, we reviewed the cost assumptions prepared for CP3 and for CP4 onwards. Our review found that the submission for CP3 was well detailed, but we had concerns over the uplifts applied for risk and uncertainty. The submission for CP4 onwards promised dramatic cost reductions, achieved by the introduction of new working methods but, again, we had concerns over the provisions for risk and uncertainty.