Select Committee on European Union Fortieth Report


UK PRESIDENCY: EUROVIGNETTE—2ND READING DEAL WITH THE EUROPEAN PARLIAMENT (11944/03)

Letter from the Chairman to Rt Hon Alistair Darling MP, Secretary of State, Department for Transport

  Thank you for your letter of 21 December 2005[45] (UK Presidency letter) which Sub Committee B considered at its meeting on 30 January 2006.

  Members were pleased to note that the UK Presidency had brokered a deal on this document and were grateful to you for keeping them informed of the progress made.We noted that the text requires the Commission to develop a strategy for the stepwise introduction for all modes of transport. Does this mean all modes of transport? Precisely which modes of transport does this include? You explained in your letter that for tolls and charges, other than those in mountainous regions, Member States would retain the freedom to determine how there venues are used. However, the European Parliament's Amendment 46 states that these revenues should "be used for the maintenance of the infrastructure concerned and the transport sector as a whole." How can these two points be reconciled? In Amendment 48 there is reference to an Annex III which we have not seen. It wouldbe helpful to have a copy of this please.

1 February 2006

Letter from Rt Hon Alistair Darling MP to the Chairman

  Thank you for your letter of 1 February.

  The text agreed with the European Parliament will require the Commission to develop a model for the assessment of all external costs to serve as the basis for future calculations of infrastructure charges. This model will have to be accompanied by an impact assessment on the internalisation of external costs for all modes of transport and a strategy for a stepwise implementation of the model for all modes of transport. While we cannot prejudge the work of the Commission, I think we might expect its proposals to cover charging forthe use of road, rail, airport and port infrastructure.

  The agreed text does, indeed, say that revenue from charges should be used to benefit the transport sector and optimise the entire transport system. However, the first sentence of the Article in which this text appears reads "Member States shall determine the use to be made of revenue from charges for the use of road infrastructure." I am entirely satisfied that the provisions of the new Directive would not fetter the Government in deciding how any revenues it might receive from road charging should be used.

  I am enclosing, as requested, a copy of Annex III to the new Directive (together with Annex IV which is referred to in Annex III).

20 February 2006

Annex A

ANNEX III: CORE PRINCIPLES FOR THE ALLOCATION OF COSTS AND CALCULATION OF TOLLS

  This Annex stipulates the core principles for the calculation of weighted average tolls to reflect Article 7(9). The obligation to relate tolls to costs shall be without prejudice to the freedom of Member States to choose, in accordance with Article 7a(1), not to recover the costs in full through toll revenue, or to the freedom, in accordance with Article 7(10), to vary the amounts of specific tolls away from the average.[46]

  The application of these principles shall be fully consistent with other existing obligations under Community law, in particular the requirement for concession contracts to be awarded in accordance with Council Directive 2004/18/EC and other Community instruments in the field of public procurement.

  Where a Member State engages in negotiations with one or more third parties with a view to establishing a concession contract regarding the construction or operation of a part of its infrastructure, or in view of this purpose engages in a similar arrangement based on national legislation or an agreement entered into by the government of a Member State, compliance with these principles shall be judged on the basis of the outcome of these negotiations.

DEFINITION OF THE NETWORK AND OF VEHICLES COVERED

    —  Where a single tolling regime is not to be applied to the whole TEN road network, a Member State shall specify precisely the part or parts of the network which are to be subject to a tolling regime as well as the system its uses to classify vehicles for the purposes of toll variation. Member States shall also specify whether they are extending the scope of the vehicles covered by their tolling regime below the 12-tonne threshold.

    —  Where a Member State chooses to adopt different policies regarding cost recovery for different parts of its network (as permitted under Article 7a(1)), each clearly defined part of the network shall be subject to a separate calculation of costs. A Member State may choose to split its network up into a number of clearly defined parts so as to establish separate concession arrangements or similar for each part.

2.  INFRASTRUCTURE COSTS

2.1.  Investment costs

    —  Investment costs shall include the costs of construction (including financing costs) and the costs of developing the infrastructure plus, where appropriate, a return on the capital investment or profit margin. Costs of land acquisition, planning, design, supervision of construction contracts and project management, and of archaeological and ground investigations, as well as other relevant incidental costs, shall also be included.

    —  The recovery of construction costs shall be based on either the design lifetime of the infrastructure or such other amortisation period (not being less than 20 years) as may be considered appropriate for reasons of financing through a concession contract or otherwise. The length of the amortisation period may be a key variable in negotiations regarding the establishment of concession contracts, particularly if the Member State concerned wishes, as part of the contract, to set a ceiling regarding the weighted average toll applicable.

    —  Without prejudice to the calculation of investment costs, the recovery of costs may:

      —  be apportioned evenly over the amortisation period or weighted to the early, middle or later years, provided that such weighting is carried out in atransparent manner; and

      —  provide for indexation of tolls over the amortisation period.

    —  All historic costs shall be based on the amounts paid. Costs which are still to be incurred will be based on reasonable cost forecasts.

    —  Government investment may be assumed to be financed borrowings. The rate ofinterest to be applied to historical costs shall be the rates that applied to government borrowings over that period.

    —  Costs shall be apportioned to heavy goods vehicles (HGVs) on an objective and transparent basis taking account of the proportion of HGV traffic to be carried on the network and the associated costs. The vehicle kilometres travelled by HGVs may for this purpose be adjusted by objectively justified "equivalence factors" such as those set out in point 4[47].

    —  Provision for estimated return on capital or profit margin shall be reasonable in the light of market conditions and may be varied for the purpose of providing performance incentives for a contracted third party with regard to quality of service requirements. Return on capital may be evaluated using economic indicators such as IRR (internal rate of return on investment) or WACC (weighted average cost of capital).

2.2.  Annual maintenance costs and structural repair costs

    —  These costs shall include both the annual costs of maintaining the network and the periodic costs relating to repair, reinforcement and resurfacing, with a view to ensuring that the level of operational functionality of the network is maintained over time.

    —  Such costs shall be apportioned between HGV and other traffic on the basis of actual and forecast shares of vehicle kilometres and may be adjusted by objectively justified equivalence factors such as those set out in point 4.

3.  OPERATING, MANAGEMENT AND TOLLING COSTS

  These costs shall include all costs incurred by the infrastructure operator which are not covered under Section 2 and which relate to the implementation, operation and management of the infrastructure and of the tolling system. They shall include inparticular:

    —  the costs of constructing, establishing and maintaining toll booths and other payment systems;

    —  the day to day costs of operating, administering and enforcing the toll collection system;

    —  administrative fees and charges relating to concession contracts; and

    —  management, administrative and service costs relating to the operation of the infrastructure.

  The costs may include a return on capital or profit margin reflecting the degree of risk transferred.

  Such costs shall be apportioned on a fair and transparent basis between all vehicle classes that are subject to the tolling system.


4.  SHARE OF GOODS TRAFFIC, EQUIVALENCE FACTORS AND CORRECTION MECHANISM

    —  The calculation of tolls shall be based on actual or forecast HGV shares of vehicle kilometres adjusted, if desired, by equivalence factors, to make due allowance for the increased costs of constructing and repairing infrastructure for use by goods vehicles.

    —  The following table gives a set of indicative equivalence factors. Where a Member State uses equivalence factors with ratios differing from those in the table, they shall be based on objectively justifiable criteria and shall be made public.


Vehicle class[48]
Equivalence factors
Structural repair[49]
Investments
Annual
maintenance

Between 3,5t and 7,5t, Class 0
1
1
1
> 7,5 t, Class I
1,96
1
1
> 7,5 t, Class II
3,47
1
1
> 7,5 t, Class III
5,72
1
1


    —  Tolling regimes which are based on forecast traffic levels shall provide for a correction mechanism whereby tolls are adjusted periodically to correct any under or over-recovery of costs due to forecasting errors.

Annex B

ANNEX IV: INDICATIVE VEHICLE CLASS DETERMINATION

  The vehicle classes are defined by the table below.

  Vehicles are classed in subcategories 0, I, II and III according to the damage they cause to the road surface, in ascending order (Class III is thus the category causing most damage to road infrastructure). The damage increases exponentially with the increase in axle weight.

  All motor vehicles and vehicle combinations of a maximum permissible laden weight below 7,5 tonnes belong to damage class 0.



MOTOR VEHICLES


Driving axles with air
suspension or recognised equivalent
[50]
Other driving axle suspension systems
Damage class
Number of axles and maximum permissible gross laden weight
(in tonnes)
Number of axles and maximum permissible gross laden weight (in tonnes)
Not less than
Less than
Not less than
Less than

Two axles

7,5
12
7,5
12
I
12
13
12
13
13
14
13
14
14
15
14
15
15
18
15
18

    
    
    

Three axles

15
17
15
17
17
19
17
19
19
21
19
21
21
23
21
23
23
25
25
26
23
25
II
25
26

    
    
    

Four axles

23
25
23
25
I
25
27
25
27
27
29
27
29
II
29
31
31
32
29
31
31
32




VEHICLE COMBINATIONS (ARTICULATED VEHICLES AND ROAD TRAINS)


Driving axles with air suspension or recognised as equivalent
Other driving axle suspension systems
Damage class
Number of axles and maximum permissible gross laden weight (in tonnes)
Number of axles and maximum permissible gross laden weight (in tonnes)
Not less than
Less than
Not less than
Less than

2 + 1 axles

7,5
12
7,5
12
I
12
14
12
14
14
16
14
16
16
18
16
18
18
20
18
20
20
22
20
22
22
23
22
23
23
25
23
25
25
28
25
28
    
    

2 + 2 axles

23
25
23
25
25
26
25
26
26
28
26
28
28
29
28
29
29
31
29
31
II
31
33
31
33
33
36
33
36
III
36
38


Letter from the Chairman to Rt Hon Alistair Darling MP

  Thank you for your letter of 20 February 2006 in reply to mine of 1 February which Sub-Committee B considered at its meeting on 6 March 2006.

  You answered the points that I raised in a helpful manner for which I am grateful. We note that in your letter you mention that, without prejudging the work of the Commission, "we might expect its proposals to cover charging for the use of road, rail, airport and port infrastructure." Could you clarify whether "port infrastructure" in this case would include inland waterways?

8 March 2006

Letter from Rt Hon Douglas Alexander, Secretary of State, Department for Transport to the Chairman

  Thank you for your letter of 8 March 2006 to Alistair Darling regarding infrastructure charging. In an earlier letter Alistair Darling mentioned that, without prejudging the work of the Commission, "we might expect its [the Commission's] proposals to cover charging for the use of road, rail, airport and port infrastructure." You asked whether "port infrastructure" would include inland waterways. I had hoped to be able to give you a definitive answer by now. We had expected the Commission to publish its mid-term review of the 2001 EU Transport Policy White Paper in April and had envisaged it might contain the necessary information. But publication of the review has been delayed and we do not know for sure whether inland waterways might be covered by any infrastructure charging proposal the Commission might intend to bring forward. I shall, of course, write to you again as soon as we have anything definite to report.

19 May 2006



45   Correspondence with Ministers 45th Report of Session 2005-06, HL Paper 243, p 224. Back

46   These provisions, together with the flexibility offered in the way costs are recovered over time (see the third indent of point 2.1), give considerable margin to fix tolls at levels which are acceptable to users and adapted to the specific transport policy objectives of the Member State. Back

47   The application of equivalence factors by Member States may take account of roadconstruction developed on a phased basis or using a long life cycle approach. Back

48   See Annex IV for the determination of the vehicle class. Back

49   The vehicle classes correspond to axle weights of 5,5, 6,5, 7,5 and 8,5 tonnes respectively.". Back

50   Suspension recognised as equivalent according to the definition in Annex II to Council Directive 96/53/EC of 25 July 1996 laying down for certain road vehicles circulating within the Community the maximum authorised dimensions in national and international traffic and the maximum authorised weights in international traffic (OJ L 235, 17.9.1.996, p. 59). Directive as last amended by Directive 2002/7/EC of the European Parliament and of the Council (OJ L 67, 9.3.2002, p. 47). Back


 
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