Examination of Witnesses (Questions 9880
- 9899)
9880. MR ELVIN: My Lord, that is our
entire case. There is sufficient protection built into the industry
mechanisms, which we are told is the way we should go forward
by the industry. The ORR has listened carefully, particularly
to EWS about the change control mechanism and has imposed a set
of very stringent criteria on us in the recognition, as your Lordship
has rightly said, that the inputs at this stage are too uncertain,
so you protect the outputs and you protect the rest of industry
whose paths are specified in paragraph 79. That is the way it
is done.
9881. CHAIRMAN: Thank you. You can get
back to poor Mr Smith.
9882. MR ELVIN: Mr Smith clearly prefers
to see Counsel being cross-examined! May I say, it is a refreshing
change to give evidence! Mr Smith, that is broadly right, is it
not, that the protection that industry has lies through the terms
of the output and through the change control mechanism?
(Mr Smith) That protection exists. It will come into play
at some point in the future, eight, nine or ten years. We are
not denying that that protection exists, our concern is it is
a series of untried protections, particularly the objective test,
which is why we asked for some certainty now, not with all 24
works, by no means at all, just the six we identified. I ought
to draw out, and I do not have exhibit numbers or anything, but
in paragraph 58 of the document which is currently on the screen—
9883. That is page 108 if you would like to
put that up.[9]
There is no earmarking of future paths because freight has to
apply for its access options in the future as well as everybody
else, but what you have is an allocated capacity which is available
to freight.
(Mr Smith) There is an allocated capacity available
for the whole industry for making the case which the ORR will
then rule upon in accordance with its published criteria and procedures.
9884. But to use my Lord, Lord Brook's terminology,
the capacity for freight growth is ring-fenced in the output driven
model. It does not say anybody in particular will get the paths
because that is an access option exercise in itself, but it ring-fences
the capacity for future growth as to whoever the ORR determines
in the industry should be entitled to it.
(Mr Smith) Not for freight growth. As 58 says in the first
two lines: "We emphasise that the unapproved capacity has
not been earmarked for freight traffic or for any other purpose".
9885. In other words, the ORR is saying, "I'm
not being fettered as to my future discretion under access options.
What I am doing, though, is adding into the model existing paths
and the freight growth so that if there is the freight growth,
which is predicted and agreed, then there are sufficient paths
to enable the freight industry to apply for them.
(Mr Smith) Or any other user.
9886. Yes, but it is always the ORR's job to
balance the various interests. The fact is that he is making sure
is that the capacity is there should those paths be required and
justified.
(Mr Smith) Correct, and including your two off-peak paths
could go for that capacity as well.
9887. But you, as we, must justify your case
for new paths, must you not?
(Mr Smith) Absolutely correct.
9888. And that is the independent mechanism
which the industry operates?
(Mr Smith) That is the system which operates at the moment.
9889. CHAIRMAN: Mr Elvin, one of the
things we must bear in mind is that the ORR's decision dealt with
freight growth up to 2015. There will not be any Crossrail trains
in 2015.
9890. MR ELVIN: No, but what it means
is the model is constrained not simply by the paths which exist
at the date of the decision, but that additional growth is then
factored in and that constrains what paths can be produced in
the future.
9891. CHAIRMAN: But after 2017 when the
Crossrail trains start running, they will refer the freight growth,
so presumably there will have to be another exercise.
9892. MR ELVIN: Effectively 2015 is giving
you freight growth to the opening of Crossrail, is it not, roughly
speaking.
(Mr Smith) The two years could be important but it gets us
close.
9893. It gets us close, yes. After that, when
you have got Crossrail operating, other franchise passenger services
operating, freight operating, you have got a series of existing
companies there seeking paths and the ORR then has to balance
any request for future paths in the light of all the other train
operating companies.
(Mr Smith) In accordance with its criteria and procedures.
9894. That is a standard process, there is nothing
unusual about it?
(Mr Smith) Nothing unusual at all.
9895. CHAIRMAN: But the ORR has not decided
on that yet.
9896. MR ELVIN: No.
9897. LORD YOUNG OF NORWOOD GREEN: I
think it has been answered, but I was just looking at 58. That
is talking about unapproved capacity after 2015, I presume?
9898. MR ELVIN: I think it is talking
about unapproved capacity full stop because the ORR cannot prejudge
what applications are made for access options in the future. The
ORR would be fettering its discretion if it said, "I am assuming
I am going to allocate X paths to certain operators". What
it has done is provided a cost of allocated growth based on freight
predictions without committing itself to how that is going to
be allocated precisely because that is a matter for the normal
processes.
9899. LORD YOUNG OF NORWOOD GREEN: Let
me be clear then for my benefit what is protected in terms of
EWS. Existing freight paths?
9 Crossrail Ref: P67, Correspondence from EWS Ltd
to the Office of Rail Regulation, ORR's decision, 17 March 2008
(LINEWD-34_04A-108) Back
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