Draft Report - Estimating the direct cost of rail access - May 2024

Our draft report establishes a plausible range for the direct cost rate, in units of dollars per gross-tonne-kilometre (GTK), that could be used in regulatory floor tests under the NSW Rail Access Undertaking. Direct costs are expressed as a rate of dollars per thousand gross-tonne-kilometres (gtk), and these can be directly compared to access prices if they are expressed in the same units.

Our analysis yielded the following maintenance cost function: 

Cost = $114,650/track-km - $76,070/Aurizon track-km + $0.84/‘000 GTK

The rate per track-km represents the fixed cost of maintenance for ARTC’s network. For the Aurizon coal network, the fixed cost is lower than the ARTC rate by $76,070/track-km per year. The rate per ‘000 GTK represents the variable (direct) cost.  These raw results suggest a direct cost point estimate of $0.84 per ‘000 GTK. That estimate is consistent with prior work undertaken by the Queensland Competition Authority in 2000:  their range of direct cost estimates, adjusted for inflation was $0.69 to $1.93 per ’000 GTK.

We welcome your comments on this draft report, the proposed method used to calculate direct costs and the suitability of the range for use in assessing compliance with the NSW rail Undertaking requirements. These can be made by email to our web site https://www.ipart.nsw.gov.au/review/transport-rail-access/measuring-direct-cost-floor-test until June 30, 2024.