{
  "docId": "019dd923-5de0-76bd-a165-578b9862173f",
  "docSlug": "091122f6e046fa86",
  "documentTitle": "Rail industry cost and revenue sharing (2011)",
  "authorId": "misc",
  "authorName": "L.E.K.",
  "documentKindSlug": "consulting-deck",
  "documentKindLabel": "Consulting deck",
  "sourceTypeSlug": "strategy_consulting",
  "sourceTypeLabel": "Strategy consulting",
  "presentationDate": null,
  "orientation": "landscape",
  "aspectRatio": 1.414,
  "pageNumber": 111,
  "pageCount": 170,
  "prevPage": 110,
  "nextPage": 112,
  "slideType": "strategic_options",
  "function": "compare_options",
  "density": "balanced",
  "nDataPoints": 0,
  "notes": "L.E.K. consulting slide regarding rail industry cost and revenue sharing.",
  "elementsJson": [
    "headline_text",
    "bullet_list",
    "numbered_list"
  ],
  "metadataConfidence": 1,
  "imagePath": null,
  "slideHref": "/slides/019dd923-5de0-76bd-a165-578b9862173f/111",
  "deckHref": "/decks/019dd923-5de0-76bd-a165-578b9862173f",
  "deckJsonHref": "/decks/019dd923-5de0-76bd-a165-578b9862173f.json",
  "deckAnchorHref": "/decks/019dd923-5de0-76bd-a165-578b9862173f#slide-111",
  "components": [
    {
      "bbox": null,
      "kind": "callout",
      "text": "On balance, L.E.K. has a preference for Option 6 over Option 5 due to the two key advantages mentioned above.",
      "attrs": null,
      "subkind": null,
      "toolName": "Visual emphasis",
      "toolSlug": "visual-emphasis",
      "confidence": null,
      "componentId": "019dd951-edac-778d-bcba-139bcbf4e53b",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": {
        "h": 0.6,
        "w": 0.8,
        "x": 0.1,
        "y": 0.28
      },
      "kind": "list",
      "text": "As highlighted on the last slide, the ORR calculates FTAC charges based on NR's revenue requirement. An alternative way of incentivising TOCs to actively engage with the ORR during the periodic review process would be to give TOCs a partial exposure to changes in the ORR's determination of efficient OMR expenditure (Option 6)\nOptions 5 and 6 are very similar and have many pros and cons in common\nThe key additional issue with Option 6 is that it could give TOCs too great an exposure to changes in the required level of renewals expenditure\nThere could be significant variations between control periods in the efficient level of renewals expenditure in a particular region as a result of asset condition considerations. TOCs would not have very good visibility of these future variations at the time of bidding for the franchise so it would be difficult for them to price these variations into their bid or manage them during the course of the franchise\nHowever, this could be overcome by using a longer term average level of renewals expenditure instead and in this respect would make Option 6 more similar to Option 5\nThere are two key advantages of Option 6 over Option 5:\nit avoids train operators being exposed to NR's cost of capital, which is outside train operators' control (except through external challenge)\nIt is likely to be easier to calculate like-for-like changes that overcome the issues listed on the last slide (e.g. excluding the impact of policy changes on the sources of NR's revenue)\nOn balance, L.E.K. has a preference for Option 6 over Option 5 due to the two key advantages mentioned above",
      "attrs": null,
      "subkind": "bullet",
      "toolName": null,
      "toolSlug": null,
      "confidence": null,
      "componentId": "b3fd83a2-3ce8-4acd-bf19-b772e0ee0d26",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": {
        "h": 0.08,
        "w": 0.8,
        "x": 0.1,
        "y": 0.16
      },
      "kind": "title",
      "text": "TOCs could be given partial exposure to changes in the ORR's efficient expenditure determination for OMR (Option 6) as an alternative to partial exposure to FTAC. On balance, L.E.K. has a preference for Option 6 over Option 5",
      "attrs": null,
      "subkind": "action-title",
      "toolName": null,
      "toolSlug": null,
      "confidence": null,
      "componentId": "25a23aa4-7e71-4ada-b3b8-34aa9059a254",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": {
        "h": 0.03,
        "w": 0.35,
        "x": 0.55,
        "y": 0.08
      },
      "kind": "title",
      "text": "Options 5 & 6: Partial exposure to periodic reviews",
      "attrs": null,
      "subkind": "headline",
      "toolName": null,
      "toolSlug": null,
      "confidence": null,
      "componentId": "487531d7-f9dd-498b-88b9-ec1c92e60b39",
      "frameworkName": null,
      "frameworkSlug": null
    }
  ],
  "metrics": [],
  "tools": [],
  "frameworks": [],
  "arcBeats": [],
  "loops": [],
  "imagePathAlt": null,
  "thumbSrc": null,
  "thumbSrcAlt": null,
  "locked": true
}