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  "documentTitle": "Rail industry cost and revenue sharing (2011)",
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  "authorName": "L.E.K.",
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  "notes": "The slide discusses the financial and operational disincentives for Network Rail to add capacity and suggests adjusting VTAC as a solution.",
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      "text": "A potential alternative to the Volume Incentive would be to increase VTAC rates such that NR receives a net benefit from accommodating additional traffic.",
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      "text": "The ORR recognised this lack of incentive on NR to accommodate additional services and introduced the Volume Incentive to try to overcome this. The Volume Incentive is generally not thought to have been successful for the reasons discussed in the “Analysis of Current Situation” appendix.",
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      "text": "Furthermore, NR suffers the downside of worse operational performance because there is a higher likelihood of secondary delays and fewer free train paths to facilitate timetable recovery. Although the financial impact of this should be mitigated by the capacity charge, operational performance is a very high profile measure so there are additional non-financial impacts that are not captured by the capacity charge.",
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      "text": "A potential alternative to the Volume Incentive would be to increase VTAC rates such that NR receives a net benefit from accommodating additional traffic. There are a number of ways in which this could be achieved, including increasing the variable usage charges or the capacity charges",
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      "text": "Variable usage charge rates are currently intended to reflect NR's efficient, short run marginal cost of wear and tear to its infrastructure from the operation of rolling stock. As a result, NR incurs a net disbenefit from accommodating additional train services if its costs exceed the ORR's assessment of the efficient level. Basing variable usage charge rates on NR's expected actual costs rather than ORR's assessment of the efficient costs would go some way towards addressing this perverse incentive against accommodating additional services.",
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      "text": "Train operators pay a number of variable track access charges to NR including: Variable usage charge: designed to recover NR's OMR costs that vary with traffic (in reality this only covers M&R). Franchised TOCs pay c.£150m p.a., which is equivalent to c.2.7% of their total cost base. Capacity charge: recovers additional Schedule 8 costs of additional traffic on the network. Franchised TOCs pay c.£150m p.a., i.e. a further c.2.7% of their total cost base.",
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      "text": "VTAC rates could be increased to give NR an incentive to accommodate additional train services",
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