HS1 Ltd and Network Rail agree new deal
HS1 Ltd, the owners of the UK’s first and only high speed railway, and Network Rail have signed a new deal, extending Network Rail’s contract to operate and maintain High Speed 1 until at least 2025.
Following a very successful first five years of operation, since the full opening of HS1 and St Pancras International in 2007, the two organisations have now extended the contract between them to:
Bring the two businesses closer together – aligning incentives for quality and efficiency
Offer better value to HS1 and its customers – with an immediate significant reduction in price
Incentivise and facilitate the 50/50 sharing of future financial outperformance
Nicola Shaw, chief executive, HS1 Ltd, said: “We conducted an extensive market review and knew that we had alternatives. However the quality of delivery from Network Rail (CTRL) has been good over the last few years and this deal offered real benefits to us and to our customers. We’ve now got a decade of certainty on which to work together to improve the line even further and to welcome more growth.”
Patrick Butcher, Network Rail’s group finance director, said: “We have run HS1’s infrastructure since the current route opened in 2007 and have delivered a high standard of punctuality and overall performance for our client and the route’s users - a standard that we aim to continue for many years to come.”
“The new contract offers our client even better value, and allows HS1 and its customers to share in outperformance through the continuation of the excellent partnership that has been established.”
HS1 remains among the world’s most reliable railways with an average train delay of between six and eight seconds. Passenger numbers continue to grow every year since opening.
Network Rail operates, maintains and renews the High Speed 1 railway through a wholly-owned subsidiary, Network Rail (CTRL).
Network Rail (CTRL) and HS1 Ltd have a contract in place to 2047 which included the right for HS1 Ltd to ‘market test’ for alternative but similar service providers elsewhere and terminate the contract in 2015 by giving notice by 31 March 2012.
A new deal has been agreed with HS1 Ltd giving HS1 Ltd a new fixed price featuring a 10% reduction in costs to 31 March 2015 and moving its break-clause rights to 2025.
Beyond 2015 a new fixed price will be agreed, determined through the periodic review process with the ORR for HS1’s control period 2 (2015-2020) and control period 3 (2020-2025). Network Rail will now be involved in, and bound by, this review process.
The new deal also sees both parties share 50/50 in any financial outperformance by Network Rail. HS1 Ltd will in turn share 60% of its discount and outperformance with its customers (i.e. the train operators who use the route).
Various other changes were made to the contract too – to improve communications between the organisations and outcomes for customers.
Network Rail (CTRL) also manages three of HS1’s stations - St Pancras International, Stratford International and Ebbsfleet International.
HS1 Ltd, owned equally by Ontario Teachers’ Pension Plan and Borealis Infrastructure Ltd, acquired a 30-year concession to own and operate the High Speed 1 railway in 2010.