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Par­tial­ly ex­empt charge ap­proval

The partially exempt charge approval procedure is for route operators of a network no longer than 1,000 kilometres that are not subject to the simplified charge approval procedure and as a result fall under the scope of section 2a(1) para 3 ERegG. Accordingly, the route operators are by law partially exempt from the regulation of charges, although these route operators must still undergo a charges approval procedure in accordance with sections 45 and 46 ERegG. As set out in section 45(1) sentence 2 ERegG, the approval of the charges and the charging principles is to be granted if the determination of the charges meets the requirements of sections 24 to 40 and section 46 ERegG and the charging principles correspond to the specifications of Annex 3 para 2 to the ERegG. It must be taken into account, however, that the provisions of sections 24 to 30 ERegG do not apply to a partially exempt charge approval procedure.

A step-by-step description of the charge approval procedure is available in the general guidelines for route operators.

Section 32 ERegG contains the charging standard for the partially exempt charge approval procedure. It stipulates that the charges for the provision of services (in total) must be calculated in such a way that they do not exceed the costs of providing these services plus a reasonable profit and that all of the individual charges are reasonable, non-discriminatory and transparent. Section 31(2) sentence 2 ERegG states that an undercoverage of costs is permissible if it is expected only to be temporary or the total costs are otherwise covered.

With regard to setting charges it is essential to comply with sections 31 to 40 ERegG and to set the charges by using a base amount and a markup. The base amount must correspond to the direct costs of train operation in accordance with section 34(3) ERegG. Direct costs of train operation are costs that arise in the existing railway network as an increase in costs due to a noticeable change in train path kilometres. Commission Implementing Regulation (EU) 2015/909 contains specific provisions for making these calculations. The markup under section 36(1) ERegG is for covering fixed costs. When calculating the markup, the resilience of the respective rail transport services and market segments must be taken into account. It must first be determined which rail transport services and market segments are relevant for a route operator. Separate charges must be set for rail freight transport, regional and local rail passenger transport and other types of rail transport in the public service contract as well as for long-distance rail passenger transport (section 36(2) paras 1 to 3 ERegG. These types of transport services can be broken down into additional market segments if necessary. The list in Annex 7 para 1 to the ERegG serves as guidance for this purpose.

The markups to the direct costs of train operation are thus to be calculated in a way that ensures optimal competitiveness of the railway market segments in accordance with section 36(1) ERegG. From an economic perspective, optimal competitiveness of all the railway market segments is achieved – while at the same time factoring in that fixed costs must be covered – by applying the Ramsey-Boiteux pricing rule. The first step in applying this pricing rule is to determine the direct costs of train operation for each market segment. Then the fixed costs not previously assigned to the market segments are added to the direct costs of train operation. The price responsiveness of the direct costs of train operation is crucial for assigning the costs to the various market segments.

Price responsiveness expresses to what extent the demand for train paths reacts to a defined price variation in track access charges. The more the quantity demanded responds to a price change, the lower the segment's viability and (all things being equal) the lower the relative markup for this segment compared with other segments. Market segments where there is currently no rail transport service do not receive a markup and thus are to be priced at the direct costs of train operation. If new rail transport is added during the working timetable period, the new rail transport only bears the costs that it directly generates in this timetable. As a result the route operator does not incur any loss because the fixed costs were already assigned to the other users.

It should be noted that charges for federally owned route operators in the regional and local rail passenger transport sector are calculated in accordance with section 37 ERegG. Under this regulation, federally owned route operators for federal states that receive funding for regional and local rail passenger transport (regionalisation funds) must set the charges in each federal state for the use of railway infrastructure. In addition, the charges for each federal state are to be calculated so that they correspond to the average charges of that particular type of rail transport in the respective federal state in the 2020/2021 working timetable period. If the total amount of the regionalisation funds to which the federal states are entitled has changed between 2021 and the year in which the charge is actually to be paid, then the charges are to be adjusted at the annual rate of change (1.8% until 2025). This is referred to as the train path price curb. This pricing rule in the short-distance passenger rail transport sector should bring about synchronisation between the change in the regionalisation funds and the access beneficiaries' costs from track access charges.

Unlike the regular charge approval procedure, the partially exempt charge approval procedure has one main facilitating feature:

the incentive system under section 25 et seq ERegG does not apply.

The incentive system set out in section 25 et seq ERegG only applies to the regular charge approval procedure. Setting incentives should ensure through regulation that route operators are aiming to increase the volume of rail transport and also that incentives are being created to reduce costs and track access charges.

Additional charge components

Other charge components are also subject to approval. A distinction is made between mandatory and optional legal requirements.

Mandatory additional charge components

The impact of an incentive system under section 39(2) and (3) ERegG

Under section 39(2) ERegG a route operator must create an incentive system with service-related components to offer both the route operator and the railway undertakings incentives to minimise disruptions and increase the railway network's performance. The incentive system can include contractual penalties for disruptions to network operations, indemnification for disruptions and bonus schemes. Annex 7 para 2 to the ERegG contains (in accordance with section 39(3) ERegG) the principles that must be included in a route operator's incentive system.

The cancellation charge under section 40(1) sentences 3 and 4 ERegG

Section 40 ERegG is the legal basis for levying what are called cancellation charges. These are charges that a railway undertaking must pay a route operator when the railway undertaking does not use contractually allocated infrastructure capacity. In accordance with section 40(1) sentence 3 ERegG a route operator must levy cancellation charges when an access beneficiary does not regularly use allocated train paths. Section 40(1) sentence 4 ERegG requires that the criteria for determining that the train paths are not being used must be included and published in the route operator's network statement.

Noise-differentiated charge component in rail freight transport under section 35(2) sentence 3 ERegG

Section 35(2) sentence 3 ERegG requires route operators to introduce a noise-differentiated charge component for determining charges for rail freight transport. This should create incentives for rail freight transport to retrofit existing wagons with noise-reducing technology. This requirement under section 35(3) ERegG is specified more explicitly in Commission Implementing Regulation (EU) 2015/429. Article 3 of this implementing regulation requires the track access charging system to contain a noise-differentiated charge component by 31 December 2021. The levying of the noise-differentiated charge component was discontinued in Germany at the beginning of the 2020/2021 working timetable period because the Railway Noise Mitigation Act of 20 July 2017 prohibited the use of loud freight wagons as from the beginning of the 2020/2021 working timetable.

Differentiation from ETCS funding under section 36(5) ERegG

The charge calculation provision of section 36(5) ERegG states that the route operators should create incentives by differentiating charges so that trains will be equipped with the European Train Control System (ETCS). According to this provision, only the calculation of charges on the railway corridors referred to in Article 13(1) of Commission Regulation (EU) 2016/919 and listed in Annex I of Implementing Regulation (EU) 2017/6 is directly affected, although the route operator is free to vary the charge rate on rail routes that are not mentioned in Regulation (EU) 2016/919. The regulatory authority can impose requirements on the route operator regarding the scope and nature of the differentiation.

Optional additional charge components

Charge discounts under section 38(3) ERegG

Section 38 ERegG enables route operators to grant railway undertakings discounts on existing charges if the conditions under paragraphs 2 to 5 are observed. As set out in section 38(2) ERegG the discounts are to be limited to the administrative costs that the route operator actually saved. The charges can also only be for one specific line section (section 38(4) ERegG) and the charges must be applied to all railway undertakings in such a way that they are reasonable, non-discriminatory and transparent (section 38(5) ERegG). Section 38(3) ERegG presents two exceptions to subsection (2) in which the route operator can grant charge discounts beyond the administrative costs actually saved, namely to advance the development of train services or to encourage the use of considerably underutilised lines.

Optional cancellation charge under section 40(1) sentences 1 and 2 ERegG

Section 40(1) sentences 1 and 2 ERegG standardise the legal basis for levying cancellation charges and make it possible for the route operator to charge a railway undertaking for cancelling or regularly failing to use (section 40(1) sentence 3 ERegG) allocated train paths.

Scarcity-related charge components under section 35(1) ERegG

To achieve more balanced traffic loads, section 35(1) ERegG allows a charge increase for line sections that have been declared congested for the period during which they are congested.

Environment-related impact under section 35(2) ERegG

Section 35(2) ERegG allows route operators to change the calculated charges to take account of the costs of environment-related impact caused by train operations.

Factoring in planned investments under section 36(4) ERegG

Section 36(4) ERegG is a special case of an optional charge increase because this provision allows higher charges to be set in order to pass on the long-term costs of planned investments to the access beneficiaries where the investments were completed after 1988 or where planned future investments meet certain conditions.

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