The Queensland rail access undertaking came into force in October of 2010. The undertaking provided for QR Network to prepare and submit to the Queensland Competition Authority (QCA) for its approval a number of key standard documents, including:
- user funding agreements
- an end user agreement (where a miner can hold access rights directly), and
- a connection agreement – to enable miners or infrastructure providers to connect their rail infrastructure to the QR network.
Each of the above documents have been submitted to the QCA and are currently under consideration by the QCA. Once approved by the QCA the documents will significantly change the face of rail regulation.
User funding regime
An effective user funding regime is a key mechanism to ensure that QR Network remains competitive for major expansions (that is, expansions for which QR Network may be able to charge outside of the regulated rates).
The user funding regime operates to enable miners or third parties to fund infrastructure development in lieu of QR Network. Where user funding is provided, QR Network is required to rebate the capital charges received from access holders’ use of the user funded part of the network.
The key issues with the draft user funding regime proposed by QR Network are:
- That the QR Network regime does not provide funding users with sufficient control over the expansion works. This goes to three things. First, ensuring timely completion. Secondly, ensuring appropriate investment and controlling cost. Thirdly, enabling funding users to have a say over what is built.
- That the QR Network regime does not provide users with sufficient security over the user funded expansion. This is an issue because if lenders or boards are expected to approve significant amounts of investment they will require some security to be granted over the infrastructure which they are paying for (and for which they otherwise have no title).
- Finally, under the QR Network regime QR Network wholly transfers tax risks to the funding users. A compromise position is required.
It is not known when the QCA will publish a draft decision on QR Network’s user funding regime.
End user agreement
As required by the 2010 undertaking QR Network have prepared end user documents which are comprised of an end user agreement and train operations agreement. The agreements are the equivalent of the access holder agreement and operator sub-agreement in the Hunter Valley coal chain.
The purposes of the end user documentation are:
- To provide miners with greater flexibility with its above rail operators. At the moment, almost all access rights are held by rail haulage operators. This means that a miner may be constrained in transferring its above rail capacity (because it is reliant on the first rail haulage operator for train paths).
- To ensure that liability sits where it belongs. In other words, to make above rail operators responsible for their acts and omissions and miners their acts and omissions. Under the current regime (without the end user documents), if a miner chooses to hold the access rights, it will (as the access holder) be exposed to the acts and omissions of its above rail operators.
Where a miner enters into the end user agreement, it will be necessary for the miner to amend its above rail agreement.
The connection agreement sets out QR Network and a third party’s rights and obligations in relation to the connection of third party owned rail infrastructure to QR Network’s rail infrastructure. The connection agreement will be of great interest to miners, such as those in the Galilee who potentially have significant connection points.
The connection agreement will also be of interest to miners developing their own rail spur and who intend connecting to the QR network.