Network Rail Braces For 1Bn Energy Bill As Costs Rise By More Than 50 Railway Network

The cost of traction – providing electricity to run electric trains – is expected to rise to £885m in 2023-24, Network Rail said, from £595m this year. Adding in other energy uses, such as natural gas for heating and electricity used for the rest of Network Rail’s operations, will take its total energy costs to £1,016m, up from £670m. “Rising energy prices will inevitably have an impact on all businesses and individuals and rail is no different,” Network Rail said. “Based on today’s market, we would expect rail operating costs, related to energy, to rise from £670m this year to just over £1bn in 2023-24.” Network Rail negotiates power prices in advance and set its costs for 2022 last year, locking in low prices. But the fix will run out while prices are still expected to be high, forcing the company to take a hit. Some of the costs are passed on to rail users. Freight companies pay Network Rail for the wholesale price of the electricity they use, which the company then passes on directly to costs. In the winter of 2021, as the wholesale cost of electricity rose by a then-unprecedented 200%, the increase prompted some carriers to reverse their decarbonization efforts by pulling electric locomotives from the tracks and replacing them with powered by diesel. Subscribe to the Business Today daily email or follow Guardian Business on Twitter @BusinessDesk Other rail operators will also have to pay increased fees. Transport for London did not respond to requests for comment, but the body is one of the biggest consumers of electricity in the UK, requiring up to 1.6 terawatt hours a year. That’s equivalent to the electricity used by around 12% of the capital’s homes, or more than half of Apple’s global bill. Around 1.3 TWh is used to power underground trains, with a typical bill of around £150m per year. The operator aims to use 100% renewable energy to power its trains by 2030, but as of June this year it had reached just 10% of that target and the existing electricity deal is set to expire on March 31. However, the energy crisis is not just one of rising prices, and there is a risk that the UK could run out of natural gas over the winter. The current “reasonable worst-case scenario” for dealing with such shortages could involve the government rationing energy and shutting down high-consumption industries. This reportedly includes railroads, as well as libraries and other large government buildings.

title: “Network Rail Braces For 1Bn Energy Bill As Costs Rise By More Than 50 Railway Network Klmat” ShowToc: true date: “2022-12-04” author: “Leroy Stoneking”

The cost of traction – providing electricity to run electric trains – is expected to rise to £885m in 2023-24, Network Rail said, from £595m this year. Adding in other energy uses, such as natural gas for heating and electricity used for the rest of Network Rail’s operations, will take its total energy costs to £1,016m, up from £670m. “Rising energy prices will inevitably have an impact on all businesses and individuals and rail is no different,” Network Rail said. “Based on today’s market, we would expect rail operating costs, related to energy, to rise from £670m this year to just over £1bn in 2023-24.” Network Rail negotiates power prices in advance and set its costs for 2022 last year, locking in low prices. But the fix will run out while prices are still expected to be high, forcing the company to take a hit. Some of the costs are passed on to rail users. Freight companies pay Network Rail for the wholesale price of the electricity they use, which the company then passes on directly to costs. In the winter of 2021, as the wholesale cost of electricity rose by a then-unprecedented 200%, the increase prompted some carriers to reverse their decarbonization efforts by pulling electric locomotives from the tracks and replacing them with powered by diesel. Subscribe to the Business Today daily email or follow Guardian Business on Twitter @BusinessDesk Other rail operators will also have to pay increased fees. Transport for London did not respond to requests for comment, but the body is one of the biggest consumers of electricity in the UK, requiring up to 1.6 terawatt hours a year. That’s equivalent to the electricity used by around 12% of the capital’s homes, or more than half of Apple’s global bill. Around 1.3 TWh is used to power underground trains, with a typical bill of around £150m per year. The operator aims to use 100% renewable energy to power its trains by 2030, but as of June this year it had reached just 10% of that target and the existing electricity deal is set to expire on March 31. However, the energy crisis is not just one of rising prices, and there is a risk that the UK could run out of natural gas over the winter. The current “reasonable worst-case scenario” for dealing with such shortages could involve the government rationing energy and shutting down high-consumption industries. This reportedly includes railroads, as well as libraries and other large government buildings.