1. The regulatory framework of the Italian railways: an outline of the main aspects Angela Stefania Bergantino (University of Bari) First Conference on Railroad Industry Structure, Competition and Investment “Round Table” IDEI, Tolouse (France) 7-8th November 2003

2. Main characteristics Structure: Unbundling (separation within same group): – FS holding: Trenitalia (services) & RFI (infrastructure) & other companies Services: – Access: open access with licence (35 licences  80% freight) Freight: completely liberalised (but only  2-3% third operators) Passengers: –Regional-local service obligation: direct assignment; competitive tendering (continuously postponed  2005); –Medium-long distance: formally open access (with licence); –Medium-long distance public service obligations (night-car): direct assignment; competitive tendering (  1/1/2006). – Licencing body: Ministry of transport (MT) – Rolling stock: owned by Trenitalia (Antitrust: no essential facility in local service tendering – Boll.26/03) – Service tariffs: regulated by CIPE with the support of NARS;

3. Main characteristics Infrastructure: – Infrastructure manager: exclusive rights to RFI (until 2060) – Path allocation: RFI – Determination of access charge structure and procedure: CIPE with the support of NARS (inspiration to marginal cost pricing) – Informational Network Prospect: RFI (since 2001) – Calculation & collection of charge: RFI – Freight terminals: owned by RFI  rented directly to Trenitalia  Antitrust (Boll.32/03) – “Regulatory organisation” (art. 30 D. 14/01): Ministry of Transport (DL.188/03)

4. Infrastructure: – Criteria for the determination of access charges; – Criteria for the allocation of slot; – Approval of Railway Network Plan (every two years) – Approval of concession contract (done) – Investment plan of RFI Services: – Criteria for the determination of tariffs; – Approval of service contract (service obligation and remuneration) – Investment plan of Trenitalia Railway regulation in Italy NO TRANSPORT AUTHORITY Ministry of Transport CIPE Regulator Other Ministries Ministry of Finance NARS Evaluations, guidelines & proposals

5. licence Concession ( 60 years) Railway regulation in Italy FS – holding RFI Trenitalia Other companies Price cap Service obligations Access charges Access rules Invest. plan quality Access charges Access rules Technical & safety regulation Investment Plan Service Contract Owner 100% Business Plan Stakeholder 2004 - “Regulatory Organisation” “Consumer” protection Ministry of Transport Ministry of Finance CIPE Regulator Other Ministries NARS Evaluations & proposals

6. The latest changes 1) railway services: proposal for new regulatory guidelines by NARS – A new price-cap 2) railway infrastructure: – Implementation of the EU directives

7. Services: the new price-cap (september 2003) Inflation (adj. RPI) X Gap-recovery Quality Adjustment factor 1) Global price cap: it includes all services, discounts, special fees (leaves greater commercial freedom, safeguards consumers,provides for the inclusion of High Speed services, might facilitate discriminatory pricing); 2) It allows to obtain a “fair remuneration of capital” (wacc) & provides a system of incentives for capital remuneration; 3) Provides for a system of premium/penalty for quality changes

8. Infrastructures: the new regulation of railway network - Decree 188/2003 implementation of EU directives (12-13-14/2001) Extension of the applicability of the provisions to the regional network where it is connected to the national (free access, separation); Introduction of the “authorised applicant” (extension to subjects who are not railway undertakings)*; All licence holders can supply all-national passenger and/or freight services; New guidelines on track access charges and their determination (Ministry of Finance & Ministry of Transport with approval of CIPE (  NARS); Regulatory Organisation: Ministry of Transport Allocation of infrastructure capacity remains with RFI (Infrastructure manager - art.4 D. 14/01); Art. 20 – it allows one year from the implementation of the law (october 2004) to RFI to assign to an independent third party the services included in the annex II.2 of D.14/01. – Trenitalia as the exclusive right to manage the majority of the freight terminals (61) on the territory: Antitrust case (boll. n.32/03)