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46 Guidebook for Implementing Passenger Rail Service on Shared Passenger and Freight Corridors a passing siding. Allocation of fixed costs will always be somewhat arbitrary. In addition, many infrastructure components subject to wear or degradation, such as rails and ties, have long lives and annual costs will vary over time as the components age. A decision has to be made between sharing costs "as incurred," recognizing that there could be considerable year-to-year variation as components age and when substantial renewals become due, or estimating long-run average costs and charging the same amount each year. A further complexity is that a passenger rail agency might fund a track renewal, as on the Downeaster route in Maine, and should enjoy the benefit of reduced annual maintenance costs in following years, instead of contributing to the next renewal cycle. Because of the technical complexity and the presence of substantial fixed costs, there is a long (and contentious) history of methods to allocate railroad operating costs to a particular traffic. In the regulated era prior to the 1980 Staggers Act, much of the effort was directed at determining "fair" freight rates to charge freight shippers of different commodities. These allo- cation methods relied on historical cost data that the railroads were required to submit to the ICC. Statistical analysis of the data yielded a costing formula, which was then used to estimate the cost of a specific freight movement. Similar methods are still used by the STB to support the more limited freight rate regulation in force today. The STB's responsibilities for regulat- ing passenger fares was eliminated with the formation of Amtrak, but it still has the responsi- bility to mediate disputes between Amtrak and freight railroads regarding access charges. Appendix B contains a discussion of the various costing issues brought before the STB for res- olution during negotiations between Amtrak and the host railroad for the Downeaster service, and the resulting decisions. These are the most recent series of decisions by the STB on Amtrak incremental costing. The following sections first introduce the primary cost categories that make up O&M costs, including periodic like-for-like replacements of worn-out track components such as rail. Then, the definitions and differences between avoidable and fully allocated costs are dis- cussed, including how cost estimates may be used in calculating the share of costs allocated to freight and passenger operations using the same tracks. Finally, methods to estimate costs of a specific rail operation are discussed, including using historic actual costs and engineer- ing analysis. 3.4.2 Railroad Operations and Maintenance Cost Categories Table 3-1 shows the matrix of railroad O&M cost categories organized by operating function and by the nature of the expense. The shaded blocks in the table matrix highlight the functional and expense categories that may need to be apportioned among the users where a rail line is shared by multiple services. The rationale for sharing the costs among users within each of the expense categories is discussed in the following paragraphs. Transportation Labor Because these are not shared resources, in most cases, each operator employs its own train crews and other on-board personnel. In some cases, a freight railroad may provide passenger train crews (as on some Chicago area commuter lines and in Seattle), but this is usually the subject of a separate operating services contract. In contrast, dispatchers are always a shared resource, because one dispatch desk (workstation) has to be responsible for all trains on a rail line segment. Therefore, dispatching costs are always a line item in a shared cost analysis and would be shared between users per applicable agreements. For Amtrak intercity services to which Amtrak incremental costing applies, only incremental dispatching costs, if any, will be charged to Amtrak. Where two passenger operators share the same rail line, it may also be necessary to share certain station costs.
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Analysis and Modeling 47 Table 3-1. Operations and maintenance cost categories. Operating Materials and Function Labor Supplies Fuel and Power Other Expenses Transportation Line-haul train crews, Minor items Electric power for Switching and yard crews, traction on electrified On-board services lines, (passenger), Diesel fuel, etc. Passenger station staffing (passenger), Dispatchers, Supervisors Equipment Inspectors, Spare parts and Power for workshops Contracted maintenance Maintenance Shop and terminal materials for car and power tools services, e.g., rebuilding maintenance employees and locomotive components, maintenance Depreciation Way and Structures Track inspection and Rails, Diesel fuel for work Equipment rental, Maintenance maintenance, Ties, trains and Contract services, Signal and telecoms, Ballast, maintenance Depreciation Inspection and Replacement parts equipment maintenance, for signal and Structures inspection and telecoms, maintenance Other construction materials General and Management above first- Office supplies Power for building Office rentals or leases, Administrative line supervisor and services Contract services, e.g., for (G&A) technical specialists, buildings, Administrative staff of all Insurance, types, Loss and Damage Accounting, payments Legal services Transportation Fuel and Power In most cases, each operator uses its own fleet of locomotives, and diesel fuel is purchased sep- arately by or on behalf of each operator. On a shared electrified railroad, power costs must be shared. This calculation can be complex, because there is no easy way to directly meter the power consumed by each train. Equipment Inspection and Maintenance Most passenger operators provide and maintain the equipment (cars and locomotives) that is dedicated to their services. Occasionally, one agency will rent or lease cars to another agency, but any associated maintenance services provided are the subject of a separate specific agreement. Therefore, cost-sharing issues rarely arise. Maintenance-of-Way and Structures Maintenance-of-way functions are always under the control of the host railroad. This is the most complex area related to cost sharing, because some cost categories are largely fixed (i.e., do not vary with use) and other costs vary with traffic volume and types of use in different ways. Also to be resolved is the approach to costs for periodic replacement of wearing components, such as rail. A rail replacement project may be treated as a capital cost in accounting terms, to be depreciated over the life of the rail, but the consumption of rail life may be treated as a mainte- nance cost in a cost allocation calculation. Most efforts to find realistic costing and allocation methods are concentrated in the maintenance-of-way and structures area. Maintenance of sig- nal and telecommunications systems also fall into this area and are mostly fixed costs that vary little with the level of usage once specific systems are installed.