Wednesday, July 14, 2010

Provincial government evaluation of the E&N corridor

The provincial government released their study into the E and N corridor and the results are not promising for people hoping that there will be any significant increase in passenger rail service of any sort.  This is a quick overview and not meant to be a perfect reflection, just an analysis to highlight some of the issues for the line.

Here are the highlights:

Freight
The current use of the line is very low, less than 1,000 rail cars per year.  Unless there is some major industrial activity that starts, the projection is for freight traffic to remain below 2000 rail cars.  If the Raven coal mine opens this rises dramatically to in the range of 13,000 to 18,000 rail cars a year.

Even with the Raven mine opening, the rail line needs to move more like 35,000 to 40,000 railcars to justify the expense of the capital investments needed in the line.

The norm for freight services is that they make money or they are not offered.   In the case of the E&N, more or less all of the capital costs for improvements of the tracks needs to come from freight services.  This mean the means the freight services will have to bear annual debt servicing costs of around $7,000,000 to $8,000,000 a year.   This adds $8000 to $10,000 to each freight rail car trip to recover the costs.

Intercity Passenger Service
Several options were evaluated which included looking at service to Port Alberni and adding more trains on the tracks.   At the end of the day the total passengers moved per year came to 160,000 to 220,000 depending on the options considered,  Currently 40,000 are moved each year.

The current service costs $2.2 million to operate and brings in $800,000 in revenue.   Extrapolating to the possible passenger numbers, revenues rise to $3.2 million to $4.4 million.   My estimate of the operating costs is that it would rise to something on the order of $4.4 to $6.6 million.  

Passenger rail continues to need a subsidy to operate and can not provide any revenues to help defray the costs of upgrading and maintaining the system.    The passenger service will need a subsidy of about $7.50 per passenger trip to be able to continue to operate.

The evaluation also looked at a tourist train operation and made estimates of 8000 to 13,200 with a revenue of $533,000 to $847,000 annually.  A drop in the bucket and not enough to make any real difference in covering the costs of the railway.

Commuter Traffic Service
Option 1
Minimal service from Langford to Victoria.   13 km of track and four stations with

Option 2
Upgraded service from Westhills to Victoria 17.2 km of track with six stations.

Option 3
Upgraded service but also one trip per day from Duncan to Victoria

Passenger Demand
The evaluation did not find a lot of potential daily demand for commuter rail.

The minimal service would have an estimated 535 daily passenger trips or 133,750 annually.
The full service would have an estimated 1050 daily passenger trips or 262,500 annually
The Duncan option would have an estimated 1350 daily passenger trips or 337,500 annually.

For comparison, Victoria Regional Transit had 24,800,000 passenger trips last year and should be at least 35,000,000 in 2026.  Commuter rail would only account for less than 1% of the total passenger traffic in the region.

Capital Costs
The minimal service of 13 km with four stations is estimated to be in the range of $70 to $130 million.   The higher cost reflects the need for a lot of upgrading of level crossings along the route, I can not see a regular rail service being acceptable without much better level crossings.   For this reason I will be using the higher number.

The expanded service with longer trains, six stations and 17km of service is estimated to be $90 to $166 million.   The variation is once again related to the costs needed for level crossing upgrades.

One capital cost that was not considered in the evaluation is the cost to build rail over the Johnson Street bridge.  This would add between $12 and $23 million to the cost of the line.

The Victoria Regional Transit Commission would have to take on a lot of debt to start the commuter rail service.  If we assume that the capital costs are between $130 and $166 million and 2/3s of the costs are covered by the senior governments, this means $43 to $55 million of debt will have to serviced by the Transit commission.      At the moment the VRTC has minimal debt servicing costs.   Commuter rail will add debt servicing cost of around $3.5 million dollars a year.  If the Johnson Street bridge costs are added, this raises it to around $4 million.   All these assume 2/3s of the costs are paid for by a senior level of government.

Operating Costs and Revenues
The operating costs are estimated to be about $3.5 million a year for weekday service for 10 hours each day.  This in current dollars.   With 300,000 passengers trips in a year, this means the operating cost per passenger trip is close to $12 per passenger trip.  In comparison, the existing bus network costs a $2.95 per passenger trip to operate.

The average fare that is brought in for each  bus passenger trip is about $1.43.  The subsidy for each passenger trip is $1.52.

If the commuter rail brought in about the same revenues per passenger trip, this mean a subsidy per passenger trip of about $10.50.  With the cost of a bus pass for an adult being $80 and much cheaper for UVic and Camosun students, the assumption of revenues per trip seems reasonable.   What this means is that each daily commuter would need a subsidy of $21 to cover the operating costs of the trip.

The debt servicing costs would add another $12 per passenger trip.   In the end, the Victoria Regional Transit Commission will have a cost of about $48 per round trip commuter each day but only take in about $2.86 in revenues.  This is a subsidy per commuter of over $10,000 per year.

Currently it costs the Greater Victoria Transit Commission about $90 million a year to operate the service.  The commuter rail service would be 7.8% of the all the costs but only 0.9% of the demand.

One of the big problems with the commuter rail idea is that rolling stock is only used for a limited number of hours a day.  The evaluation had each train set in use for seven hours a day and a total of 1750 hours a year.   This is capital cost per rail car of $80 an hour for a 20 year lifespan

Final Comments
The rail line is reaching a point where if nothing is done to repair and rehabilitate the line, there will be no option but to close the line.

The capital costs involved are high, but even if they were free, the costs to operate the rail line are simply not affordable.
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