Consulting in Public Transport and the Rail Sector

Public transport on road and rail is a service of general economic interest (SGEI), the operation and infrastructure of which call for long-term support from public funds. Public compensation payments are subject to strict guidelines under European, federal and state law. In particular, the verification of orderly use of financial resources, adherence to the ban on over-compensation, and the creation of incentives for quality and cost effectiveness determine the relationship between public authorities and transport companies. In order to ensure the upkeep of the railway infrastructure, the evolving practice of the Federal Agency will bring with it significantly more stringent demands on the pricing of railway infrastructure companies.

PwC’s public transport experts advise companies and public authorities on all questions of the organization and financing of public transport. Together with PwC’s regulatory experts, they support railway infrastructure companies in questions of regulating charges.

Our advisory services focus on:

Long-term sustainability of public transport systems:

• Conceptual design of market models for public authorities (market intervention instruments, tariff measures, awarding public service contracts to own or third-party companies, award competition)
• Drawing up cooperation models for transport companies (organization models, business appraisal)
• Analysis of sustained financial viability of public transport systems (“stress test” in the form of long-term planning)
• Revenue analyses and identification of revenue potential (focus: user financing)
• Analysis and ensuring economic efficiency of service performance (open and anonymous benchmarking, functional area-related detailed analyses, weakpoint analyses and action recommendations to increase cost efficiency)
• Identification of cost objectives (best practice)
• Definition of quality standards and creating incentives for quality assurance.

In our projects, we take into account the various interests and viewpoints of public authorities and companies and strive for acceptable solutions for local and regional markets. The close integration of our clients ensures a relationship to local conditions and feasibility. A look at all “subsidy drivers” (costs, revenues, depth of production, range) reveals the levers you need to know as our client in order to be in a position together with us to develop options for action all the way through to individual measures necessary for securing an adequate transport service.

Legality and regularity of financial compensation:

• Definition of compensatable business operator duties (public service contracts, tariff measures, quality assurance)
• Calculation checks for directly awarded railway traffic performances
• Conceptualization and audit of separating accounts for public services in accordance with the appendix to VO 1370/2007 (separation from other business areas, coding, integration in internal accounting including management information systems)
• Audit of adherence to cost objectives (4th Altmark criterion, company-related earnings targets)
• Application audit (para. 45a Passenger Transport Act [Personenbeförderungsgesetz/ PBefG], para. 148 Social Code IX [Sozialgesetzbuch – SGB IX]), audit of revenue sharing.

Funding cases have increasingly been coming under the scrutiny of the state aid law of the European Union. Not only being “able to fund” but also “entitled to fund” play an equal role for funders and beneficiaries alike. As our client, we discuss with you the requirements that are made on cases of funding which comply with state aid law, including optimum steering impact for investment and operating functions.

In the case of company-related financial compensation that is not based on competitive prices, we use calculation tests to ensure that the contracting bodies are authorized on a sound basis to pay the financial compensation. In the form of accounting separation, we ensure the appropriate differentiation between public services and commercial business and enable a business assessment of corporate activities outside of services of general economic interest.

Regulation of railway infrastructure user charges:

• Development of route and facility pricing systems
• Advice on economic concepts for statements of expenditure to the Federal Agency (calculation, documentation, communication)
• Conceptualization of a system landscape for statements of expenditure
• Verification for an appropriate return on investment.

In the telecommunications and energy sector, we have many years of consulting expertise covering all fields of regulatory practice ranging from fundamental aspects, calculation of remuneration and documentation to communication to the regulatory body. As a railway infrastructure company, you profit from our know-how. We help you adjust to more stringent regulatory requirements which are emerging at European Union level, in national law and in regulatory practice. Verification for an appropriate return on investment.