ARCHIVESHISTORIQUES
DELACOMMISSION
COLLECTION RELIEE DES
DOCUMENTS "COM"
COM (77)266
Vol.1977/0092

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COMMISSION OFTHEEUROPEAN COMMUNITIES
COM(77)266final v
Brussels.15June1977
Proposai
fora
COUNCILREGULATION
layingdownuniformcostingsprinciples
forrailwayundertakings
(submittedtotheCouncilbytheCommission)
COM(77)266final

-1-
EXPLANATORY MEMORANDUM
SectionI
Legal "bases,objectivesandgeneralprinciples
Légalbases
1*UnderArticle8(2)ofCouncilDecision75/327/EECof20May1975
theimprovementofthesituationofrailwayundertakings andtheharmoni­
zationofrulesgoverningthefinancialrelations "betweensuchundertakings
andStates,"Before1January1978»theCouncil,actingonaproposalfrom
theCommission••••••••••,shalllaydownuniformcostingprinciples' *for
railwayundertakings .
2.Paragraphs3and4ofArticle8ofthatDecisionstatethattemporarily,
"therailwayundertakings mustprovidetheStatewiththenecessarydata
toenableadetailedassessment tobemadeofthefinancialresultsof
eachofthecategoriesofactivity".
"i)passengertransport:
-byrail(ifpossiblesubdividedintolongandshortdistance
orintohigh-speedandexpressontheonehandandother
railservicesontheother),
-byroad
-byothermeansoftransport;
ii)goodstransporti
-falltrainsandwagons,
-paokagesandparcels,
-byroad."
(1)O.J.n*L152of12June,1975.
/

-2-
3.Theaimofthisproposalistomeettherequirements ofthesepro­
visionsinthecontextoftheCouncilResolutionof27June1974(l)which
madecostinganimportantfactorincommercialcooperation betweenrail­
wayundertakings andincomparingthefinancialperformanceoftheseunder­
takings.
Objectives
4*Throughtheuseofcosting,thisproposalattemptstomeettwo
principalobjectives.
Thefirstistopromotecooperation betweenrailwayundertakings in
thecontextoftheimprovementoftheirfinancialsituation.Asafirst
stepitisproposedtodealonlywithgoodstrafficofsomeimportance.
Cooperation andmanagementinthissectorcouldbeimprovedbytakinginto
accountthecostingprinciplessetoutinthepropose,!for
-costingfromorigintodestination ,
-analysingthecommercialadvantagesofacceptingtraffic,
and,asfarasinternational trafficisconcerned,
-allocatingrevenuebetweentherailwaysinvolvedinthesame
traffic.
5.Thesecondimportantobjectiveistoprovideameansofcontinuous
monitoringofthefinancialresultsofthevariouscategoriesoftherail­
ways'operations ;andtheCommissionhasalreadyputforwardaproposal
foraRegulation (2)tomeettheessenceofthefirstrequirementof
Article8(2)oftheDecisionof20May1975»""toachievecomparability
betweentheaccountingsystemsandannualaccountsofallrailwayunder­
takings".Nevertheless ,thisproposaldoesnotfullymeettheprovisions
ofparagraphs (3)and(4)ofArticle8.Forthatreasonthepresentproposal
envisagesadditionalmeasuresinthefieldofrelationsbetweentherailways
andtheirsupervisoryauthorities ontheonehandandintheareaofcom­
parabilitybetweenundertakings ontheother.
(1)O.J.n®C111of13September1974
(2)Doc.COM(77)76 ./

-3-
General principle
6. Tomeet these objectives ,itisproposed that ,from 1January 1979t
therailway undertakings should usetheprinciple ofparticular costing
fortwopurposes ,i.e. thedetermination ofthecosts ofaspecific gpods
traffic andtheallocation ofcosts tocategories ofoperations .
Particular costs means :
6.1 .inthecase ofgoods traffic :
-a)fornewtraffic ,those variable andfixed costs ,orthose direct
andcommon costs ,attributable tothis traffic ;
-b)forexisting traffic ,thetermination ofwhich atcurrent con­
ditions isbeing considered ,those costs which would nolonger be
incurred ifthis traffic were discontinued ;
6.2,inthecase ofrailway operations asawhole ,foreach category of
operations ,those variable andfixed costs ,orthose direct andcommon
costs ,attributable tothis category ofoperation .
Section II
Principles forcosting aspecif iegoods traffic
7* Itisproposed that theprinciple ofparticular costing should be
applied tospecific goods traffic .Since themore detailed analysis of
costs resulting from this approach canonly bejustified fortraffic ofsome
importance ,itisproposed todeal with specific goods traffic infull
train loads .
8, Theprinciple ofparticular costing should beapplied inaccordance
with thefollowing approach :
-particular costs should becalculated forthesame period astheexpected
duration ofthetraffic being costed ;
-thecosting should take account offoreseeable changes .

9.Duringthisfirststageitisproposedtoleavethechoiceofdetailed
methodsforworkingouttheabovecoststotherailwaysthemselves.
10.vInordertomaintainadegreeofcomparability ,thecostfactorsto
betakenintoconsideration incostingarelistedinanannextotheproposal
whichwillprovidetherailwayswithaschemeofpresentation .
11.Thecostscalculatedinthismannerwouldprovidetothecommercial
departmentsoftherailwaysdataforthetermsandconditionsofaccepting
newtrafficorformaintaining existingtrafficoncurrentterms.These
costswouldalsoconstituteanimportantelementinfixingpricesand,in
international traffic,theycouldbeusedasanelementtoapportionrevenue
betweentherailwayundertakings involved.
12.Inordertoreinforcecommercialcooperation betweenrailwayunder­
takingsandfacilitateeffectivedecision-making inasectorfrequentlyin
competition withothermodesoftransportitisproposedthatonrequestthe
railwayundertakings involvedincarryingthesameinternational goodstraffic
infulltrainloadsshouldinformeachotheroftheirparticularcostsin
respectofthistraffic.Arequirement tothiseffectwouldbeinharmony
withArticle11§1oftheDecisionof20May1975*
SectionIII
Principlesgoverningtheallocationofcosts
tocategoriesofoperations
13.Itisproposedthattheprincipleofparticularcostingshouldbe
appliedtotheprocessofallocatingcoststocategoriesofoperations.
14.CostsforallocationarecostsshownintheProfitandLossAccount
oftheAccountingPlanmentionedinpoint5andbrokendownbytype,less
anycompensation andaidsreceivedunderRegulationNos.1191/69(l)»
1192/69(2)andIIO7/7O(3)whichrepresentareductionincost8.
(1)and(2)O.J.N°L156of28June1969
(3)O.J.K°L130of15June1970.

-5-
15•Theaiminthisfieldistoallocatecostsasfaraspossibleto
thevariouscategoriesofoperationssoastoleaveaminimumofcostsun­
allocated.Inapplyin .theprincipleofparticularcostingasalready
described,theallocationofcostsshouldthereforebecontinuedbyusing,
atthechoiceoftherailwayundertakings ,thetwodifferentprinciples
ofutilization andcausality.Thischoiceshouldenableeachrailwayto
takeintoaccountitsspecificstructure.
16.Acomparison ,betweentheparticularcostsforeachcategoryof
operationsobtainedasdescribedaboveandtherevenuesshownintheProfit
andLossAccountintheAccounting Schemereferredtoinpoint5would
allowthefinancialresultofeachcategoryofoperationstobeassessed.
Inordertoprovideabetterbalanceinthesub-categories of
operationsasbetweenpassengerandgoodstrafficthanthebreak-down
showninArticle8.3oftheDecisionof20May19751i"tisproposedto
addthefollowingsub-category t
"goodstrafficcarriagebyothermodes"
andtosubdivide
"fulltrainsandwagons".
Costswhichitwouldnotbepossibletoallocatetocategoriesof
operationsshouldbetakenintoaccountwhenthetotalresultsofthe
undertakings areexamined.
17*Itisproposedthattherailwaysshouldcommunicatetotheirrespective
supervisoryauthoritiestheoutcomeoftheircostallocationtocategoriesof
operations.Thecommunication ofthisdatatotheCommission would
provideafurtherelementinthecomparativeanalysisoftherailways.

-6-
SectionTv
Finalprovisions
18.Theprovisionsoftheproposalconstitutethebeginningofalong
processinadifficultfield,"buttheyareanessentialelementinim­
plementingtheDecisionof20May1975andadvancingcooperation between
therailways.Inthislightitisessentialtostudyfurtherdevelopments
oftheprinciplesdefinedandthepossibleextensionoftheirscopeof
application .Consequently ,ithasbeendeemednecessarytoestablishan
AdvisoryCommitteetoassiststheCommissioninitstasksofmonitoring
theapplicationoftheprinciples embodiedintheRegulation andofstu­
dyingwaysofimprovingthemeasuresproposedinthisfirststage.
Ο
ο ο
InputtingforwardthesethoughtstheCommissionhasofcourse
drawnextensively ontheexperienceoftheInternational UnionofRail­
ways(UIC).Moreover,duringthepreparatorystageofthisproposal,
theCommissiontooktheopportunity providedbyseveralmeetingswith
representatives oftheUIC'sGroupofNinetomakeadetailedstudyof
themosturgentproblemsandthelinesalongwhichactionwouldbeneeded
inordertoresolvethem.Thisproposalresultslargelyfromthatstudy.
/.

-7-
ProposalforaCouncilRegulation
layingdownuniformcostingprinciples
forrailwayundertakings
THECOUNCILOPTHEEUROPEANCOMMUNITIES,
havingregardtotheTreatyestablishingtheEuropeanEconomicCommunity,
andinparticularArticle75thereof,
havingregardtoCouncilDecision75/327/EECof20May1975on"the
improvementofthesituationofrailwayundertakings andtheharmonization
ofrulesgoverningfinancialrelations "betweensuchundertakingsandStates(l),
andinparticularArticle8thereoff
havingregardtotheproposalfromtheCommission,
.havingregardtotheopinionoftheEuropeanParliament,
havingregardtotheopinionoftheEconomicandSocialCommittee,
whereastheimprovementofthesituationofrailwayundertakings requires
theintroduction ofrulesonfinancingandaccountingbasedasfaraspos­
sibleontheprinciplesapplicabletoindustrialandcommercialunder­
takingswhilstatthesametimetakingaccountofthespecialnatureof
railwaysandinparticulairtheircostandrevenuestructure,
whereasanysuchimprovementretiresthelayingdownofuniformcosting
principlesforrailwayundertakings !
whereastheestablishment ofuniformcostingprinciplesforrailwayunder­
takingsshouldleadtoclosercooperationbetweentherailways,andwhereas
itshouldprovideausefultoolforanyformofintegrationoftheseunder­
takings.
(1)O.J.n#L152of12June1975,p.3
./

-8-
whereas specific goods traffic infull "train loads constitutes alarge and
growing proportion oftotal goods traffic carried "bytherailways ,andwhercc ...
itisappropriate toestablish uniform costing principles forsuch traffic ;
whereas theparticular costs ofaspecific traffic may beused bythe rail­
ways asafactor inprice-setting and indeciding whether toaccept the
traffic under consideration andwhereas ininternational traffic these costs
mayprovide anelement forapportioning revenues between theundertakings
involved inagiven traffic ;
whereas ininternational traffic itisappropriate that therailways involved
ina given specific traffic should beable tocompare theresults of
their costing byexchanging details ofthese costings ;
whereas greater transparency ofthe financial operations ofrailway under­
takings isrequired iftherules governing financial relations between them
and the States aretobeharmonized ;
whereas forthe purpose ofkeeping the States informed thenecessary information
forassessing financial performance bycategory ofoperations must becommu­
nicated tothe States bytherailway undert akings ;
whereas communication ofsuch information tothe Commission would facilitate
comparison oftheoperations oftherailways atCommunity level ;
whereas^in order toassist theCommission initstasks ofensuring the
application ofuniform costing principles andofproposing measures toex­
tend their scope after this first stage ,anAdvisory Committee should be
setup;
HAS ADOPTED THIS REGULATION :

-9-
SectionI
GeneralProvisions
Article1
Theuniformcostingprinciplesforrailwayundertakings setoutin
thisRegulationshall"beappliedforpurposesof(i)determiningthecosts
ofspecificgoodstrafficinfulltrainloadsand(ii)allocatingcosts"by-
categoryofoperations#
Article2
ThisRegulationshallapplytothefollowingrailwayundertakings s
-SociétéNationaledescheminsdeferbeiges(STICB)/lTationaleMaatschappij
derBelgischeSpoorvcgen(NMBS)
–DanskeStatsbaner (DSB)
–DeutscheBundesbahn(DB)
-SociétéNationaledescheminsdeferfrançais(SftCF)
-CorasIompairEireann(CIE)
-AziendaautonomadelleferroviedelloStato(FS)
-SociétéNationaledescheminsdeferluxembourgeois (CFL)
–NaamlozeVennootschapNederlandse Spoorwegen(NS)
-BritishRailwaysBoard(ERB)
-NorthernIrelandRailwaysCompanyLtd.(NTH).
Artide3
1*Witheffectfrom1January1979trailwayundertakings shall,forthe
twopurposesspecifiedinArticle1,applytheprincipleofparticularcosting*
2.Particularcostingmeanscostingbyreferenceto:

-10-
2.1.intheraseofgccdstraffic:
a)foranewtraffic,"thosevariableandfixed ordirect
andcommoncostsattributable tosuchtraffic;
b)foranexistingtraffictheterminationofwhichoncurrentterms
isbeingconsidered ,thosecostswhichwouldnolongerbeincurred
ifsuchtrafficwerediscontinued ;
2.2.inthecaseofrailwayoperationsasawhole:
foreachcategoryofoperations ,thosevariableandfixed or
directandcommoncostsattributable tothatcategoryofoperations.
SectionII
Principlesforcostingaspecificgoodstraffic
Article4
Railwayundertakings shallapplytheprincipleofparticularcosting
tospecificgoodstrafficinfulltrainloads.Specifictrafficshallbe
takentomeannewtrafficortrafficthetermination ofwhichoncurrent
termsisbeingconsidered.Railwayundertakings shallapplysuchprinciple
"byreferencetotherelevantcharacteristics setoutinAnnexI*
Article5
1.Railwayundertakings shallcalculatetheparticularcostsreferredto
inArticle4inaccordancewiththefurtherprinciplessetoutbelow:
-costsshallbecalculatedforthesameperiodastheexpecteddurationof
thetrafficbeingcosted;
-thecostingshalltakeaccountofforeseeable developments .
2.Forthepurposeofcalculatingparticularcoststherailwaytinder-
takingsmayusethemethodBoftheirownchoice.
./

Article6
1.Railwayundertakingsparticipating inagivenspecificinternational goods
-trafficinfulltrainloadsshallcommunicatetheirparticularcostsfor
thistraffictoeach«theronrequest.'International goodstraffic"means
thecarriageofgoods <u.toforintotheterritoryofaMemberStateoracross
theterritoryofoneormereMemberStates,
2.Railwayundertakings shallpresenttheircostingsonthebasisofthe
standardlistshowninAnnexII.
SectionIII
Principlesgoverningtheallocationof
costs"bycategoryofoperations
Article7
1.Railwayundertakings shallapplytheprincipleofparticularcostingfor
thepurposeofallocatingcostsamongthevariouscategoriesofoperations
setoutinparagraph2.Costsshall "betakentomeanthecostsbytypeofthe
ProfitandLossAccountoftheAccountingPlan,asshowninAnnexIIItoCouncil
Regulation onthenecessarymeasurestoachievecomparability betweenthe
accountingsystemsandannualaccountsofrailwayundertakings (l),lessany
compensation :oraidsreceivedfromtheStatewhichreducecosts.Railway
undertakings shallusethetableinAnnexIIItobreakdownthecompensations
andaidsreceivedtinderRegulationsffos1191/69(2),1192/69(3)and1107/70
(4)intoitemsconstitutingareductionincostsoranincreaseinrevenue.
2.Thecategoriesoftraffioshallbeasfollows:
a)forthecarriageofpassengersandbaggage:
–railtransport(subdividedinaccordancewiththeneedsofeachunder­
taking)
–roadtransport
–carriagehyothermodes.
(1}Doc.OOM(77)76
(2)(3)O.J.n®L156of28June1969,p.l
(3)O.J.NoL156,28.6.1969,p.8
(4)O.J.UoL130of15June1970.p.l
./.

-12-
b)forgoodstraffic:
j-full"trainloads
-fullwagonloadsandsetsofwagons
-packagesandparcels
-roadtransport
-carriagebyothermodes.
Article8
1.Forthepurposeofallocatingcostsbycategoryofoperations ,
railwayundertakings shallapplytheprincipleofparticularcostingtoeach
category.Insodoingandinordertoachievemaximumallocationofsuch
costs,railwayundertakings shalluseoneofthetwofollowingprinciples
attheirchoice:
Utilization principle :
Allocationofcostsinproportiontotheuseofresourcesmade
byeachcategoryofoperations.
Causalityprinciple :
Allocationofcostsbetweencategoriesofoperationsinproportions
showingthatcertaincostscouldbeavoidedintheabsenceofcertaincate­
gories,Inapplyingthisprinciplerailwayundertakings maynotregard
onecategoryofoperationsasthemaincauseofsuchparticularcosts
butshallapplythecausalityprincipletoallthecategoriesofoper­
ationsconcerned,
2,Costswhichitis.notpossibletoallocatetoanyonecategoryof
operationsshallbetakenintoaccountwhentheresultsoftheundertaking
asawholesireexamined.
./

-13-
Article9
Withintenmonthsoftheendofthefinancialyeartinderconsideration ,
allrailwayundertakingsshallcommunicatetotheirsupervisoryauthority
andtotheCommission iicularsoftheallocationofcosts "bycategoryof
operationscarriedoutinaccordancewiththeprovisionsofArticle8.
SectionIV
Finalprovisions
Article10
1*ThereisherebyattachedtotheCommissionanAdvisoryCommitteeto
assistthelatterinstudyingtheapplicationoftheprinciplessetoutin
thisRegulation *
2.TheCommitteeshellgiveitsopiniononanyquestionrelatingtothe
implementation ofthisRegulationandshallstudymeasuresdesignedto
improveitsprovisions.
3*TheCommitteeshallhaveasitsChairmanarepresentative oftheCommission
andshallconsistoftworepresentatives designatedbyeachMemberState#
TheMembersoftheCommitteemayobtaintheassistanceofexpertsdesig­
natedbythem*TheCommitteeshallbeconvenedbytheCommissionwhich
shallprovidethenecessarysecretarialservices.
Article11
AnnexesItoIIIformintegralpartsofthisRegulation *
ThisRegulationshallbebindinginitsentiretyanddirectly
applicableinallMemberStates*
DoneatBrusselsPortheCouncil
ThePresident

ANNEXI
Analysisoftransportoperations
Relevantcharacteristics :
-natureandvolumeoftrafficconveyed;regularorofseasonalor
exceptionalnature,
-routefollowedbythetrafficendbyanywagonsreturningempty,
-methodoftransportused(fulltrainloads),
-classofservice.
-weightofconsignment andaverageloadofwagonorwagons,
-category,typeandcharacteristics ofwagonorwagonsused(railwayor
privately-owned ;covered,open,flat;tareweight,length),
-turn-roundtimeofwagons,
-journeyandreturnedemptycoefficientofwagons,
-shuntingofloadedtrafficand,whereapplicable,ofemptyreturnwagons,
(ondeparture,onarrival,duringjourney),
-administration ,
-durâtionoftraffic»
Characteristics oftrainsconveyingtraffic:
-numbersandcategoriesoftrains,
-methodoftractionandclassoftractionunitused,
-runningdistance,
-distancesrunbytractionunits(includingassistedjourneysanddis­
tancesrunlight),
-grosstrailingtonnageoftrains(authorizedandactualaverage),
-rosteredhoursofstaff(driving,accompanying ),
-administration
forthevarioussectionsoflineused*

ANNEXI(contlimed)
Characteristics ofroutesusedt
-gradients.
-speedlimitsandaveragerunningspeeds,
-trafficmixandcongestion,routecapacity,
-axleloadings*

ANNEXII
Standardlistoffactorstobetakeninto
consideration incalculatingparticularcostsforgoodstraffic
1.Administration
2.Otheroverheads
3,Socialinsurance
4.Taxesanddues
5«Miscellaneous expenditureandindemnities
6.Terminalservices
7•Shunting
8.Otherstationexpenditure
9.Trainmanning
10•Generaldepotservicesandpreparationoftractivestock
11.Driving
12.Materialsused"bytractivestock
13•Maintenanceoftractivestock
14-Maintenanceofgoodswagons
15•Maintenanceofotherrollingstock
16.Depreciation orreplacement andhireofrollingstock
17*Maintenance anddepreciation orreplacementofpermanentway
18.Maintenance anddepreciation orreplacementofengineering works
19-Maintenance anddepreciation orreplacementoffixedinstallations for
electrictraction
20.Maintenance anddepreciation orreplacementofsafetyandtelecommunication
installations
21.Maintenance anddepreciationorreplacementofbuildings
22.Maintenance anddepreciation orreplacementofotherinstallations
23.Financialcharges.

AÏWEXIII
Breakdownofcompensation andaidsfromtheStateunder
RegulationsN°s1191/69(l),1192/69(2)andIIO7/7O(3)
asreductions incostsorincreasesinrevenue
Compensation andaidsconstituting
areductionincosts
Regulationn°1192/69onthenormal­
izationofaccounts
Régulationn®IIO7/7O:
-expenditure oninfrastructure in
respectofwhichothertransport
undertakings incurnoliabilities ;
-expenditure incurredintheresearch
Ianddevelopmentoftransportsystems
andtechnologies moreeconomicfor
thecommunityingeneral.Compensation andaidsconstituting
anincreaseinrevenue
Regulationn°1191/69concerning
publicserviceobligations
Regulationn°1107/70:
-tariffobligations notcovered
byRegulationn*1191/69
(1)and(2)O.J.n°LI56of28thJuneI969
(3)O.J.n°L130of15thJune1970.