Fixed Costs in Action | The Cost of Powering the Railways

It's not often that businesses disclose data relating to their specific costs like energy in case competitors find that information handy. So a hat tip to Network Rail for letting us know what it costs to literally "power" the railways.

As the Guardian reports, the amounts concerned are pretty eyewatering, particularly as Network Rail is faced with significant increases in energy costs over the coming weeks and months.

The cost of electricity for running trains alone is expected to increase from £595m to £885m in 2023-24. Over to you to work out the percentage increase.

That electricity bill is essentially a fixed cost. Presumably it costs about the same to electrify a rail network and keep it operational regardless of how many trains use the network each day.

Electricity is just one element of energy costs. Total energy costs are forecast to rise to £1,016m, up from £670m this year. Again - another chance to practice a percentage change!

That total of over £1bn will, presumably include the costs of gas used for items such as heating the waiting rooms and perhaps powering some of the food concessions in the railway station concourses.

Someone is going to have to pay for these increased costs.

Although just over half of rail fares are regulated, it is a reasonable guess that passengers will end up paying more to let the train take the strain.