The Public Service Obligations in Transport Regulations 2023

Public service contracts and general rules

7.—(1) Subject to paragraph (2), where a competent authority grants an operator an exclusive right or compensation in return for the discharge of a public service obligation, it must do so by means of a public service contract.

(2) A public service obligation which aims to establish maximum fares for—

(a) all passengers, or

(b) certain categories of passenger,

may be effected by a general rule.

(3) In accordance with the principles set out in this regulation and in regulation 10 (public service compensation for directly awarded contracts), the competent authority must compensate the public service operator for no more than the net financial effect on the operator of complying with fare obligations effected by a general rule.

(4) A public service contract and a general rule must—

(a) clearly set out the public service obligations with which the public service operator is to comply, and the geographical areas concerned,

(b) establish in advance, in an objective and transparent manner—

(i) the parameters on the basis of which the compensation payment, if any, is to be calculated, and

(ii) the nature and extent of any exclusive rights granted, in a way that prevents overcompensation,

(c) in the case of a public service contract awarded other than under regulation 14 (awards of contracts under competitive procedure), determine the parameters in sub-paragraph (b) in accordance with regulation 10, so that no compensation paid to the public service operator exceeds the amount that is the net financial effect on that operator of discharging the public service obligation, and

(d) determine the arrangements for the allocation of costs connected with the provision of services.

(5) The costs referred to in paragraph (4)(d) may in particular include—

(a) costs of staff,

(b) costs of energy,

(c) infrastructure charges,

(d) costs of maintenance and repair of public transport vehicles,

(e) costs of rolling stock and installations necessary for operating the passenger transport services,

(f) fixed costs, and

(g) costs of relevant finance.

(6) A public service contract or general rule must set out arrangements for determining how revenue from the sale of tickets should be allocated and the proportion of such revenue which may be—

(a) kept by the public service operator,

(b) repaid to the competent authority, or

(c) shared between the public service operator and the competent authority.

(7) A public service contract must require the public service operator to provide the competent authority with the information essential for the subsequent award of the public service contract, while ensuring the protection of commercially sensitive information.