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Flawed financial data used in bullet train critique, official says

May 4, 2012 |  6:38 pm

Illustration of a high-speed rail station. Credit: California High-Speed Rail Authority

The state high-speed rail authority said Friday that a group of outside financial experts used flawed international data in an analysis that found that the future California bullet train would require massive operating subsidies.

The group of experts, including former World Bank official William Grindley and Stanford University management professor Alain C. Enthoven, said their research showed that foreign high-speed rail operators had much higher operating costs than the California project was estimating for its system.

Their analysis asserted that the rail authority was projecting its future costs at 10 cents per passenger mile, about one-fourth the cost that foreign operations average.

But in a letter to the authors Friday, Mike Rossi, a former banking executive who serves on the board of the California High-Speed Rail Authority, said the analysis used flawed data. The report was based largely on a report from BBVA, a Spanish foundation, which used mistaken cost data supplied by the International Union of Railways, Rossi said.

Rossi said that the foreign system most like the one California is planning is in Taiwan, which has a cost per seat mile of 3.1 cents, less than half of California's projected 6.5 cents. Rossi has taken the lead in crafting the business model for the future California system, which he says will generate multimillion- dollar surpluses on the day it starts partial operations.

In addition, Rossi said Enthoven and Grindley improperly used the cost per passenger mile for part of their analysis, which mixes up costs and revenues.

Grindley said that he is discussing the data issue with the BBVA authors and that the matter remains open.


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-- Ralph Vartabedian

Photo: Illustration of a high-speed rail station. Credit: California High-Speed Rail Authority