What are some rail penalties you would apply? And this is tournament play?
Yes, tourney play with dedicated dealers.
Players are issued one 30-second time chip per hour of estimated tournament length (4 chips or two minutes of extra time for a 4-hour event, for example). Players always get up to 59 seconds to act before they are requied to forfeit a time chip.
Players get 30 seconds to act before dealer announces "Time", at which point the dealer starts clocking the player and tracking 'owed' time chips. After 30 more seconds, dealer announces "Chip #1", and continues timing and making subsequent "Chip #X" announcements until the player acts (verbally or physically).
Once the player acts, dealer requests that the number of time chips used be surrendered by the player. If the player has insufficient time chips to cover his time usage, he is penalized 3 minutes rail time for every 30 seconds of excess time used, effective at the start of the next hand. A player's hand is never ruled dead for excessive use of time.
In 15 years of using time chips in two 4+ hour events/month, we have never issued a rail penalty, and the number of time chips that have been forfeited is very low (usually one or two total per event, at most).
But play certainly is much quicker than it was prior to time chip implementation, and dealers very rarely even need to start the "Time" process at all. It works well as a time-wasting deterrent, while still allowing players the freedom of extra time for the occasional tough decision.