Friday, 30 September 2011

Dublin congestion charging ruled out for now

The Irish Herald reports that Transport Minister, Leo Varadkar, has ruled out an introduction of congestion pricing in Dublin in the medium term.   Dr. Varadkar has been Minister since March, after the Fine Gael party roundly defeated the Fianna Fail party in the general election in February, so has had a chance to consider transport policy.

He was responding to the government's National Transport Authority proposing a congestion charge for driving into downtown Dublin as part of its draft transport strategy for the city through to 2030.  The previous government had endorsed the concept as being part of a long term strategy.

However, it has been ruled out because the Minister believes Dublin's public transport system is not good enough to provide an alternative to motorists.  He insists that motorists have a viable alternative to commuting by car.   Dublin already has a commuter rail system, light rail and an extensive bus network.

I don't think congestion pricing must be limited to ensuring all motorists can have an alternative mode, when there are other alternatives, which could be changing time of travel, or even route (depending on the design of the congestion charge).  It simply isn't viable to ensure all have an alternative, but certainly what public transport exists should be seen as being a major useful alternative.   Alternatives include public transport, cycling, walking, telecommuting, off peak driving, changing destinations and car sharing.  Congestion charging is likely to shift demand in a wide range of ways, not just a shift to public transport, as important as that is.

See the Dublin Demand Management Study of around six years ago for a rather basic consideration of congestion charging (and other measures) for Dublin.   However, I suspect a key reason for not considering congestion charges for Dublin for now, is the economic situation (and the simple fact that congestion in Dublin has notably reduced in the past few years due to the economic crisis).   So for now, this politically controversial idea, will be parked, until Dublin's economy revives enough for congestion to get back to the levels of five or so years ago.

Thursday, 29 September 2011

News briefs: Russia, New Zealand, Texas, New York

Russia

The Moscow Times reports that a consortium led by investment company VTB Capital, has won the right to build the 120 rouble (US$4 billion) segment of the Western High Speed Diameter in St. Petersburg.  The 11.5 km northern segment will be tolled.   The consortium includes Russian firm Gazprombank, Italian firm Astaldi and Turkish firm Ictas Insaat.  The concession last for 30 years, with revenue estimated at an average 9.67 billion roubles (US$304 million) per annum, indicating a lucrative return if revenue meets forecasts, although the City of St.Petersburg will be required to compensate if traffic forecasts are not met.  Apparently one of the key reasons for the consortium winning was because its rival wanted a guaranteed 14 billion rouble p.a (US$440 million) from the city.

Tolls remain a growing source of revenue for major new Russian motorways, and PPPs are increasingly of interest as a way to progress such projects.

New Zealand

Following on from the Auckland Mayor, Len Brown, proposing congestion pricing to help fund an underground inner city rail loop, the New Zealand Herald now reports that he is praising the proposal of the contractor lobby ground Council for Infrastructure Development.  The suggestion is that every motorway onramp in the city have a NZ$3 (US$2.33) toll at peak times, NZ$2 (US$1.55)interpeak and NZ$1 (US$0.78) off peak, with a cap of NZ$6 (US$4.66) a day.

It is an interesting idea for a city with three major radial motorways (and a north-west and south-west peripheral ones), but also with short distances between interchanges which could mean quite some diversion onto local roads.  Yet it should still be investigated to determine how much impact it could have on congestion, and revenues.

Texas

Frum Forum reports on how Republican Presidential Contender, Rick Perry, achieved considerable success with his toll road policy as Governor of Texas.  It said:

The secret lies with locally chartered toll road authorities that exist in every major Texas metropolis and were largely created under Perry’s administration. As Perry envisioned with the TTC project, the private sector has played a role. Cintra, the company that would have built the TTC, has built one decent-sized Austin-area road without a dime of public money. It is one of only a handful of enitrely-privately-financed roads in the United States...Most prominently, by opening up new land for development, the new roads have played a role in keeping Texas housing affordable for just about everyone. Today, the typical home in Texas costs less than 3 times the median income; while multiples of 8 or 12 are common in California and New York.

There is enough commentary about Presidential contenders for this blog to stand to one side, but it looks like at the very least, Rick Perry brought a free market approach to toll roads.

New York

The Gothamist writes about whether the increases on tolls on the tolled crossings from New Jersey to New York could be a trojan horse to tolling the remaining crossings.   It floats an idea from ex traffic commissioner Sam Schwartz “His plan would raise all tolls into Manhattan below 60th Street to $13, charge drivers to cross 60th Street from uptown, and impose tolls for the first time on the Brooklyn, Manhattan, Williamsburg, and Ed Koch Queensboro bridges. The price at other crossings would stay flat or be lowered, to reward drivers who aren’t contributing to Manhattan congestion - reducing tolls at the RFK Triboro, Verrazano Narrows, Throgs Neck and Whitestone Bridges from $13 to $8.” Then the issue arises as to why some bridges remain free...

Indeed. How can it be politically acceptable for the Port Authority of New York and New Jersey to increase tolls (without there being any dedication of money to new transport projects), but not toll the other crossings?  It is time for a decent study on the economic and environmental benefits of New York congestion pricing, with multiple scenarios.

USA truck tolling?

The National Review has published an article by Reihan Salam supporting distance based truck tolling, with a voluntary option for cars.  The benefits of it would mostly be in revenue protection, but also far better pricing for freight.  Yet it neglects the benefits of reducing congestion, which only will really be effective if all cars are priced too.  However, to get that far will take a long time, and the merits of starting with trucks are considerable, especially if tolling is priced to reflect economic efficiency combined with usability and practicality.

Saturday, 24 September 2011

Auckland congestion charging - not happening yet

Congestion pricing for Auckland? 

Auckland, New Zealand's largest city, is not typically thought of as a place for road pricing, or where there is severe traffic congestion. Yet work undertaken a few years ago indicated that average traffic speed at peaks are worse in Auckland than in Sydney or Melbourne in Australia – cities that each have a population of the whole of New Zealand. One estimate puts the cost of congestion at NZ$750 (US$580 million) p.a.  Given I am originally from New Zealand, I confess I do have a bit of a personal interest in this.

Auckland metropolitan region
The city has a population of around 1.3 million. The leading mode is by far the car, although around 44% of commuters to the central city travel by public transport, bike or foot, only 13% of employment is located there, so less than 5% of all trips in metropolitan Auckland are by public transport, and most of them by bus. 

In the past decade over NZ$1billion (US$780 million) has been committed to upgrading Auckland rail network. Most recently, central government has committed to the same to be spent again electrifying the network and supplying new trains (all of the current trains are refurbished secondhand units from the UK and Australia).

Recent local government reforms saw a creation of a single local authority for the whole region replacing eight local authorities. Now the first elected Mayor is enthusiastic about further expansion of the rail network even before electrification has occurred, wanting to build an underground rail loop in central Auckland at a cost of NZ$2.4 billion (US$1.86 billion).  According to Radio New Zealand, he has suggested that one way of funding the project would be a congestion charge.

The Council for Infrastructure Development – a lobby group of construction companies, transport users and business, has previously advocated a NZ$1-2 (US$0.78-US$1.55) toll on motorway ramps to raise money for transport projects.

The response of the current National led government (facing election in two months time) has not been positive.

According to the New Zealand Herald, Transport Minister Steven Joyce said “he had "significant reservations" about tolls and congestion charging, as motorists already contributed about 11 per cent of their fuel taxes to public transport”.  All fuel tax in New Zealand is hypothecated to the National Land Transport Fund, which is used by the government to pay the full cost of state highways, around half the cost of local authority roads and half of the cost of local authority public transport subsidies (which all must be delivered on a tendered contract basis).


So far it's been shown to have quite limited benefits in terms of relieving congestion with something like 1,500 to 2,000 cars a day off the road which in the context of Auckland is very little,"..."If road users were being asked to contribute I hope they'd want to push pretty hard as to what benefit there would be really for them in terms of congestion."

It is unclear whether the Minister is opposed to congestion charging per se (it is hardly going to be a vote winner to say so in election year) or just opposed to using it to fund a rail tunnel project he doesn’t believe is worthwhile.

Concept of Auckland CBD downtown cordon
The only option that could be seen to be linked to a CBD underground rail loop would be an inner city cordon or area charge like the one depicted here. Yet it would be unlikely to raise much money or make a big difference to congestion beyond that area or the approaching roads.

The Automobile Association is adamantly opposed saying: “In a recent survey, AA Members sent a very clear message that central and local government are to be considered the primary and secondary funding sources for any public transport projects. Motorists may be prepared to contribute more than they already do, but they must not be considered the main funding source for public transport” in addition Aucklanders also sent a very clear message in 2006 that they would not accept road pricing - including congestion and network charging. 75% of AA Members surveyed were opposed to road pricing."

"We live in tough economic times. When people are already struggling with their finances, the last thing they need is being made to pay to use a motorway. The $2 network charge being proposed could cost a regular motorway user $1000 a year in extra tax."

"If a congestion charge is introduced to stop people driving into the CBD, motorists will simply decide to shop and work elsewhere. At the end of the day that will hurt the CBD retailers and employers."

It also quotes from the government report that claimed the proposed underground rail link would only remove 1,400 cars from the roads in the morning peak (less than 5% of cars entering the CBD) - that means "the Council wants motorists to pay $1.7 million to remove each car". In other words, the main beneficiaries of the rail link are not road users, but public transport users getting a better ride and property owners getting improved access. The connection between congestion charging and the rail link is poor.   The acid test would surely be if Mayor Len Brown makes it an election platform when he comes up for re-election in two years' time.  I somehow doubt he will do that.

Auckland Council does not have the legal powers to introduce a congestion charge under current legislation, but the last (Labour led) government (voted out of office in 2008) undertook a study – the Auckland Road Pricing Evaluation Study (ARPES) – to determine whether road pricing on Auckland’s roads would make sense.

It looked at several options, including one similar to that proposed by CID.

It came to some conclusions:
- A congestion charge focused on the city centre would generate little revenue and make little overall difference to congestion, mainly because most trips at peak times did not commence or terminate there; 
- A charge only to use the motorways (as suggested by CID) would generate a lot of revenue, but divert a lot of traffic onto parallel local roads, making congestion worse overall;
Motorway only road pricing option from ARPES

- The best option in terms of generating revenue and reducing congestion would be network wide distance tolls, but technology and cost made it prohibitive at the time;
- The proposed options were large cordons around the “isthmus” that comprises the immediate suburbs around central Auckland.

However, it was decided then not to proceed, but to focus on building motorways and upgrading public transport, paid for by increases in fuel taxes and road user charges (the distance/weight charge on all diesel vehicles).

Twin cordon road pricing option (preferred by ARPES)
I doubt whether congestion charging just to pay for a single rail loop would add up financially, or politically, especially since the rail network doesn’t serve the north shore or many of the suburbs to the south of the city.  Auckland's main newspaper, the New Zealand Herald, says that regardless of what government thinks it should be up to the Auckland Council to decide.

It says charging could be done very easily by putting electronic toll readers on motorway off-ramps, thereby ensuring that traffic not destined for Auckland could pass through on the motorways for free. But any traffic leaving the motorways to use the city's roads and other amenities would pay the charge, and should. If the Auckland Council can convince its voting residents to pay the full cost of the project without calling on central funds, sceptics will have to reassess their view.

The problem is that the motorways are not owned by Auckland Council, but the Crown. Central government owns and manages them as state highways, so would have to agree (and besides it has to change the law to permit councils to introduce such charges).  Until the railway electrification and the Western Ring Road, I doubt Aucklanders will feel there is no alternative to more roads or public transport.

So I don’t think Auckland will have congestion charging soon. As a new world city that has grown and developed with highly diverse travel patterns, with employment, education, leisure and retail located all across the city, it is too artificial and distorting of land use patterns to put cordons in place. The motorway ramp option is also flawed as the distances between interchanges are too short to avoid encouraging diversion onto local roads.

Key concerns about introducing a new charge are fair.  Using the money to pay for a rail loop is unlikely to be wise, as it is taking money from motorists to spend on a project that is not expected to make a measurable difference to traffic congestion (so wont benefit motorists), but rather benefit downtown property owners and rail users.  Given that project has a poor benefit/cost ratio, it is hardly surprising that the AA and motorists would oppose road users paying for most of its costs.

In addition, a charge focused on the downtown is likely to discourage investment there.  Auckland is not London, New York or Hong Kong.  Employers will choose downtown Auckland or Auckland's satellite centres on the North Shore, Henderson or Manukau, or if large enough, Sydney.   Indeed, if the enormous public spending on rail is about encouraging growth of the CBD, congestion charges will counter that quite effectively, especially since it is clear that it would not address the more endemic Auckland wide congestion problems.

However, that isn’t a reason to reject it outright.

Just because a solution for Auckland isn’t easy doesn’t mean it should be abandoned. Decentralised New World cities can benefit from road pricing too. However, the question is first whether pricing should be about raising new money or improving the way current funds are raised (and it can mean both).

60% of the revenue to pay for local road maintenance and improvements in Auckland come from a local tax on land (rates).  While there is an argument for property owners to pay for some of the fixed capital costs of roads because access generates property value, there is a case in busy cities to transfer most of that to users, to help reduce congestion.  Cutting rates and replacing them with congestion charges may be a more clever solution, and certainly more politically palatable.

To manage congestion effectively, a network road pricing solution is needed. Perhaps the existing distance charging system (Road User Charges) that applies to around 20% of vehicles in the country already (heavy and diesel vehicles) can provide a platform to better charge other vehicles (but only to replace fuel tax). However, to have it based on time of day would require all vehicles to pay by distance, varying by time and location.

Such a charge would minimise distortions, manage congestion and be a sustainable source of revenue.   Yet the biggest challenge is always public acceptability.  That is why I think the future for Auckland congestion charging is in replacing existing taxes that pay for roads.  At the very least local authority rates, but ideally fuel tax.  However, any system will need to make a worthwhile difference to congestion, avoid localised distortions and not result in significant diversions of traffic.

Declaration of interest: I worked on the Auckland Road Pricing Evaluation Strategy.

Friday, 23 September 2011

News briefs: London, Illinois, San Diego, Texas, Pennsylvania

Short items from the UK and US today..

London

One of the problems for Transport for London (TfL) is enforcement of the congestion charge against foreign registered vehicles. They are not exempt (unlike in Stockholm), but can pose a problem for enforcement if the vehicles have left the country. TfL uses the SPARKS network, which was set up by London local authorities to form partnerships with motor vehicle registration and enforcement agencies across all 27 EU Member States. As a result, there are now agreements with several of them to recover congestion charging fines from vehicle owners in their home countries. Now the problem of evasion is not high. I recall a figure from two years of around 12%, but have no source for that. However, around a third of that is able to be recovered through SPARKS (let's exclude the non-payment of several embassies, notably USA, from that figure, which totals £50 million from those non-compliant embassies).

Yet there is one way TfL can enforce - it can impound vehicles that have fines beyond a certain threshold.  One group that has been particularly problematic are the expensive luxury and sports cars of the super-rich who fly them to London for summer, from the United Arab Emirates.  UAE paper The National reports that Emirati cars owe TfL £8,280.  The problem is not just the congestion charge, but parking fines, illegal use of bus lanes, running red lights and speeding.  In short, they are young carefree and carless Emirati men who care not a jot for the delays and danger they are placing Londoners in (and of course they are not unable to pay).

The paper continued:

London’s Metropolitan Police have seized cars worth millions of dirhams in a clampdown on groups of young Arabs who gather on the quiet backstreets of affluent Knightsbridge to race their luxury motors.

Police conducted random checks on high-performance vehicles in the area during July to make sure drivers had valid UK driving licences, insurance and number plates.

Seems like the only appropriate approach.

Illinois

Woodridge Patch reports that the Illinois Tollway plans a 35c toll increase to help fund a $12 billion programme of capital investment. The plan includes reconstructing the Jane Addams Memorial Tollway (Interstate 90) to link Rockford to O’Hare Airport, a new interchange to connect Interstate 294 to Interstate 57 and a new all-electronic Elgin O’Hare West Bypass that can provide western access the airport. (Full map here)

It is supported by the as it is the first toll increase in 28 years!  The tollway is quite a network of 460km of toll roads in the environs of Chicago.

The Mundelein Review is endorsing the plan, saying:

Tollway officials have analyzed the existing system and developed projects that keep the current roads in good repair, but also position the region for growth. The widening of I-90, for example, will include room for a bus rapid transit lane one day. The Elgin O’Hare west bypass should prove to be an engine for economic development. All these changes, we hope, will lessen the intense traffic jams that make the Chicago region the nation’s most- congested.

A good example of how tolling a network of highways can help maintain that network, but provide a basis to allow that network to be upgraded and expanded with a source of revenue.  It is especially encouraging that the increase in tolls is accepted because it will deliver improvements for those paying and help improve public transport.

San Diego

The San Diego Reader reports that the bankruptcy court put the value of the bankrupted, and now re"nationalised"(by SANDAG) South Bay Expressway toll road at $285 million.  SANDAG bought the road off the creditors for $345 million. I’ll leave it to taxpayers of San Diego to decide if they think it is a good deal to spend more than the market price for a toll road that is intended to be subsidised.

Landline magazine reports: "When it was opened in November 2007, the South Bay Expressway was projected to lure 60,000 vehicles per day from Interstate 5 and other roadways connecting the Otay Mesa Port of Entry to State Route 54. But just two years after opening, the South Bay Expressway was only realizing 22,600 vehicles per day. The operator filed for Chapter 11 reorganization in March 2010 in an effort to restructure $510 million in debts."

Texas

US TV network ABC reports on how the Texas Department of Motor Vehicles has issued a number plate twice resulting in a man receiving toll violation notices for roads he hasn't been on.

"Scott loves to show off his 1929 Model-A Ford, but he insists he's never driven it to the Austin area, not when its top speed is just 45 to 50 miles an hour...Sure enough, wouldn't get in it and drive it over there," he said. "That'd be an all day drive!"...The Texas Department of Motor Vehicles admits it has issued some plates twice with the very same numbers...We do recognize that it's a problem and we're working to resolve that problem as we speak," said Randy Ellingston with the Texas Department of Motor Vehicles"

By far one of the more important things to get right is to ensure the motor vehicle number plate database does not contain such errors.  Anecdotal evidence is that there are plenty of such agencies with dated databases without the budgets or political will to tidy them up.  Electronic free flow tolling demands this as an enabler, and it is a major threat to the success of such systems when they have errors such as this.

Pennsylvania

Morning Call reports the Pennsylvania Turnpike Commission is considering moving to fully electronic free flow tolls, and is surveying users to establish their opinion.  Wilbur Smith and McCormick & Taylor were hired to conduct a year long study (honestly shouldn't take that long) into such a conversion.

Thursday, 22 September 2011

Series of toll road investor results: Ferrovial, Atlantia, Transurban, Metro-Pacific

Ferrovial

Construction News reports Spanish infrastructure investor Ferrovial reporting a 312 million euro in net profit in the first half of 2011, contrasting with losses of 164 million euro in the same period of 2010. Notable was how the EBITDA on the Toronto 407 ETR rose by 8% in part due to higher tolls and lower operating costs. The Airports division contributed 62% of EBITDA, Services 14%, Toll Roads 14% and Construction 10%.

Ferrovial owns its toll roads through its subsidiary CINTRA.  Its highway assets (whole and partial) are:

Atlantia

Reuters reports that the Italian toll road investor company had a 41% increase in profit for the first six months of 2011 compared to 2010. This reflected sale of a stake in one road and increased toll revenue, despite declining traffic volumes (with a 0.5% decline in volumes on Italian toll roads).

"Excluding the sale of an investment and charges related to impairments, profit rose 12 percent over the period."

Atlantia's highway assets are:
- Autostrade per l'Italia SpA (2854.6 km of network of Italian motorways);
- Società Italiana per Azioni per il Traforo del Monte Bianco (5.8 km), which manages the Italian section of the Mont Blanc Tunnel;
- Raccordo Autostradale Valle d'Aosta SpA (32.3 km), which manages the road linking Aosta and the Mont Blanc Tunnel (Italy);
- Autostrada Torino-Savona SpA (130.9 km), which manages the motorway linking Turin and the Ligurian coast (Italy);
- Società Autostrada Tirrenica SpA, which holds the concession for the entire length of the Livorno-Civitavecchia motorway (240 km) and currently manages the Livorno-Rosignano section (36.6 km) (Italy);
- Tangenziale di Napoli SpA (20.2 km), which manages Naples' orbital motorway (Italy);
- Società Autostrade Meridionali SpA (51.6 km), which manages the Naples-Pompei-Salerno motorway (Italy);
- A4 Krakow-Katowice motorway (Poland);
- Pune Solapur Expressways (50%) in India, which holds the concession (expiring 2030) for 110 km motorway in the state of Maharashtra;
- 135 km toll motorway serving the cities of Rio Bueno and Puerto Monttt in Chile;
- 442 km toll motorway in the state of San Paulo in Brazil;
- 23.5 km southern section of the orbital toll motorway serving the city of Santiago del Chile;
- 79 km toll motorway serving the cities of Algarrobo, Casablanca and Cartagena in Chile;
- 43 km of road network in the city of Santiago in Chile;
- 21.5 km north-eastern bypass in the city of Santiago del Chile; and
- Urban motorway linking the city of Santiago with Arturo Merino Benitez International Airport.

Transurban

The Herald Sun reports that Australian toll road company Transurban has reported a 90% increase in full year profit.  An 8.8 per cent rise in traffic on Melbourne CityLink, which netted A$434.6 million (US$424 million) in revenue, was a key contributor to total toll revenue of A$891 million (US$870 million) - up 10 per cent.  It carries a reported A$5.8 billion of debt behind its assets. 

The Australian reports an interview with Transurban chief Chris Lynch who said "Our roads are very robust ... There's not a lot of discretionary travel on our roads, it's largely people getting to work or the airport."

It was also noted that the Melbourne CityLink, it gained from an additional lane on the western approach to the toll road network allowing for greater use of its capacity.

The Australian also noted that:

"The acid test of an infrastructure company is the ability to pay generous distributions funded by real cash rather than debt. The "wedge of free cash" -- $390 million in all -- enabled Transurban to declare a 27c per security full-year payout, with management promising "at least" a 29c distribution this year."

Adelaide Now reports that Melbourne Citylink grew faster than the average 10% "with an increase of 12.8 per cent to contribute $434.6 million. Transurban said the completion of the upgrade on its southern link, adding lanes on CityLink between both tunnels and Toorak Rd, had been important in boosting traffic."

Transurban said traffic growth on the Lane Cove Tunnel, purchased nearly a year ago, had initially risen 6 per cent but had declined to 2.8 per cent this calender year due works on the M2.

Transurban's highway assets are:
- Hills M2 motorway, Sydney. Australia;
- Lane Cove Tunnel, Sydney, Australia;
- Eastern Distributor, Sydney, Australia;
- Westlink M7, Sydney, Australia;
- M5, Sydney, Australia;
- Pocahontas 895, Virginia, USA; and
- Capital Beltway HOT lanes, Virginia, USA

Metro Pacific Tollways Corporation (Philippines)


earnings slipped 4 percent in the first half of the year to P725 million (US$17 million) due to lower-than-expected traffic growth and higher tax payments during the period. “Though traffic demand could be lower given sharp increases in fuel prices and the expiration of MNTC’s (Manila North Tollways Corp.) income tax holiday, MPTC still expects a strong financial performance this year with the increase in toll rates and modest traffic volume growth,” MPTC president Ramoncito Fernandez said in a statement.

The company's latest road is the Subic-Clark-Tarlac Expressway. Its portfolio also includes the North Luzon Expressway.

Wednesday, 21 September 2011

More tolls unpopular in Georgia, USA according to newspaper

The Times Herald Editorial in Georgia USA asked if its readers would support more tolling. What drove this was the announcement by Gov. Nathan Deal announced the first public-private road construction project -- a $968 million plan to construct toll lanes on Interstate 75 north of Atlanta primarily in congested Cobb County. The project involves a managed lane system along I-75 from the SR 155 (Zack Hinton Parkway, South) interchange in Henry County north to the SR 138 (Stockbridge Highway) interchange in Henry and Clayton counties, a distance of 12.24 miles. It clearly provides a choice for motorists providing a tolled bypass to a congested section of highway, whilst relieving the untolled section as motorists choose the tolled lanes.

I-75 managed lanes
Yet check the reaction and comments to the idea under the editorial. Many simply think of it as paying twice, most don’t think they get a choice and some simply think they pay enough in gas tax that should pay for roads. It looks like some serious communication issues exist in Georgia, and the case for tolls need to be made on the basis that there isn’t enough collected now to pay for major improvements like this. As long as people have choice, tolls tend to be acceptable, but in Georgia it may be that a lot of work needs to be done to convince people.  Indeed, the paper noted not long afterwards how opposed people were to tolls.

If successful, this latest public-private road project could determine if other such projects take place around the state.  However it does appear that a vocal group are loudly against tolling in the state, which means the local DOT will have to take some efforts to demonstrate how and why tolling will be advantageous to motorists.   Not that Georgia is without tolls, as the State Road and Tollway Authority is responsible for a single tolling point on the GA 400, with the money going to pay for the maintenance and upgrade of the road, and the parallel public transport service.  Are the people commenting not users of this route, or is their experience that negative that they oppose tolls?

(Note: To avoid accusations of any form of parochialism, I will only use the term Georgia, as it stands, to describe the country.  Georgia, the state in the USA, will always be suffixed by the USA)

Canadian exit from Transurban

The Sydney Morning Herald reports on the Canadian Pension Plan having sold its cornerstone stake in toll-road company Transurban for A$903 million(US$919 million). Transurban is best known for owning the lucrative Melbourne Citylink, six toll roads in Sydney, and the I-495 HOT lanes and Pocahontas 895 in Virginia, USA.

The deal is a sale of almost 170 million shares - about 12 per cent of the issued capital - for A$5.23 a piece. The block trade was picked up by a range of mostly domestic institutional investors.

The paper also notes that recently that another fund, the Ontario Teachers Pension Fund has taken advantage of the strong Australian dollar by swapping its stake in Sydney Airport and paying A$791 million (US$805 million) in cash for MAp Airports' (formerly Macquarie Airports) cornerstone holdings in two European airports (Brussels and Copenhagen).

It’s a fairly obvious transaction. With the Australian dollar so high, it makes sense to cash in investments on the Australian market, and hunt around for cheap deals in Europe and the US, where currencies are low and the market (and prices) are subdued. The bigger question is where to invest, given the prospects for toll roads in some locations (e.g. Greece) look rather dire. Some wise modeling and forecasting will be needed to ensure that bargain prices are indeed what is obtained.

Shares dropped on the news of the exit.

Tuesday, 20 September 2011

Are toll roads bad for New Jersey?

This is the question raised and answered by Bob Ahler. Bob joined an ad-hoc commit-tee called Citizens Against Tolls, whose primary goal was the elimination of tolls on the Garden State Parkway.
Those of us working in the road pricing world have to face opponents to tolling regularly. Of course many of the concerns about tolling are quite legitimate issues about whether the money will be used for what is intended, or misunderstandings about how a system may work. People don’t generally like paying for something that is, to them, free otherwise. Given most roads most of the time don’t have any form of direct charging (although fuel taxes form a kind of indirect charge), putting any form of pricing on a road is going to be controversial.

Once you get beyond highly politicized debates about tolling it is worthwhile to understand what arguments are made against it, and so I though it would be worthwhile reviewing Bob Ahler’s series on tolling in New Jersey in the Cape May County Herald (not that it was easy to find all of the articles as they weren’t linked in a series and there are two "fourth articles" and a sixth as well as a final article).  The ones I found are numbers 1, 2, 3, 4, 5 and 6, oh and another 3rd!

All in all there is a lot of interesting history in his articles, but his anti-toll position doesn’t seem unassailable. I thought the best approach would be to go through his conclusion point by point.  He starts:

With the high cost to collect tolls, additional driving times, wasted gasoline, additional pollution, unsafe toll plazas driving conditions, loss in matching federal highway funds and the subsidy paid by drivers on toll roads, the only conclusion that can be reached is that tolls do not serve the best interest of New Jersey citizens. 

It is therefore recommended that tolls be eliminated from all roads, thus saving $522 million a year. Lost revenues can be made up from a 7.2 cent per gallon increase in the state gasoline tax, thus insuring that road upkeep funding is the same for all roads in New Jersey.

So he proposes eliminating tolls and increasing fuel tax. So everyone pays more, rather than letting people using some roads pay for those roads. Except of course, not everyone pays the same. Fuel efficient vehicles pay a lot less, except that they don’t actually consume less “road” than others. However, it is his financial claims of a saving that don’t bear close scrutiny, especially since around a quarter of these “savings” are “travel time” savings which can be gained by fully free flow tolls. Let’s go one by one: 

The following is a list of toll elimination benefits:

• Savings of over three hundred million dollars a year in toll collection costs.

Now it is true that collecting tolls costs more than collecting fuel tax. Indeed, collecting taxes on basic commodities is always cheaper than billing people for what they use. It would probably be cheaper to charge telecommunications, cable TV and broadband through a tax on electricity, but would it result in better services if such systems were provided by a government monopoly reliant on politically driven funding? I doubt it. Toll collection costs can be brought down. EZPass is one way to do it, but a more concerted effort to move to fully electronic free flow and learning lessons of competitive utilities can do a lot more. This is Bob’s strongest argument, and it is up to the toll sector to show it can collect tolls more efficiently. What he completely fails to even acknowledge is that fuel taxes are a poor proxy for road use, as they can’t reflect wildly differing geographical costs, variations in demand and supply, nor do they reflect well the marginal costs of road use by the heaviest vehicles. 

• The in-flow of $75 million a year in matching federal highway funds.

What this demonstrates is that, if true, the Federal government is not neutral on states that toll. He appears to consider that if tolled roads were untolled, they would gain federal funding support, but that also requires matching funding from the state. I advocate that tolled roads that fuel tax payers use should get funding from the fuel tax paid in using those roads, that would eliminate this distortion and reduce tolls.

• Without toll plazas, there would be less traffic congestion, resulting in less wear and tear on vehicles, a reduction in gasoline usage and a reduction in air pollution.

Don Shula Expressway, North Texas Tollway Authority, Maryland County Connector, Toronto 407, Melbourne Citylink etc etc. Toll plazas are unnecessary for tolling and eliminate all of these concerns. Next!

• Driving on the Turnpike, the Parkway and the Expressway would be safer and more of a pleasure since drivers would no longer have to contend with competing traffic in the selection of a toll lane.

See above. Next!!

• Lengthy and cumbersome entrance and exit lanes could be replaced with shorter and more efficient clover-leave ones.

See above. Next!!!

• The location of entrances and exists would be based on the needs of traffic instead of toll plaza revenue generation consideration (sic)

Electronic free flow tolling can enable this too.

• Drivers would no longer be encouraged to change their driving habits by clogging up adjacent roads in order to avoid toll roads. All roads would therefore be funded in the same fair and efficient manner, thus spreading the cost equally among all drivers.

A road that is clogged is badly priced, so should be subject to pricing that matches demand with supply. Fuel tax may be financially efficient, but it is not economically efficient or fair, nor does it spread costs equally. Indeed, why is spreading costs equally fair? Why should users of an expensive major facility be subsidised by other motorists? The diversion issue is reasonable, but it is an argument also for network wide road pricing, which I believe would give Rob apoplexy.

• The elimination of subsidies paid by tolls.

The thesis here is that toll roads are priced far higher than untolled roads and some of the money is used to subsidise the other roads. A fair point, as tolls should be set at efficient rates related to the infrastructure costs concerned, and demand and supply. On some roads this means a healthy surplus, or a profit. Yet fuel tax offers exactly the same thing. Some heavily used roads generate lots of fuel tax revenue, and others generate little. So why are tolls particularly singled out for this argument?

• The lowering of the operating cost for trucks, thus eliminating the need to pass toll costs on to customers.

Well, only for the trucks using toll roads. He wants to increase fuel tax on everyone everywhere in the state, which puts up their costs. Wouldn’t they pass that onto customers?

• The elimination of the temptation by elected officials to sell or lease toll roads to meet current budget requirements.

He means, to retire some debt or fund some other infrastructure. The argument presented as to why this is “bad” is that the new owners would increase tolls. That can be limited by specifying conditions in a concession of course, which is more effective a limit than it could be under state ownership (as politicians can’t constrain themselves as easily as they can constrain the private sector). Why is state ownership of all roads a good thing in and of itself, unless this is an ideological argument?

• Although the need to eliminate tolls appears to be obvious, there could be pressure against doing so by those having a vested interest in the continuation of tolls. It will therefore take a politically courageous person to eliminate road tolls in New Jersey, one who seeks to run an efficient and fair highway system, so that we can say that we do not have tolls on roads in New Jersey.

Politically courageous? Well it would be popular, except for the need to increase fuel taxes and find the money from somewhere else. The vested interest in the elimination of tolls comes from those who pay tolls, and nobody else. Others would have to subsidise them. The vested interest in keeping them comes from everyone else would avoids having to pay for the roads tolled, and the staff. The former is a big enough group to listen to!

All in all, the argument against tolls rests on an antiquated view of tolling technology, combined with high operating costs and poor pricing. There are cases where tolls don’t make sense, but these often are new roads where the case for the road itself was very poor indeed. Unviable toll roads are often unviable roads. Other cases are those where the benefits to non-users are substantial and come from the diversion of traffic onto the new route. Bypasses being a clear example, where having all through traffic bypassing a built up area, reduces congestion, pollution and accidents, but tolling such a route may dramatically cut those benefits, which when monetized, more than make up the value of toll revenue.

I don’t believe toll roads are bad for New Jersey. They may be run more efficiently with new technology, business processes and commercial imperatives. However, they generate net revenue for the roads concerned that would otherwise have to come from fuel tax. Consider the elimination of tolls on the crossings into Manhatten to think about the effects of that on congestion, and the pitiful fuel tax revenue one would get from the increase proposed. Quite why rural motorists should pay more to make up revenue from those driving into Manhatten is unclear. As fuel tax revenues become ever more difficult to obtain, the likelihood is that tolls will be considered more frequently, but the real benefit comes from better pricing to manage congestion, and send signals to road users and governments spending money on roads, as to how to respond.

Almost all of the economy functions according to price signals, and is the better for it. Roads can be too, as long as the transaction costs involved in tolls are more than offset by the better investment and usage decisions that such signals can help inform. An overly simplistic view of tolls is that they are just another way for the government to make money, but I consider them to be a way to efficiently price infrastructure and everything that comes from that – and this is where debate on tolls should reside. In economics, not politics.

History of EZ-Pass

EZ Pass is a DSRC based electronic tolling system used on toll roads in 14 states in the USA.   Toll roads in Delaware, Illinois, Indiana, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Ohio, Pennsylvania, Rhode Island, Virginia and West Virginia, share use of the system, which enables interoperability between the roads.  It uses what might be considered to be a rather dated, but effective standard of 915MHz sent at 500 kbit/s using the IAG protocol in 256-bit packets.  


Some interesting points include how in 1993 some felt that would be a waste of money, especially with the general sentiment in favor of phasing out tolls. "Visionary skeptics foresaw that an electronic toll collection system would be very expensive to implement, requiring new buildings, computers, extensive wiring at toll booths, a new billing and collection system, technicians to maintain and test the new system and electronic identification sensors to allow toll plazas to differentiate between authorized and unauthorized vehicles."

In November 1996, the state announced plans to award a $488 million contract to MFS Network Technologies, to set up an electronic toll collection system called E-ZPass....it was discovered that MFS could not record toll cheats electronically, toll collectors had to write down the license plate numbers of violators

The introduction of E-ZPass did not go smoothly. Drivers, who erroneously entered the turnpike through an E-ZPass lane and then exited through a non-E-ZPass lane, found that they were charged the maximum toll at that exit. There were also cases where Turnpike “entries” didn’t get recorded but “exits” did.

Problems were even worse when tags malfunctioned. The assumed violation triggered a camera, which took a picture of the passing vehicle’s license plate. That resulted in the owner receiving a $25 fine for an “administrative fee.” If the owner was an E-ZPass customer, they could fill out the back of the violation, thus informing the agency that their pre-paid account had sufficient funds in it.
The agency then usually cancelled the fine and only assessed the toll fee. But this was expensive corrective action, since in addition to the time spent by the E-ZPass employees and the customer; a toll could result in two letters from the agency and one letter from the customer.

A weak link of the E-ZPass system is the transponder tag, which is mounted in each vehicle for detection and toll collection purposes. Each is equipped with a battery, which is supposed to last 10 years. But with many batteries wearing out sooner than had been anticipated, more than a million tags were replaced under a $28 million contract with Mark IV Industries (the company that supplied the transponder), approved by the Turnpike Authority in 2006. 

Lots of expensive lessons, that seem silly now, but how many others make the same mistakes again and again? The toll industry globally is still very fractionated, with many local players in the market. The opportunities are there for lesson learned in different jurisdictions to be applied more readily across the board, but by and large, most practitioners remain US, European or country specific focused. 

What of the future?  Well the article doesn't predict.  I presume there will be more conversions to fully electronic free flow tolls, and the question will be whether the technology ever moves on to the new Federal 5.9GHz standard which is necessary for all sorts of sophisticated ITS applications.  Moreso, how will EZPass evolve to cope with plans to replace fuel tax over the long term?  I expect the future to be bright, but more focused on providing the essential service of handling customers, opening, closing and changing accounts, rather than focusing on the technology used.   For it is in service provision that the biggest risks lie in terms of costs and therefore margins for operators.

Monday, 19 September 2011

Seattle's toll tunnel to replace untolled viaduct (UPDATED)

Route of the tunnel
Those unfamiliar with the story of the Alaskan Way Viaduct should read this. In summary, this viaduct is a six-lane part of Washington State Route 99 running along the Seattle waterfront. It was damaged in the 2001 Nisqually Earthquake and faced either needing to be repaired or replaced. Replacement was to cost up to US$3.5 billion, but as the viaduct runs along the waterfront of the city, it was seen as a chance to do something different (don’t ask why it wasn’t insured like any privately owned infrastructure). The options narrowed down to a bored tunnel or a surface street option.

Environmentalists argued, remarkably, that it would be better to demolish the viaduct and not replace it, so that traffic would be pushing through surface streets. The presumption is that the resulting severe congestion would simply deter many from driving and so have a positive impact – except of course for those who DO need to use the route (even buses and trucks), and anyone walking, cycling, working or living along the surface route. A clear case of local environmental gains being overridden by those wanting to wage a war against road traffic.  Indeed they even argued that the tolled tunnel would be no better on the streets that just demolishing the viaduct and routing traffic through town.

SR 99 tunnel, two lanes stacked
A postal referendum on the options came out in favour of the tunnel, which is an innovative stacked tube design as seen here. 

So the state has signed a construction contract to break ground on a $2 billion, 1.7-mile tunnel from Sodo to South Lake Union in September, to replace the Viaduct by 2016.
The problem with the tunnel is that as it will be tolled (and be four lanes whilst the viaduct is six lanes), and the environmental-impact statement claims that some 40,000 to 45,000 cars a day as drivers dodge a cost of anywhere from $1 overnight to $5 in the southbound afternoon peak. Yes, the tolled tunnel would have peak congestion pricing to manage demand. The state predicts that by 2030, about 57,000 cars would pass through the tunnel each day under the current proposed tolling plan, compared with 93,000 if the tunnel wasn't tolled at all. The city may gain a waterfront, but will also gain more downtown traffic. The question may yet be raised as to whether downtown congestion pricing might be a useful strategy to limit this, indeed the environmentalists might be better focused on that, now that an effective bypass is to be built.  

Traffic on the highway has been largely static in the last decade, hovering around 110,000 daily trips near Seneca Street, or 63,000 through the Battery Street Tunnel.
According to the Seattle Times, Highway 99 project Administrator Ron Paananen claims that the tunnel project, with a widened Alaskan Way south of the ferry terminal “preserves similar overall capacity to the current viaduct”. The FHWA has also signed off on the option.

Seattle isn’t unfamiliar with tolls, with the following existing projects:
- Tacoma Narrows Bridge;

Big inner city toll tunnels are a modern solution to getting major traffic to bypass built up areas. They are not cheap, but they are permanent and make an enormous difference to traffic flows and the local environment. I wish Seattle the very best with this project and hope the traffic management and design for the surface routes is good enough to balance the needs for traffic and the desire to unlock the value of the land along the waterfront that will be freed up by removal of the viaduct.

Tolling will be electronic free flow and the pricing will need to be attractive enough to appeal to a majority of the existing users of the viaduct.

Full details on the project, including a cost breakdown are here.

UPDATE:  Useful details provided in the comments below, a key point being that much of the current traffic on the viaduct is entering and exiting the downtown.  The tunnel will be simply a bypass, so in fact it will be providing tolled capacity only for those bypassing, the existing streets will have to manage (with some widening work), begging the obvious question as to whether congestion pricing might be helpful?

San Diego "nationalises" a private toll road

I wrote in July about how the San Diego Association of Governments (SANDAG) was considering “nationalising” (there isn’t a handy word for governments short of central government acquiring businesses) the bankrupt South Bay Expressway. The reasons being that the concession for the toll road had gone bankrupt and so it was seen as a potential “bargain”. However, SANDAG isn’t looking for a way to give taxpayers a good return, but to effectively cut the tolls to make it a more general use route. It is seeking to subsidise it.

One report suggests that the road is seen as a cheaper alternative to expansion of Interstate 805, which is estimated at a cost of US$700 million. So as a result, SANDAG bought the South Bay Expressway (SR 125) for US$345 million. It had been a dud investment for the Macquarie group as traffic turned out to be half that of forecasts.

However, as much as this may be sold as a bargain, one politician is clearly getting a rush of blood to the head saying "Could those tolls be half that price? Could they be one-fourth? Could they go away? Anything is possible," said Chula Vista Mayor Cheryl Cox. Apparently Cheryl Cox’s voters are happy to pay more taxes in response. Currently, tolls are based on vehicle type and distance. The maximum for a car is US$4 for a 10 mile trip, with a minimum of US$0.85 at the moment, obviously reducing this would increase demand, and a free road would do the most, but do taxpayers really want to pay for that?

One approach could be to treat a calculation of the fuel tax revenue generated from the road’s use as a shadow toll to offset the existing tolls (after all, anyone using fuel tax is already paying to use a road). However, assuming SANDAG just want to optimise use of the road, there will need to be some demand modeling about what tolls would maximise the economic efficiency of the network.

Of course this is exactly what has been advocated by some for the UK's M6 toll road, but the government here is uninterested in finding money (that it doesn't have) to buy a road that it wont make money from (and it is NOT bankrupt, but has a relatively content owner).   Yet it isn't on the cards for the bankrupt toll roads in Australia.   The simple reason being that the road doesn't close, and unless a government is keen to use taxpayers' money to subsidise tolls, there isn't much point in having taxpayer money risked on the road. It is interesting that the USA, oft cited as the example of unfettered free market capitalism, is now an example of quite the opposite.

Brisa working in challenging times

BusinessWeek reports on how Brisa, the Portuguese toll road concessionaire, is facing stagnant revenues and growth, in part due to the parlous state of the Portuguese economy slowing demand.

In the first half, sales rose 2.2 percent to 323.7 million euros ($466 million), and toll revenue declined 1.7 percent to 261.7 million euros. Ebitda dropped 1.2 percent to 221.8 million euros...The shares have fallen about 38 percent this year, giving the company a market value of 1.94 billion euros.

However, the company is still in a sound position, due to sale of its shareholding in Brazilian concessionaire Companhia de Concessões Rodoviárias, it has cash reserves of half a billion Euro. It has since been diversifying its portfolio, expanding into the Netherlands, and into rail and airport concessions, as well as being strict on operating costs (aiming for higher than the 60% DSRC tag takeup it currently gets on its roads.  Having over 1500 out of the 1800km of Portuguese toll road concessions makes it a clear leader in that market

Yet a presentation of Brisa a year ago indicated that it considered the Portuguese market to be less exposed to demand risk than one may think. Reasons given include:
- Immature car ownership in Portugal (20% below EU average with scope to grow, although this is unlikely during recession);
- Low exposure to heavy vehicle traffic, which is itself highly elastic in demand according to economic conditions (as well as imposing substantial marginal costs in terms of maintenance);
- Low exposure to tourism/transit traffic.

In addition, it states that in 2009 whilst the Portuguese economy contracted 2.7% traffic only dropped 0.8%. In other words, traffic demand for Portugal is relatively inelastic.

So whilst it is exposed to a stagnant economy, it looks to be in a better position than one may otherwise assume.  

Besides its Portuguese concessions, its businesses include:
- 100% of Brisa Operations and Maintenance (providing motorway operations services including road user assistance);
- 100% of Brisa Inovação (research, design, development, production, installation, support and maintenance of the equipment, system and intelligent services related to motorway management);
- MCall (call centre operations and marketing services);
- 100% of  BEG (project management company);
- 75% shareholding in Via Verde (the Portuguese DSRC based electronic toll service provider);
- 60% of ControlAuto (a Portuguese vehicle safety inspection company);
- 36% of TIIC (a transport infrastructure investment company);
- 100% of the Northwest Parkway concession in Denver, Colorado;
- 30% of Dutch company Movenience, which is responsible for toll collection at the Westerschelde Tunnel in the Netherlands.

It has a strategy to go further afield and has been involved in an interesting project in the Netherlands using ITS to reduce traffic congestion in the Netherlands (more on that to come). 

Friday, 16 September 2011

Poland's heavy vehicle national toll system

From 3 July 2011, Poland became the sixth country in Europe to implement a national heavy vehicle tolling system based on distance travelled. The system, branded as viaToll, applies to all vehicles over 3.5 tonnes (not just trucks). Tollroadsnews has a good article about the system here.

The system replaces a sticker based vignette system, which charged domestic and foreign vehicles weighing over 12 tonnes on the basis of prepaid access to the network based on a year, a month, week or a day.  800 Euros for a year (US$1,095) down to 9 Euros for a day (US$12.32).  The fundamental problem with vignettes being that revenue does not increase based on usage, but rather on the number of vehicles on the road.  The vignette system also only applied to vehicles 12 tonnes and over, the viaToll system applies to all vehicles down to 3.5 tonnes, so captures most of the freight and all of the bus market.

While Poland's economy has been one of the most buoyant in Europe during the economic downturn (in part because it does not use the Euro, has kept its public finances in a good state and has enjoyed substantial repatriation of funds from expat Poles working elsewhere in the EU), it has substantially grown its truck sector exponentially.  It has entered the German and other neighbouring country road freight markets, undercutting local competition and keeping prices low.  As a result, the Polish government sees this system as a way of getting the thriving (though very low margin and competitive) truck sector to make a fairer contribution to the costs of the network it depends on (given Polish truck operators are paying such tolls in neighbouring Germany, Czech Republic and Slovakia).  

In addition, Poland is now a primary road transit route for freight between Russia and the EU.

Official network map
1,565km of motorways and selected major highways have been tolled, using a DSRC based system (with the 5.8GHz EU standard). The system has distinct parallels with the systems in place in Austria and the Czech Republic, having been installed by Kapsch. As a result it is rather different from the GPS based systems in place in Germany and Slovakia, and the tachograph/GPS system in place in Switzerland

With its 5 billion PLN (US$1.58 billion) DSRC based system, it relies on gantries to detect vehicles passing underneath with the viaToll tags. The intention is to receive about PLN913 million (US$289 million) in the first year. About 430 have been installed. Whilst reliable and cheap to operate, it is far from cheap to install and it is far from cheap or quick to expand the geographic scope of the network, unlike GPS systems. Indeed, the DSRC based systems in Austria, Czech Republic and Poland perhaps all stretch the capability of such technology being deployed in an economically viable way on a national scale by only charging motorways and selected major highways.

ViaToll DSRC tag
For all vehicles over 3.5 tonnes the DSRC tag is mandatory, with no option to pay by other means. The tags are expected to have an operational life of five years on average before needing replacement because of battery life.   Tags require a PLN120 (about US$38) which is fully refundable on return of a working tag and cancellation of an account with no outstanding debts.   Deposits for stolen viaToll boxes will not be returned, incentivising drivers to keep their vehicles locked!

17 tag distribution points and 16 customer contact points (one in each province) were established, with pre-registration available one week in advance.

The preferred way to register is online on the viaToll website, it has interestingly been noted that scam websites had been set up seeking registration and payment details. A development that is bound to be a risk in the future with fully electronic toll systems.

Payment options include a wide selection of fleet and fuel payment cards, with credit and debit cards also possible online, and with cash through selected outlets.  Pre and post pay options are available.  Prepaid accounts can have a maximum of PLN1000 (US$316.54) per vehicle in top up, indicating some interest in the system NOT having very large amounts of currency. Minimum top up is PLN120 (US$38).  Post pay accounts need credit, bank or insurance guarantees.

350,000 tags have been distributed for 112,000 customers (some customers have fleets).  They use a system of beeps to inform the driver about the account status:

A single beep means that the user has sufficient funds in the account;
Two beeps indicate that the user has funds in the account, but not enough; and
Four signals indicate no funds in the account or a malfunction of the viaBOX.

Curiously, although built to the EU standard, the viaToll DSRC tag has not been subject to interoperability agreements with other EU tolling systems.  This may simply be for contractual purposes for now, but it would not seem to be complicated to consider interoperability with at least the similar Czech and Austrian systems.   However, as much as there is strong policy interest, European attempts at promoting interoperability between toll operators have been fraught with difficulties.  The tags cannot be swapped between vehicles because they are linked to the vehicle number plate, but multiple tags can be placed on a single account making it ideal for fleet operators.
The system is enforced using Automatic Number Plate Recognition (ANPR) cameras on gantries and on board 94 roaming mobile enforcement vehicles. The cameras and vehicles will interrogate vehicles detected to be of a size liable for the toll, and attempt to interrogate a tag. If no tag is found, the number plate will be recorded and a mobile enforcement vehicle has the right to request the suspect vehicle to stop. Offences include not having a tag,  entering incorrect data in order to obtain a tag and having insufficient funds in a prepay account to undertake a trip (post pay accounts do not face this issue).  The mobile enforcement unit undertakes a report, and if it is a Polish vehicle, the fine will be sent by post to the owner.  If a foreign vehicle, the fine appears to look like it is to be paid instantly, an issue for some as it holds the risk of corruption.  However, as Poland is a member of the Schengen Area (which abolished border controls between EU Member States that signed up to that agreement), it is otherwise difficult to enforce against vehicles travelling to Germany, the Czech Republic, Slovakia or Lithuania (but there are still border controls with Ukraine, Belarus and Russia).

The toll tariff schedule is complex, with lower rates for lighter vehicles and for vehicles with cleaner burning engines (e.g. Euro V or better).  The rates are different for motorways compared to national roads, based on both infrastructure costs and in the interests of traffic management.

Toll rates on motorways range from:

PLN0.20 per km (US$0.039 per mile) for trucks between 3.5 and 12 tonnes and all buses with a Euro V rated engine or better; to
PLN0.53 per km (US$0.104 per mile) for trucks over 12 tonnes with a Euro II rated engine or worse.

Toll rates on national roads range from:

PLN0.16 per km (US$0.031 per mile)  to PLN0.42 per km (US$0.082 per mile) on the same basis.

Poland is curiously charging more to use motorways even though such roads probably have lower long run capital costs and there being policy reasons to encourage traffic off of other roads and onto motorways. 

I’ve been told there have been some teething problems with the system in terms of traffic diversion, as some trucks in particular choose to avoid the tolled roads. If you look at the rather sparse network, the scope to do so is clear, but alternative routes in Poland are not great, and the country is trying to catch up with other EU Member States of the east in completing a nationwide motorway/grade-separated highway network.

Given the time, cost and effort involved in installing new tolling points, a flexible response to such cases is not easy, unless it involves reducing the toll, which I suspect is not on the cards.

Clearly the long term solution for national road pricing is to not have a system dependent on gantries for regular users to be charged. However, Poland has now signed up to an eight year contract, so has bought into a DSRC solution for the medium term. There is little doubt that many costs are lower for this system than for a GPS based system (and the contract prices offered indicate that), but it is a trade off. Lower risk, lower in vehicle costs (and no need for a second solution for non-users because of the low cost of tag), but higher infrastructure costs and lack of flexibility to expand or alter the charging network quickly.

ViaToll has reported that it has generated PLNl80 million (US$25.3 million) in the first 54 days of operation. However, while this only includes collection from heavy vehicles, it is worth noting in parallel to the heavy vehicle system, manual toll collection applies on a handful of motorways for vehicles under 3.5 tonnes only. These have PPP concessions applying and include the A1, the Konin - Stryków section of the A2 and the Bielany Wroclaw - Sośnica section of the A4 (from January 2012).