Friday, 28 September 2012

Maryland's toll enforcement inadequate says report

The Washington Post has reported that the state of Maryland has been inadequate in enforcing tolls against motorists who drive through free flow toll lanes without EZ Pass transponders.  The story is a damnable indictment on poor legislation and policy.  15,000 motorists owe over $500 each in unpaid tolls and nine rental car companies also owe tolls ranging from $80,000 to $209,000, with violations dating back up to eight years.  A total of nearly 650,000 vehicle owners owe the state $6.7 million in unpaid tolls and fees.   

Maryland toll roads


A table produced by the newspaper indicates violations have increased substantially in the past year, from 386,000 in 2011 to 692,000 in 2012, with a $2 million increase in the value of violations.

The Maryland Transportation Authority threatens to suspend vehicle registrations of violators, but hasn't done so for two years because it has failed to issue $50 citations which it must do in advance of suspension.

What does it do?

the authority, which operates the state’s eight toll facilities, mails vehicle owners a “notice of toll due.” After 30 days of nonpayment, the authority tacks on a $25 fee. Repeat violators are referred to the state’s central collection unit, which continues to send periodic letters requesting payment. But unlike its practice with other types of debt owed to the state, the unit never reports chronic toll violators to credit-rating agencies.

Tony Fugett, the unit’s director, said toll violators receive two letters and an occasional automated phone call requesting payment. After that, they receive a letter once a year. The state can deduct money owed from lottery winnings, contractor payments or state income tax refunds, Fugett said. If none of those is applicable, he said, “I guess there’s nothing we’d have in our arsenal other than continuing to contact people.”

So the letters are toothless.  Yet the Maryland Transportation Authority regards this level as manageable as violations only cost 0.2% of total revenues.  Manageable until now, because why would anyone continue to pay when the state doesn't actually do anything beyond negotiate for payment?

It has become more of an issue because toll rates are planned to rise in July 2013, and those that do pay are less than happy that "being good" seems a bit unfair, when those who don't pay face few consequences.  The Authority's reason for not issuing the $50 citation is that it wants to be more "customer friendly", but at what point is being customer friendly letting violations accumulate over years whilst seeking to put up prices for those who do pay?  A quarter of unpaid tolls are out of state and the state has no reciprocal enforcement agreements with other states.

A bill had been drafted to allow the Authority to suspend registrations and to allow for interstate agreements, but it went nowhere.

The article claims that the Authority sends details of vehicle owners who incur debts of over $30 to the state debt collection unit, referring 700 to it in the 2012/2011 fiscal year. 

The article is interesting in reporting violation rates of toll roads in neighbouring states:

New Jersey 1.4%
Virginia  1.7%
Delaware 3.4%

It also describes the enforcement procedures in other states:

New Jersey has arrested some of its most flagrant toll cheats on ­theft-of-services charges and recently posted a “Wall of Shame” on the Internet listing toll scofflaws by name and home town. Three states — Massachusetts, Maine and New Hampshire — recently entered the first-ever reciprocity agreement to pursue vehicle registrations of out-of-state toll violators.

In Virginia, vehicle owners with three or more unpaid violations are summoned to a court hearing, where a judge may impose a civil penalty of up to $500 for multiple violations. If an owner ignores the court-ordered fines, the state puts a hold on the vehicle’s registration renewal.

Conclusion

The primary blame for this appears to lie in two places.  First, the state legislature which has refused to change the law to make it easier to enforce tolls and to enable more efficient enforcement of out of state violations.  Secondly, the Authority seems unwilling or unable to issue citations, and wanting to appear "customer friendly" doesn't seem like a good enough reason.  If it is legal, then the laws needs changing.
Compared to free flow tolling elsewhere, this practice simply seems absurd.  Fines should recover more than the cost of enforcement and be a deterrent, and the state should be able to recover debt like any other.   Not having a robust enforcement process will undermine future revenues as more and more realise that they are unlikely to face serious consequences if they don't pay ( the state can take the tolls and fines out of lottery winnings and tax refunds, but this affects few).  It is core to any robust electronic tolling system to have serious sanctions for not paying.   Maryland oddly seems unable and the legislature unwilling to address it.

Thursday, 27 September 2012

Delhi to focus on parking before congestion pricing

The Economic Times (of the Times of India) reports that the Delhi Government has decided to implement a number of measures short of congestion charging to address growing congestion in the city.

Parking fees are to be increased, and enforcement of minimum emissions and safety standards of vehicles will be toughened significantly.  The expectation is that this will remove a number of vehicles from the road, as well as having positive impacts on emissions and safety.  The only problem is that this will undoubtedly target the lowest income owners of motor vehicles (who by Delhi standards are still middle income households).  

Certainly this approach makes sense, as without the ability and willingness to effectively enforce laws against vehicle owners, it is doubtful that a Delhi congestion charge could be enforced either.   A sustained effort over six months to fine or remove vehicles that don't meet laws on safety or emissions would help stem the growth in traffic.

On parking, it is also reasonable and relatively low cost to adopt robust policies on restrictions and pricing that will help traffic to flow freely and to let parking pricing be market led.  Whilst Delhi may not yet be ready for the sort of radical parking pricing now seen on trial in San Francisco and Los Angeles, a focus on parking should be the key for the immediate future, although it will not be sufficient.

There are 6.5 million vehicles in Delhi today, a number that increases on average by about 1,000 a day (the report notes there were 562,000 vehicles in 1981).  Ownership will continue to increase, and whilst public transport can be enhanced (and walking and cycling should not be neglected) and parking addressed, the fundamental problem of traffic congestion is demand exceeding supply, without the price instrument to manage it.

If Delhi can demonstrate that it can effectively enforce laws against vehicle owners on safety, emissions and parking, it shouldn't be hesitant about more detailed consideration of congestion pricing, even if it is likely to be the last policy instrument taken to help relieve traffic in the city.

Wednesday, 26 September 2012

Stockholm congestion pricing has had long term effects on traffic levels

The European Commission DG Environment reports on a study that indicates that the congestion tax in Stockholm has managed to sustain and enhance benefits in congestion reduction over time.   The EC believes this has positive implications for the concept's application in other cities.

Stockholm congestion tax cordon map

The report says:

The results of this study suggest that congestion charging can work over the long-term, supporting plans to introduce such charges in other cities across Europe. The findings also demonstrate that some concerns about the charges, such as increased congestion on other routes, are not supported by the evidence, and that public acceptability may increase over time.

Non-exempt* traffic had reduced by 29% across the Stockholm cordon when the congestion charge was introduced in 2005, and that level of reduction has been sustained even though prices have not increased (so have reduced in real terms by around 2% per annum).  It appears that the charge has had a long term effect on changing driving patterns into central Stockholm.   However, researchers acknowledge that over time there will need to be real increases in prices.

Another criticism about congestion charging, that it increases traffic on roads adjacent to the charging zone, appears to have been without foundation, as there has been no significant increases in traffic or congestion on other routes, except that attributable to population increases.

Finally, public acceptability for the scheme is now 70%, up from 36% in 2006 (and a narrow majority in favour of the charge in a referendum), indicating that the benefits of permanent reductions in traffic volumes and improved mobility are now widely accepted.

In conclusion, the Stockholm scheme has not only worked, but sustained a step change in traffic patterns in the city and not distorted traffic movements outside the zone.  

It's worth noting that the Stockholm scheme is slightly more sophisticated than the London one, as it has higher charges at peaks compared to the interpeak period, and no longer has an exemption for so-called "green" vehicles, because the emphasis of the tax is to reduce congestion - and all cars contribute to that.  The other interesting dimension to the congestion tax is that most of the revenue is being used to support enhancements to roads outside the charging zone, which appears to be a key part of the charge gaining acceptance by people in Stockholm.

Finally, the official title of the charge is the "congestion tax" because under Swedish law, it is the only way the charge is enforceable.

* Exempt vehicles are only buses, emergency vehicles, motorcycles, diplomatic and foreign registered vehicles and those of holders of a disability parking permit.


Tuesday, 25 September 2012

Transurban advocating network wide urban road pricing

TransUrban CEO Scott Charlton, at a conference in Melbourne, called for network road pricing in Australian cities to better manage network utilisation.  He suggested that full network pricing might include discounts for trucks travelling at night, and mean a simplified charging structure with peak and off peak charges, which could also facilitate efficient use of corridors for both public transport and other vehicles (which to me sounds a lot like, well, roads).  He also suggested that toll lanes parallel to untolled lanes may work in certain contexts in Australia, although he did not suggest any specific examples.

In the Sydney Morning Herald it was reported that he said that some studies suggest that as much as 40% of afternoon peak journeys are discretionary, indicating considerable scope to change demand patterns and substantially reduce congestion.

The report said:

"Whether it's corridor charges, congestion charges, demand pricing or distance-based tolling - network pricing will have to be introduced to fund infrastructure, manage demand and promote public transport alternatives," said Mr Charlton, whose company operates the M2, M5, the Eastern Distributor, the M7 and the Lane Cove Tunnel.

"Just take a look at our major motorways and it's obvious: we need new capacity – and we have to find better ways to utilise our existing assets."


So he is advocating wider pricing not just to fund more infrastructure, but to better manage existing highways.  This shows a wider interest than that traditionally expressed by toll road concessionaires, who typically look little further than the demand/revenue of their roads against debt.   Could it be that TransUrban would be interested in having more responsibility for traffic management and highway management in cities than just the roads it manages now?

The report noted support from the New South Wales Premier, Barry Farrell, for reform of tolling in Sydney to have charges on a distance basis on existing tolled motorways, but not charging by time of day.  There is a strong intention to make the charges, at least in the first instance, revenue neutral (but of course this cannot be guaranteed over the longer term if demand increases).

Yet this approach, whilst welcome, is insufficient according to Charlton, as it deliberately avoids peak charges (which already exist on the Sydney Harbour Bridge).

He makes the point eloquently, arguing effectively that Australia cannot keep building new capacity that is only fully utilised for a few hours a day:

"If you look at just one of our Sydney motorways – the Eastern Distributor – you can see the peaks in the am and pm periods," Mr Charlton said.

"You can also clearly see the motorway has excess capacity during other parts of the day. The question is – could peak pricing change this profile? Or could discounts during the off periods produce a better transport outcome?," he said.

"One key fact in the road pricing debate is that a significant number of motorists do have an option of when they travel. Some studies suggest as much as 40 per cent of travel in the afternoon peak is discretionary.

"We are asking people to consider their travel more deliberately, and question the time of day they really need to travel or by what mode.

"Pricing restrictions on travel will be a bitter pill to swallow for a country that prides itself on high standards of living. Avoiding difficult initiatives will result in un-economical decisions on infrastructure delivery and the further build out of existing roadways that are only fully utilised for a small number of hours a day."

He's right.  One of the critical points about congestion charging is encouraging a time-shift of trips, not just a mode shift, and there need not be an alternative mode for every trip (which is not only impractical, but not economically viable).  

The chief executive of Infrastructure Partnerships Australia, Brendan Lyon, agreed with him, saying:

''Our historic approach has been to add new roads to address congestion, but there are natural limits to a supply-only approach,'' Mr Lyon said.

''Australia cannot endlessly build its way out of trouble, and that means we need to begin a national dialogue about how pricing can better manage congestion and help to fund the huge backlog of public transport and road infrastructure.''

Quite.

This view was echoed again by Infrastructure Australia chairman Sir Rod Eddington, who once led a detailed inquiry into transport policy for the last UK government (which was swiftly, and wrongly, ignored by that and the current government).  According to The Age, Eddington said there should be "Mature and dispassionate" discussion about pricing and that congestion cost the state of Victoria A$4 billion per annum (US$4.2 billion).

He believes the first step should be a a road charging system for trucks, as congestion charging for cars is far more difficult.

He's right of course.  For road pricing will only actually be accepted if motorists see value in it, which will come from effectively reducing congestion, ensuring existing networks are well maintained and some offsetting of existing non-motoring taxes.



Sunday, 23 September 2012

UK Transport Minister says motoring taxes will be replaced by road pricing

Should the UK government replace road tax with road pricing?

Should fuel tax be replaced by road pricing as well?

Well one UK Minister thinks road pricing is inevitable.

Both the Mail on Sunday and the Sunday Express are reporting that Parliamentary Under-Secretary for Transport (a junior Ministerial role), Norman Baker, has said that road tax (officially called vehicle excise duty - essentially an annual tax associated with vehicle ownership) will be replaced with a distance based road pricing system, and fuel tax will also need to be significantly reduced, because existing taxes are unsustainable.

Whilst it is not policy at present, he is the first Minister of the current UK government to say that such a change is inevitable, and he cites evidence from the Office of Budget Responsibility to say revenues from existing motoring taxes will be halved by 2030.  This point was made earlier this year by a comprehensive report from the Institute of Fiscal Studies for the RAC Foundation which I wrote about.

The problem quite simply is that revenue from fuel taxes is being eroded by increased vehicle fuel efficiency and new vehicle fuel technologies, and revenue from vehicle excise duty eroded by people buying vehicles in the cleanest engine categories (which pay less), along with flat rates of vehicle ownership.  While fuel tax could be continually increased, this is becoming politically untenable and will start to have serious equity implications as it will hit those who cannot afford the newest most fuel efficient vehicles the most.


-  Vehicle excise duty would be scrapped and fuel duty cut, with distance charging replacing them based on a "black box" inside vehicles;
-  Motorway trips would "cost more", those on short local trips would "be the winners" (but it is unclear why);
-  The cost to the average motorist would not be higher.


-  "Every government of every colour will get there, whatever parties say now";
-  "We have to recognise that for the future the car is the friend of the environmentalist. We’ve moved very successfully towards the rollout of electric vehicles and a change to what cars are."

It's worth noting that he is not the lead Minister and that he from the Liberal Democrats, the junior coalition partner in the current government (which is having its annual conference this weekend).  So this statement has to be seen in context.  It is an idea being floated that more senior Ministers can refute if need be.

The reactions so far have been from two interest groups.  The Automobile Association head of roads policy, Paul Watters, said to the Sunday Express that "our members tell us they do not trust Governments on road pricing and assurances about such systems being ‘revenue neutral’.  No one ever believes it.”

That indeed, is the problem.

The other comment was from Stephen Joseph, the chief executive of the Campaign for Better Transport (a pro-public transport lobby group), who said in the Sunday Express that it was "hugely significant" and "I think the only way it would work is if people are given a choice between paying road charges or paying fuel duty".

I suspect he is right.

Comment

Good on Baker for floating this, although I predict much of the public discourse on this will be the absolute disbelief that governments can be trusted to lower existing taxes, and concern once again about what the money collected is spent on, and worries about privacy (in part generated by years of false reporting about the technology by some newspapers).   Given the Liberal Democrats had a policy at the last election of drastically cutting spending on roads in favour of public transport and being particularly enthusiastic about policies to reduce climate change, some will see this as a trojan horse to tax motorists more.

A shift from ownership taxes (vehicle excise duty - commonly referred to as "road tax") to distance based charging would be a positive step, in reducing the costs of ownership and meaning those who drive the most would pay the most.  It would have a modest effect of making all motorists consider the costs of each trip, although if it was a flat charge it would certainly encourage them to take the shortest route by distance, although that may not be the best route.   It would take some variation of charges by type of road to avoid that, although it is peculiar for Baker to seem to suggest motorway trips would cost more - when on a per mile basis they should be the cheapest, if it is just about recovering infrastructure costs.

That being the key point.  What is the purpose of motoring taxes?  If it is about recovering what is spent on the infrastructure (or better yet the long run cost of capital), then motorways should be cheapest, on average because although they are expensive to build, the cost per vehicle mile given volumes of traffic is comparatively low.  If it is also about managing demand, then there should be a component of peak charging, which is related to roads that get congested.  If it is also about reducing negative environmental externalities, then there could be a component for that, or if fuel duty is retained it can be said to partly reflect that.

It would be disappointing if time of day was not included in any charge.

In fact a version of this proposal was floated by Brian Wadsworth, Director of the Road Ahead Group,  in a report published by the RAC Foundation.  He proposed that a "discount" system be introduced that would mean that those who do not drive on congested roads at congested times get a refund during the year, with the presence on the network determined by an On Board Unit measuring the time or distance a vehicle spends on congested roads.   I see considerable merit in the idea, but it would not be revenue neutral and is really only useful as a stepping stone towards full charging.

A simpler approach of just charging for distance, at a flat rate, which only varies by vehicle size (and perhaps emissions class) would be similar to that about to be piloted in Oregon, and identical to how diesel cars are charged in New Zealand. 

Yet while it is not technically difficult, it will be politically impossible unless it became just an option, so motorists could choose to pay the annual vehicle excise duty (and bear in mind the cleanest vehicles pay nothing) or pay by distance.  Until people can see that they wont pay vehicle excise duty when they pay for distance, it wont be trusted.  There would be more trust if the system could also partially refund fuel excise duty, at that point people would see they are paying less for fuel every time they fill up their vehicles. 

However, let's not pretend that this wont cost money.  There is a considerable cost in developing any system to replace vehicle excise duty, and moreso to replace fuel duty, but this needs to be seen in the context of the long run economic benefits of changing behaviour and in having a sustainable source of revenue from vehicles.  These are not points that will have widespread political acceptance, at least for now.  What might get acceptance is offering people the option to pay far less for fuel and nothing to own a car, in exchange for paying per mile.

There are a few tricks though.

One is going to be Treasury accepting that, for a while, this will cost more money than doing nothing.  A new system to charge vehicles for road use will cost more than fuel tax or a tax on the annual re-registration of a vehicle.

Secondly there will need to be compulsion at some point.  Two obvious options are to raise existing taxes so much that it incentivises the shift, or by requiring all newly registered vehicles to be on the new system.

Finally, the greatest gains of such a system are not in revenue protection, but in congestion reduction.  That means charging by time of day and location, to some extent.  Brave is the politician willing to push this too early, but weak is the politician unwilling to recognise that this is what will transform highways management in the country.

EU law limits what can be done, for now.

One point that he would need to get around is EU law, which given he is from the Liberal Democrats, a party that embraces the UK having a closer relationship with the EU, is a little ironic.  You see EU law sets minimum vehicle excise duty rates for vehicles over 12 tonnes, so for heavy vehicles not much more can be done, given the introduction of the vignette scheme in 2015.   In essence, the vignette would need to be replaced with distance charging (which, if it is to be done with cars would make sense with trucks). 

Also important is that EU law also sets a floor for fuel duty, which for unleaded petroleum is equal to about £0.29 per litre, so any system that refunds fuel duty can only do so down to that limit.

However, there is a lot of scope within all of that to move, with fuel excise in the UK almost £0.30 a litre higher than that limit.

Conclusion

This should be the start of a long debate about how roads are charged for in the UK and how to reform the system, but to do it will require the rebuilding of trust with motorists and to do that there will need to be some movement on linking what is paid in motoring taxes to what is spent on roads.  

There will also need to be transparency about existing taxes and the objectives of taxing motorists.  Until this can be established, and the current opaque relationship between vehicle excise duty, fuel excise duty and expenditure on highways is clarified, there will continue to be difficulties in developing a clear vision to reform a series of taxes that themselves have been disconnected to the use of the road network and expenditure on it.

For I suspect that motorists will be far more embracing of paying for road use by distance if they saw that what they paid reflected a fair share of the costs of maintaining and developing the roads, and that the roads themselves were maintained to a minimal standard.

Right now it would be very difficult to convince anyone that this is what happens.

Friday, 21 September 2012

Malaysian government to take over highway concession heading for bankruptcy

According to IFR Asia the Malaysian federal government has decided to take over the Eastern Dispersal Link (EDL) road in Johor Bahru from concessionaire MRCB (Malaysian Resources Corporation Berhad).

Why?  Well this is the case of the concession granted to build and operate a toll road, followed by a law passed to prohibit tolls being charged on the road at all.

The EDL expressway is an 8.1km long road which opened on 1 April 2012.  Johor Bahru is effectively the border town between Malaysia and Singapore, and the highway provides an enhanced link within the border region.

Eastern Dispersal Link, Malaysia - official map

However, the Malaysian Government decided when the road opened that it would not permit tolls to be collected on it, so the concessionaire has faced the past few months negotiating with the government a compensation deal to make up the difference, and meanwhile has been servicing the debt for the road without any revenue.


The report notes as regards the concession there is :


only M$21m in the company’s cash reserves, hardly sufficient to meet a M$47m cumulative interest payment due December 21 on its M$1.04bn senior and junior sukuk, as well as on a M$220m syndicated bank loan. The shortfall is a reason Ram Ratings downgraded the long-term ratings on the M$845m senior bond to BB3 from A2 and the M$199m junior sukuk to C1 from BBB2.



(A sukuk is essentially an Islamic financial instrument with some parallels to bonds).

Curiously, the owner of the concession, MRCB, which is no small company, has indicated that it doesn't intend to contribute funds to meet the shortfall, threatening a default - a first for Malaysian toll (or rather highway) concessionaires, which is perceived as likely to embarrass and disrupt plans for ongoing private investment in infrastructure in the country.   However, the Malaysian Federal Government has previously supported concessionaires more widely in other sectors through extending concession periods or buying bonds to restructure their debt.  It is not shy about interfering in what it deems to be the public interest.

The result of negotiations appears to be a government takeover of the concession, although the article suggests that tolls may yet be imposed, but probably at a price lower than the M$6.20 (US$2.01) per trip suggested.   One controversy is apparently that all users of the new Customs/Immigration/Quarantine complex located near the end of the expressway will pay a toll to contribute towards the road's costs, whether or not they actually use the road.

Overall it implies a conflict between seeking private finance to build and manage roads with tolls, and then taking relatively ad-hoc decisions around abandoning or discounting tolls for political reasons. Elections are due in the coming months, whereby the ruling UMNO party is expected to win (as it always does), but is facing ever growing pressure from growth in support from opposition parties.  It would appear Malaysia is not immune from concerns over opposition to tolling in certain situations.


Thursday, 20 September 2012

News briefs - Australia, China, Indonesia, Macquarie Atlas Roads, Texas, UK

Australia - New South Wales government denies interest in congestion pricing

AAP reports that NSW Roads Minister Duncan Gay has said that the State Government has ruled out a congestion tax, but is considering implementing distance-based tolling.   Certainly it is clear that NSW is considering reforming toll roads around Sydney so that pricing is more closely related to a proxy for distance, but it is less clear as to whether the state is interested in a wider roll out of distance based charging to replace ownership taxes.

China - Standard & Poors affirms BB- rating and negative outlook for toll road investor Road King

Reuters reports that property and toll road investment company Road King maintains its rating with with S&P.  Property is the dominant factor for the relatively low rating and negative outlook.  On toll roads it reports a more optimistic side to the firm:

Road King's stable operating performance and the sizable cash flows from its toll road business support the rating. The company currently derives more than 80% of its toll revenue from its expressway projects, including the Longcheng Expressway it acquired early in 2011 and which commenced operation in July 2012. We expect Road King's toll road business to continue to provide stable cash flows in the next one to two years, underpinned by its stable profit sharing ratios. 

Indonesia - Longer toll road concessions to be allowed

Tempo Interactive reports that the Indonesian Government is to change the law to extend the maximum toll road management permits for private companies from 40 to 50 years.

The Jakarta Post reports that a 73km toll road is to be built in North Bali from Kuta to Seririt at a price of US$872 million.  The project is intended to open up a wide area for tourism and development, and is linked to plans for a new airport at the north of the island.


Macquarie Atlas Roads posts half year loss and further asset devaluations

Business Spectator reports that Macquarie Atlas Roads has posted a loss of A$75.2 million (US$77.7 million) in the six month to June 30 2012.  This is an improvement on the A$106.4 million (US$110 million) loss for the same period last year.


The A$33.4 million fall in the value of investments comprised a loss of A$26 million on the Autoroutes Paris-Rhine-Rhone (APRR) toll road in France compared to a profit of A$11 million in 2011; a loss of A$7.4 million on the Dulles Greenway toll road in the US compared to a loss of A$10.8 million in 2011; and no loss on the Chicago Skyway toll road in the US compared to a loss of A$17.5 million in 2011.

There was no loss booked for the Chicago Skyway in the first half of 2012 because the carrying value of the road had been reduced to nil.


The Australian reports that the company expects to release a dividend next year.  It also noted:


Macquarie Atlas Roads said the increased losses partly reflected losses on interest rate swaps and higher debt-related amortisation.

Macquarie Atlas Roads said proportionate revenue from its roads rose by 1.4 per cent to $330.8 million in the first half of 2012 despite a 1.9 per cent fall in traffic volumes.

Revenue was boosted by toll increases.

"Macquarie Atlas Roads' portfolio of toll roads has continued to generate positive revenue and EBITDA growth during the period despite difficult economic conditions in Europe and the US," chief executive Peter Trent said.


Texas - new toll road to have highest speed limit in US

The Texas Weekly reports that Texas State Highway 130  (which will be a toll road) will have a speed limit of 85mph (about 137km/h), which will be the fastest in the USA.  Some advocates of private toll roads have promoted the idea that roads could be built to enable relatively safe driving at faster speeds, and motorists could be charged the price to allow it.  In Texas, it looks like it will happening, albeit with an increment of only 5mph.

Meanwhile, the Statesmen argues that the new speed limit is partly about enhancing the viability of the toll road, which includes lowering the speed limit on the existing highway from 65mph to 55mph, even though it will be safer (because the new road will be between the north and southbound lanes of the existing lanes).   Is it a conspiracy to make the new lanes more likely to be financially positive or just coincidence?

UK - Dartford Crossing manual tolling to be gone by 2014

The Brentwood Weekly News reports that the UK Government has announced that it is spending £25 million (US$40 million) to undertake a range of improvements to the tolled Dartford Crossing routes, including removal of manual toll booths as part of a programme to make the highway a fully electronic free flow tollway.  The route is notorious for being a bottleneck in both directions, in part due to the queues at toll booths.  The UK Highways Agency is hoping to have removed the manual toll booths by October 2014.

Wednesday, 19 September 2012

Review of toll roads in the US SouthEast

The Raleigh Public Record has published an interesting review summarising toll roads in several states from North Carolina down to Florida.

It reviews the following roads:

- Triangle Expressway (North Carolina's first toll road);
- Southern Connector (South Carolina, tolled part of I-185);
- GA 400 (Georgia);
- Veterans' Expressway Toll Road 589 (part of Florida Turnpike system);

The key comparisons are about pricing per mile, which ranges from US$0.30 to US$3 for a car, reflecting different traffic volumes to spread the fixed costs of the road, availability of alternatives (making toll prices a function of the costs of diversion in time) and different business models (Foley Beach is fully private and quite expensive). 

Tuesday, 18 September 2012

So what about rental cars and tolls?

It's one of those neglected issues when road pricing comes along, which is to consider what happens when a hirer of a rental car uses an electronic free flow tolling facility and doesn't pay.  The obvious answer may be that the rental car firm should be liable, as it would be for any parking offences, but it wasn't obvious in Harris County, Texas.

The Houston Chronicle reports on a settlement between Enterprise Rent-A-Car and the Harris County Toll Road Authority of US$1.15 million in unpaid tolls and fines.  The problem being a combination of Texas law and the rental contract.  Rental companies could provide details of the hirer within 30 days to the Authority and make it the Authority's responsibility to pursue the hirer, which of course proved to be problematic.

You see elsewhere most rental car firms take credit card details that they retain to cover any such fines or fees.  However, this law encourages the rental car firm to pass on the responsibility, so that it doesn't face either the administrative cost of processing the payment or the bad customer relations in charging it.  Enterprise thought it could avoid responsibility, but eventually relented.

Enterprise now does exactly what I described above, which of course it should have done so in the first place had it bothered to see business practice elsewhere.

Enterprise now works with a vendor that ensures all of its roughly 1 million vehicles' license plates nationwide are listed in an account. The vendor pays the county when HCTRA's toll cameras pick up a plate on that list. The vendor then charges the tolls, with a fee, to the renter's credit card, said company spokeswoman Laura Bryant.

Bryant said the process is working, not only for tolls, but for red-light camera fines and parking tickets, too.

"That doesn't mean the process is perfect, but we're doing everything we can to make it as good as it can be," she said. "This has been a huge learning curve for everybody."

For a twentieth of the cost of this settlement, Enterprise could have got some consultants in (!) to develop the business solution to this problem based on best practice elsewhere.

Avis apparently settled for US$190,000 four years ago, and Hertz has toll tags installed in its Texas based vehicles effectively enabling it to be an easy part of the toll payment transaction at the end of the hire.  

Conclusion

If the law makes it clear that vehicle owners are responsible for tolls, then it is up to rental car firms to ensure that their contractual and payment solutions enable them to pass on these costs.  Toll tags in areas with extensive toll networks should enable toll transactions to be looked up and added to accounts, and the use of credit cards can ensure any residual transactions can be paid for.  With electronic free flow tolling increasing in reach and scope, it will become increasingly important for rental vehicle and vehicle leasing firms to find ways to ensure that liabilities for such charges can be recovered from those who initiate them.

Monday, 17 September 2012

Pennsylvania Turnpike's burgeoning debt

The Trucker.com published a report from Associated Press claiming that the Pennsylvania Turnpike looks like it is on a path towards financial difficulties, not because of a lack of traffic, but because it is being expected to cross-subsidise a lot of transportation spending across the state.

Background

The Pennsylvania Turnpike is 856km (532 miles) long connecting Ohio to New Jersey, and is one of the states most strategically vital corridors, with its various segments comprising parts of six Interstate Highways.  It is managed by a state quango called the Pennsylvania Turnpike Commission and the prevailing tolling technology is a combination of closed road tolling (ticket based) manual tolls with EZ Pass tags as optional.

Pennsylvania Turnpike network map
Story

Prices on the Turnpike have doubled in the last ten years, but it is now generating less revenue than what it spends.  Its current debt is US$7 billion.  

The article states:


Highway and bridge projects around Pennsylvania have grown dependent on the money from turnpike toll-payers, and so have transit agencies such as the Southeastern Pennsylvania Transportation Authority.

If the turnpike stopped making its $450 million-a-year payment to PennDOT, the already strapped state transportation budget would lose about 12 percent of its financing.


Its liabilities exceed assets by US$1.3 billion, because it keeps being required to fund activities outside its core, so that it is, in effect, a borrowing instrument of the state.

The problem comes from an ill thought out law which was originally envisaged to raise revenue by expanding tolls.  


The root of the turnpike's financial woes is Act 44, the 2007 state law that required the turnpike to contribute $900 million a year for statewide roads, bridges and transit.

To come up with the money, state lawmakers authorized the Turnpike Commission to convert Interstate 80, which parallels the turnpike across northern Pennsylvania, to a toll road. But the federal Department of Transportation in 2010 denied the state's application to require tolls for I-80 travel.

So the turnpike's obligation to fund other roads and transit dropped in half in 2011, to $450 million a year, under terms of Act 44.


In other words, with the Federal Government opposing an application for tolls on an existing highway, the legislation didn't remove the obligation, just halved it.

Revenue at the turnpike is currently US$800 million a year, and US$300 million is spent on operating and maintaining the road (yes, there should be an issue with this and this is allegedly being addressed).  US$300 million is also spent on servicing existing debt, yet instead of US$200 million being spent on other projects, the Turnpike Commission is expected to spend US$450 million.

Prospects

Moodys is bullish in the short term, but forecasts of continued traffic growth look over-optimistic.


Moody's, like other ratings agencies, continues to rate the turnpike's financial health fairly high: Aa3 on its debt for turnpike operations, and three notches lower, A3, on the debt for Act 44 payments.

Moody's has assigned a "negative" outlook for the future of the turnpike's debt because of "dependence on regular toll increases and modest traffic growth to support projected debt-service coverage ratios."

Turnpike officials are assuming that traffic will increase by 3 percent to 5 percent every year, according to their most recent traffic study.


So the path is laid out for the state to either cut spending, raise other taxes or expand the tolling remit of the Turnpike Authority.

The article concludes with a useful review of other states which use tolling authorities to cross-subsidise other activities:

Pennsylvania is one of several state and local governments that require toll-payers to pay for projects not directly related to the road or bridge that is tolled.

The New Jersey Turnpike Authority, the Triborough Bridge and Tunnel Authority in New York City, and the Harris County Toll Road Authority in the Houston area are among those that tap tolls for other projects.

In New Jersey, about 30 percent of toll revenue is transferred to the state Transportation Trust Fund Authority for use on statewide highway projects and transit operations.

Locally, the Delaware River Port Authority spent nearly $500 million over the last 15 years for "economic development" projects — such as stadiums and museums — to be repaid by revenue from its four toll bridges linking Philadelphia and South Jersey.

It warns that Moodys considers toll authorities with wider funding remits to be "riskier" than those without, which is logical, given that without such commitments, tolling authorities (especially for large high volume networks) should be quite profitable.  For now, it appears that some states are using there toll networks to offset declining real revenues in fuel taxation.  The problem they have, and Pennsylvania certainly will have, is that this is only sustainable if the proportion of the tolled network increases as well.

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Penn Live has also published an editorial expressing concern about the sustainability of the existing cross-subsidies from the Turnpike.  It supports ideas from the Transportation Funding Advisory Commission such as increasing vehicle ownership fees, driver licensing fees and a tax on oil company franchises.  Of course, none of these ideas have anything to do with usage of the network, and most seem likely to exacerbate existing deadweight costs of taxation and so will impose an economic burden likely to be worse than raising turnpike tolls.  The choices need to be around getting better value for money for what is spent, treating asset management on a cost accounting basis, not some Soviet style public good, and then once some reasonable costs have been estimated for the long term lifecycle renewal of these assets, determining how to allocate those costs among users and charge them appropriately.   

Sunday, 16 September 2012

UK government confirms introduction of truck road user charging

UK media has been reporting that the Government has confirmed that it is proceeding with a truck road charging system, which is essentially a vignette system for vehicles over 12 tonnes.  Various reports indicate that legislation is to be introduced to allow the system to be operational in 2015 and raise slightly more than £20 million a year in net new revenue (after operation costs and refunding vehicle excise duty for UK lorries).

Whilst there are, as yet, no details on the Department for Transport website, it is expected that the details will broadly correspond with that previously released, which I wrote about here:


There isn't too much else to say, but it is worthwhile making a few points which are not clear from the media coverage (BBC report, Daily Telegraph reportThe Independent reportThe Sun report) and indeed completely incorrect from the Express.

Distance or time charging?

This is time based charging, by day.  Owners of lorries of 12 tonnes or greater will need to pre-purchase access to the UK road network for at least 1 day, with intervals likely of 1 week, 1 month or 1 year.  UK lorry owners will only be able to buy 1 year in association with their purchase of vehicle excise duty.
There will be no need for measuring distance travelled, so the report in the Express claiming there is a need for "a box which could be tracked by satellite" (a technology which doesn't exist) is nonsense.

Done elsewhere?

Yes, a very similar system exists now in the Netherlands, Belgium, Luxembourg, Denmark, Lithuania, Hungary, Romania and Bulgaria.  It's very simple.  It is still a big step from distance based charging.
Complex technology?

No, it only needs to be like Hungary or Romania, with vignettes purchased in advance, online, by phone or in person, for a vehicle identified by number plate.  Automatic Number Plate Recognition technology is needed only for enforcement.
Thin edge of the wedge?

You could argue it could allow for car vignettes to be introduced in the UK, but why would it bother?  There are relatively few foreign light vehicles entering the UK to make it worthwhile, as it would almost certainly only be introduced with an offset to vehicle excise duty.
You could also argue it could allow for distance charging next, which is supported by the Freight Transport Association.  However, it is a far bigger step to measure distance, transmit measurements of distance, and more importantly, offset existing taxation (which would have to be fuel duty).   There are sound reasons for considering heavy vehicle charging by distance to improve resource allocation, reduce cross subsidies between road users and better reflect the growth and reduction of demand over time.   Yet there is little evidence that any major UK political party wants to confront that.
Conclusion

This isn't a big deal.  It is the UK effectively introducing the system that exists in Hungary and Romania, except it will apply to all roads.  My key interest is how enforcement will be managed with the now open Irish border, as suddenly Irish lorries will find doing business in the UK will be more expensive.

UK lorry owners will face little difference.  Foreign lorry owners operating in the UK will face some increase in costs which will deter a few, but will mainly mean they are paying a share of the costs of maintaining UK roads (whereas before those that did not refill diesel in the UK did not pay any UK taxation).   The impact on foreign lorry presence on UK roads is likely to be minor, perhaps a reduction of less than 5%.   Revenue is minor, at just over £20 million a year more after costs.  It wont mean revenue will grow with growth in freight traffic, except a small increment of the presence of foreign lorries.  

In short, it helps cover a discrepancy in fairness between foreign and domestic UK lorries, but not by much.   Most European countries charge lorries for using their major networks, the UK does not.  The high UK fuel tax deters some from filling up in the UK, but fuel tax is also high in the Netherlands.  However, it isn't a radical form of road pricing, it will have little impact on demand and is not a reason for concern.  It's a small positive step forward for those wanting better pricing on UK roads.  That's it.

Friday, 14 September 2012

Toll traffic and revenue studies fraught with difficulties

It's an issue that has most recently been highlighted by the court case in Australia around the bankrupt Clem 7 toll road.  It has also been highlighted by the poor performance of the Pocahontas Parkway in Virginia.  It is the accuracy and reliability of traffic and revenue forecasts for toll roads that are public-private partnerships.

The Bond Buyer has a good article summarising some of the history behind the Pocahontas Parkway and several other unfortunate projects, including comments from a range of consultants on some of the key issues and concerns.  

The Pocahontas Parkway is only meeting 60% of its predicted traffic levels, resulting in concessionaire - TransUrban - substantially writing down its value in the investment as it struggles to raise enough revenue to service the debt on the road.  

Of interest is the:

National Cooperative Highway Research Program report examining the practice of toll road revenue projections. It examined how projections of toll road revenue compared to the actual revenue obtained for 26 toll road projects between 1986 and 2004.


The report showed that only one project generated between 90% and 110% of the revenues projected within the first two years of operation. But none of the projects were on target with their projected revenues in each of the first five years of operation.

A few roads in the review, such as the GA 400 in Atlanta, were actually chronic overperformers.


What is suggests is less that there is chronic inaccuracies in forecasting, but more a systematic optimism bias in the forecasts, perhaps driven by a desire to please those touting for investment to present a positive case for the projects.   It's not about the recession either, as this study predates that.

Whilst it suggests a market failure, it is important to remember that most of the projects that get advanced are not initiated by entrepreneurs, but by governments wanting a specific project to proceed.  Of course if the project will not generate enough traffic to pay for itself, then investors need to make it clear that without government subsidies a project wont proceed.  If roads really were developed in a free market setting, then it is likely that investors would be significantly more conservative, as they would not be advancing projects for political, but rather financial reasons.

Ratings agencies are becoming sensitive to the failings of such forecasts as well:


A Standard & Poor's analyst who scored the BBB-plus Dulles Toll Road in Northern Virginia said his agency is inclined to just analyze existing historical debt without relying on a third-party revenue estimate.


Fitch analysts announced earlier this year that because of the evidence of high volatility in the earnings of managed lanes — an increasingly popular type of toll project allowing cars to pay a toll to use traditional "carpool lanes" — it will use "conservative growth estimates" for such projects in the future.


Fundamentally, new toll road projects are usually about attracting people who are using existing roads to pay more for a better trip, or to attract new trips onto a road.  If the growth in development in an area does not proceed, or motorists do not perceive enough benefit to pay for the new route it will fail.  Unless a new route offers substantial time savings for significant numbers of users, it wont generate enough revenue to pay for it.

My personal view is that Traffic and Revenue forecasts should always be peer reviewed, with the key assumptions and risks around forecasts clearly highlighted by that review and considered critically.  Investors who rarely give such forecasts much scrutiny must ask for this in the future, and take a bearish view of traffic growth in mature markets where traffic growth has tailed off in recent years.  People's willingness to pay a toll on a road has a different perceived value to their willingness to pay for other things they buy.  In addition, it should never be forgotten that trips on a road are utilitarian, they are driven by a desire to travel to a place, not to use the road per se.  Understanding the prospects for growth in those trips is critical to knowing the veracity of claims that there will be an ongoing trend of more road vehicle trips.   Is it vehicle ownership? Population growth?  Increased incomes (so increasing scope for discretionary trips)?  Tourism?  Freight?

The court case over Clem 7 is being closely watched by toll revenue forecasting consultants in many countries, and will be a key test case to see where liability lies for reliance on such forecasts and the assumptions underlying them.   Whatever the outcome, it should result in consultancies involved in this activity taking additional care to be transparent on the basis of their forecasts, but should also mean that those who commission them understand that these studies are likely to need to be longer and more intensive, if the risks and variables that affect demand are to be thoroughly evaluated.

FOOTNOTE:  The Australian Federal Government Department of Infrastructure and Transport has just released a new report called Disincentivising Overbidding for Toll Road Concessions, undertaken by Dr Robert Bain and Oxera Consulting.  I have not read it in detail, but will review it shortly.  To my knowledge it is the first substantive piece of work on this issue released by a government body (but I am happy to be corrected on it).  

Thursday, 13 September 2012

Atlantic Cities considers VMT, but doesn't look beyond the Atlantic

Eric Jaffe at Atlantic Cities concludes that Vehicle Mileage Tax (distance based road user charging or mileage based usage fees depending on your preferred choice of terminology) is a good idea which is technically viable, which surprises me, although he got there after making a bunch of mistakes and also did the usual “if it didn’t happen here it doesn’t count” narrow-mindedness of thinking no one else in the world has thought of it before Americans have. Yes, even ignoring the truck weight/distance taxes already in four states, the Swiss has been doing this electronically since 2000. At some point American journalists might notice.

So what was his train of thought?

The article says that a field study by the University of Iowa showed it could work. Perhaps fair enough (although the distance measurement is arguably not the biggest issue), but there are real operational systems in the world today in several countries, which is probably a better indicator that something works than a university field study. 

He also claims that “Mileage data can be captured via GPS”, which would be a surprise to any engineer who worked on GPS. GPS is a system that purely takes signals from satellites to measure the co-ordinates of a specific device. No GPS satellite captures anything, at all. However, GPS devices can be adapted to record and measure distance, but let’s not keep making the tired mistake of thinking GPS satellites pick up anything from people’s handsets on the ground. The “Spy in the Sky” myth keeps needing to be swatted. 

He rightly points out that a system can be integrated with fuel purchases so that payment of VMT can offset payments of gas tax (Oregon’s trials proved that), although the accounting involved is a little more complex than that. 

The article then highlights how VMT is likely to reduce driving, largely because motorists become acutely aware of the cost of each trip as it is taken. This is intensified if pricing varies by time of day and location. Fairly basic acceptance of the pricing principle of course, but it also should recognise that at some times and places it could be cheaper than paying a gas tax.  I suspect that it isn't what he has in mind, but it's important to give both sides of this.

However, he concludes with some concerns, such as how VMT “does nothing to encourage green cars”. Yet again, the Atlantic Ocean remains a psychological barrier to understanding reality. In Germany, its “VMT” type truck tolling system does just that, by having differential pricing according to the emissions rating of vehicles. It is entirely possible to do that for cars, and in Germany it has incentivised changes in the truck fleet towards lower emission vehicles. 

Another concern raised is VMT “creates a rate-equity debate with rural and possibly even suburban drivers who lack reliable transit options”. A debate yes, but who argues that fuel taxation is unfair to those in rural areas or without other modal choices? Shouldn’t the argument be about paying for what you use, not relating to extraneous factors? How prices are set needs to be based on economics. 

Finally he says “any mileage system would also need to consider how much of its intake should go toward public transportation”. Yes, what is done with revenue is critically important, but that is a wider debate. Better road pricing could conceivably abolish the need to subsidise public transport altogether, but this article wasn’t really about economics.

In conclusion, the article is positive as it throws into the mix of public discourse support for an idea that is highly controversial and seen by many as “just another tax” due to the high level of distrust of government in the US. However, it would be helpful if it had been able to address some key myths around privacy and promoted a shift towards more equitable and efficient pricing of roads – linking what is charged to what is used and spent on them. For now, I fear it will polarise those who argue for less tax against those who simply want to restrain car use for environmental reasons – with little or nothing about economics.

The only way there will be public support for such a major change in how people pay for roads is if they can be convinced that they will be better off with a change, and it will be fairer overall.  This article didn't make that case, it made the case that it can be done, not enough for the case that it should be done.

Wednesday, 12 September 2012

Shanghai not pursuing congestion charges, but continues to regulate and ration car ownership

Website Eastday reports that Shanghai city officials have said that they are not considering or investigating introducing a "road congestion fee" to address traffic congestion, despite Beijing having already announced the concept has been included in its traffic management plan.

Shanghai has a considerable ring road network
It is focusing on expanding public transport and managing its car number plate auction to ration ownership of cars in the city.  The number plate auction system effectively slows the growth of vehicle ownership and has been in place since 1994.

The number plate auction works by requiring any purchaser of a new car in the city to obtain a number plate through a monthly auction.  The monthly auction limits new vehicles to around 8,000 each month, with the latest price being equivalent to US$9,770 which is higher than China's annual per capita GDP (US$8382 on a Purchasing Power Parity basis), but not Shanghai's (over US$12,000). 

The report notes that there will be around 1.4 million cars with local number plates in the city by the end of 2012.  There is still ample scope for growth in car ownership, given the municipal population of Shanghai is over 23 million people.

Of course it isn't compulsory to have Shanghai registered plates, and over 500,000 vehicles on Shanghai roads are registered out of the city, but such vehicles are banned from "elevated roads" during peak times.  This effectively is a form of traffic rationing based on regulation, by banning non-Shanghai cars from expressways during peaks.  Anyone owning such a vehicle wanting to be registered in Shanghai would need to participate in the auction.

The city is already proposing extending this ban to longer time periods.

Of course, the other effect is to keep the vehicle fleet relatively old, as once one gets a number plate for the car, it stays with the car, so there is every incentive to keep the car as long as possible.  In a city with considerable pollution problems, discouraging fleet turnover will have a negative impact upon this issue.

The number plate auction, as a result, effectively rations car ownership and road space by restricting access to only locally registered vehicles.  However, it also raises revenue that helps subsidise public transport.  The same report indicated that over 2009 and 2010 the number plate auction raised US$1.06 billion for the city, which spent US$860 million on improving the public transport network and offering fare discounts to incentivise mode shift.

The big question will be for how long Shanghai can avoid pricing roads to manage congestion.  I'd wager that if Beijing can successfully introducing congestion charging, and given Shanghai already uses number plate enforcement to regulate usage of major highways at peak times, it would not be difficult for the city to introduce pricing - which after ownership has grown to a certain point, will be inevitable if it really wants to get to grips with traffic congestion. 

Tuesday, 11 September 2012

News shorts - Florida, India, New York, North Carolina, Ohio and Texas

Florida pursuing tolled upgrade of existing highway

The Florida Times-Union/Jacksonville.com reports that the Florida Department of Transportation is to commission an upgrade of the First Coast Outer Beltway that will see it widened to a grade separated four lanes highway with tolls.  Tolling will be done on a segmented basis, with rates of US$0.20-US$0.60 for cars per segment, effectively creating a distance based toll along the highway.  Florida Turnpike Enterprise (a business unit of Florida DoT) will finance the project estimated to cost US$230 million which will be recovered from tolls which will be entirely electronic free flow using the established SunPass system.

Despite criticism from some quarters, based on a vote in 1988 that saw Jacksonville abolish tolls in favour of a small sales tax (an economically regressive and irrational measure) "Florida Transportation Secretary Ananth Prasad said the current sales taxes and gas taxes that fund transportation are not sufficient to build something like the Outer Beltway"

Potholes on Indian toll road highlights poor incentives

The Times of India reports that "The Ghoti-Padhga toll-way stretch on the Mumbai-Agra national highway has been ridden with potholes, for nearly the past one month, making it difficult for motorists to drive through the affected sections".

Apparently, the company responsible is simply uninterested in maintenance with the report continuing:  "maintenance was looked upon as a part of expenses rather than looking towards it as re-investment for earnings and hence the proposal had not received a response till date".

Such scant regard for some basic standards on a toll highway indicates an appalling failure on behalf of the procurement and contracting regime for the road.  However, a market led approach would suggest that motorists will increasingly abandon this toll road on the basis that it isn't worth the money.  On the other hand, if the development of PPPs for toll roads in India is on the basis that the private sector will maintain minimum standards of service, then there need to be constraints on such behaviour built into concessions.

New York - Governor "considering" Sam Schwartz's tolling plan

The New York Observer reports that Governor Andrew Cuomo is apparently "reviewing the proposal" of former New York City Department of Transportation Commissioner Sam Schwartz to reform tolling on crossing adjacent to the city in the state.  I wrote extensively about the proposal, which is adamantly NOT called congestion pricing, because it effectively delivers an integrated approach to tolling of major crossings in New York, reducing the prices for trips more distant from Manhatten and introducing tolls on untolled East River crossings.

The article rightly says it is far too early to say whether it will get support, but it is encouraging that the Governor at least appears to be open minded on the issue.  It has the potential to raise more revenue and help reduce traffic congestion, but it also will balance support from those who will pay less on some crossings and those who will pay more or start to pay on others.

North Carolina story shows importance of quality control in enforcement

TV station WRAL, Raleigh North Carolina reports on the case of Jerry Hester, a man who was pursued for enforcement of an unpaid toll bill for the Triangle Expressway, because of human error that mistook the letter N for the letter M.   It appears it took the intervention of a consumer advocacy TV programme (5 On Your Side) to get it resolved with "NC Quick Pass" - the operational arm of the North Carolina Turnpike Authority.

Electronic free flow tolling is being rolled out across the US, although it is some years behind the likes of Australia which has had it now for well over a decade.  Unfortunately, some key lessons learned from free flow systems elsewhere don't always seem to have been embraced.  In this case, it should have been easy for enforcement appeal staff to double check the number plate image and eliminate the penalty altogether, rather than it remaining in the escalating bureaucracy of enforcement.

It certainly shouldn't take a TV programme to highlight such a problem.  This is standard best practice in the tolling industry.

Ohio Turnpike Director advocating wider use of revenues

Columbus Morning Call reports that the Ohio Turnpike Director Richard Hodges is advocating a law change to allow surplus revenues from the toll road to be spent on transportation projects in the state further than 1 mile away from the road.   It appears to be driven by concerns about the growing reserve in the accounts of the Turnpike, which could reflect a lack of useful projects that can be funded from surplus revenues.  Of course, if the turnpike is privatised, this will effectively be the return on the capital asset value that could be distributed to shareholders.

The report also summarises the financial position of the road:

The turnpike, which has $50 million in its reserve, expects to generate $270 million in revenue this year, the newspaper reports. Its operating expenses stand at about $122 million and the turnpike will spend about $90 million on capital projects this year.

Ohio Turnpike thwarts trucking scam

The Trucker reports on how the Ohio Turnpike has stopped a scam whereby truckers avoided paying the full toll price by lying about "lost" toll tickets.  Being a closed toll system (whereby toll tickets are issued at the start, and used to calculate the total toll price depending what exit the vehicle departs from), there was scope to cheat, as described on the website below:

The scam worked this way: A trucker taking a ticket at the turnpike's entry near Indiana would travel across Ohio and claim the ticket was lost when he hit the last interchange before Pennsylvania.

The trucker would pay $44 for the "lost" ticket, the same he'd pay if he had turned in the ticket. After delivering his load to the east, the trucker would head back on the turnpike.

Instead of crossing the state and paying another $44, the trucker would leave the turnpike several exits before the Indiana border and feed the "lost" ticket to an automated fare machine. Toll tickets don't designate east or west travel.

To the machine, the trucker had traveled only a short distance from the Indiana border and would pay, depending on the exit, a toll less than $10, turnpike officials said.

Of course the state is contemplating privatising this toll road, which would raise the incentive to plug any potential holes in revenue, most likely by better incentivising electronic tolling accounts.

Texas concerns about enforcement of free flow tolls against Mexican vehicles

The Texas Tribune reports that officials in El Paso, Texas and some other Texas authorities are increasingly concerned about the inability to enforce violations of tolls on electronic free flow toll facilities on vehicles registered in Mexico.

In short, this is an issue that has been an emerging concern in Europe which faces much of the same issues around cross-border enforcement of such offences.

At the moment Mexican vehicles appear to be a very small proportion of vehicles on Texan roads, but the fear is that more free flow tolling offers opportunities for free-loading.  One idea proposed by El Paso Mayor  John Cook would be the ability to impound vehicles with such fines - effectively the London approach to those who persistently evade the congestion charge.

The report notes:

The situation that some El Paso officials fear is already emerging in a border community more than 800 miles away. The first portion of State Highway 550 opened in Cameron County last year. When completed, the toll road will connect the Port of Brownsville to U.S. Highway 77.


Cars from Mexico on the road, minimal so far but expected to increase, are not being billed, said David Garcia, the assistant coordinator for the Cameron County Regional Mobility Authority

One option would be to enable the border crossing to also be a check for such liabilities, but enabling that is likely to be far from easy.