Brazil to let major private highway concession on existing road

Infranews reports that the ANTT (Agência Nacional de Transportes Terrestre - National Transportation Agency) has announced it will be auctioning a 30 year concession for a US$3.4 billion toll road. The route is a 817km section of federal highway BR-040 between Brasília and Juiz de Fora, Minas Gerais.

What the auction effectively means is that prospective concessionaires have to bid to finance, build, operate and toll the road, and the offer that will do so, with the lowest tolls, is more likely to win.  Studies on the project indicate it can more than generate enough toll revenue to pay for the upgrade of the highway.  The proposed maximum toll rate is BRL 0.0973 (US$ 0.041) per km, or BRL 9.73 (US$ 4.12) for 100km. The successful concessionaire will have to demonstrate it can operate, maintain and upgrade the road to the required standard at tolls with a discount on those rates.  Recent concessions have been awarded to groups that offered to do other routes with discounts of over 40% on the proposed rates.

This is quite some road, being roughly the distance from London to the top of Great Britain as the crow flies, and being most of the main highway from Brasilia to Rio.  Interesting of course, that it is to be tolled to fund the upgrade.  The section from Rio to Juiz de Fora is already tolled and subject to a concession held by the company Concer, since 1996.

Interesting that leasing out large stretches of highway to private companies to upgrade, using tolls, is being implemented by a leftwing government in Brazil.  A similar concept in the United States or the UK would provoke howls of outrage from some quarters.

UK- Vehicle Excise Duty to be made fully electronic

The BBC reports that as of October 2014, the annual (or 6 monthly) "tax disc" that is proof of payment of Vehicle Excise Duty (a tax on vehicle ownership), is to be scrapped.  Proof of payment will now be linked to number plates and Police checks of payment will be enforced by ANPR cameras.

Vehicle Excise Duty is rated on vehicle size (to charge trucks more to reflect wear and tear they impose on the network) and CO2 emissions.  It raises about £6 billion a year in revenue.  None of it is hypothecated for road spending.  The UK Government spends £9 billion a year on roads in England, funding for roads in Wales, Scotland and Northern Ireland is contained within the budgetary contribution to those devolved governments.   Of course, revenue from fuel tax exceeds £27 billion a year as well.

UK - Further comment on scrapping of toll plan for the A14

Guy Bentley at City AM argues for network road pricing to manage congestion and encourage more efficient investment in roads.

AutoExpress reports that the Labour Opposition blames the Government for a cost increase in the project due to delay, and called tolls "half-baked".

USA - California - Orange County debates free lanes over toll lanes

According to the LA Times, there is general agreement that there needs to be additional lanes on the San Diego Freeway (I-405) between Long Beach and Costa Mesa.   The debate is whether they should be HOT or untolled lanes.  Caltrans (the state entity responsible for managing the state highway network) wants toll lanes, on the basis that new capacity should be paid by those directly benefiting from it.  However, six of the boroughs that the freeway passes through want the lanes to be untolled.  

The report said, of a latter signed by the Mayors of the six cities:

"Constructing toll lanes is a breach of trust with Orange County residents," the letter stated, adding that residents agreed to a half-cent sales tax increase that would fund one additional general-purpose lane on the 405 Freeway.

One option is to add a free lane and a HOT lane, but that would seem ridiculous.   The HOT lane would have so little demand to make it not worthwhile.  Either there is money to widen the road or there isn't.

Now I consider sales taxes being used to pay for highways to be economic insanity.  Why should people shopping have to pay for an additional lane on a road many of them do not use regularly and most wont benefit from?  However, if it is there, in part, to pay for it, then it is difficult to argue against, unless of course, the sales tax is cut when the toll lanes open.

The report also says:

City leaders expressed worry that the project would push traffic onto their streets, or that motorists traveling in the toll lanes would find it too difficult to pull off the highway and patronize local businesses.

The first point makes no sense, as the lanes are additional capacity.  They will improve traffic conditions for those who pay, and a little for those who don't.  I also doubt whether those wishing to pay to use the toll lanes (who are more likely to be those on a time constrained trip) have any special interest in pulling off the highway.

If the lanes can be substantially funded by being tolled, they should be, and let sales taxes for transport be cut.

Orange County Transportation Authority website on the project.

USA - Texas - El Paso getting its first toll lanes 

I noted this proposal two years ago.

El Paso is getting its first toll lanes opening soon.  A 9 mile stretch of the I-10 will see one new lane each way from the interchange with US-54 to Zaragoza Road with a toll of US$0.10 per mile. The Camino Real Regional Mobility Authority encouraging "sticker tag" installation of users.  These lanes will be pure toll lanes, with no option for high occupancy vehicles to get a free trip.

Austin

An 11-mile stretch of Austin’s MoPac Boulevard will expand to eight lanes from six to accommodate a growing population.  Neither the Texas Department of Transportation nor any of the local entities involved in the $200 million project are predicting it will transform MoPac into a free-flowing thoroughfare.  The project is the responsibiilty of the Central Texas Regional Mobility Authority.  It is to accommodate population growth.  The key is the extra lanes are pure toll lanes, not HOT lanes.   Carpooling will not give you a free trip, the reason apparently being that the lanes are intended to maintain a minimum level of service.   By not allowing carpooling, it saves on enforcement and means that the lanes are purely managed by price.  

According to the Texas Tribune, the Capital Metropolitan Transportation Authority board is hoping it will boost bus patronage as buses will use the new lanes toll free.  Bus routes are to be revised to see how much they can usefully take advantage of the new lanes.  "Registered van pools" and emergency vehicles are also exempt.

The price will be set dynamically with the lowest price being US$0.25, and an average expected to be less than US$4 with trip lengths being a minimum of 5 miles.  However, unlike many toll systems elsewhere, there is no price ceiling.  The price will be as high as is necessary to maintain good free flow conditions.  Of course, those not liking that can use the parallel untolled lanes.

The payment system is a simple DSRC 915MHz system compatible with TxTag, TollTag or EZ-Tag.   Users without tags will be billed to their home address traced by ANPR cameras and accessing of motor vehicle registration databases.

Allied to the project are improved bicycle and pedestrian facilities ( US$5 million, including 3 miles of new path and 4 miles of footpaths).

The MoPac website says...

The project is being financed through a unique partnership with the Capital Area Metropolitan Planning Organization (CAMPO) and the Texas Department of Transportation (TxDOT). CAMPO and TxDOT have approved grants totaling $199.5 million to fund the project. As part of the partnership arrangement, the Mobility Authority has agreed to set up a Regional Infrastructure Fund, and over the next 25 years, will deposit $230 million into the fund. CAMPO can then allocate money from the fund to other transportation projects in the region.

So the lanes are taxpayer funded, but will they raise enough money to recoup that expenditure?

So it is not to be.  It appears that the proposed A14 toll road is going to be built - but not as a toll road.

In the Autumn Statement of the British Government it is to be announced that the major upgrade of the A14 will proceed, but as a conventional highway project funded by Treasury, according to the BBC.

I've written extensively before about the project:

UK investigates more tolling and private finance;

A new toll road for Britain?

UK government adds new (A14) toll road to programme

Lukewarm reception for A14 toll road idea

A14 project to have one tolled section

A lonely toll road that wouldn't come remotely close to paying for itself

So this is a story of some wishful thinking, which I'll admit, I agreed with at the time.  It was right to investigate whether tolling could usefully help pay for a project.

A very large highway project, involving mostly new capacity, was ready to go.  Then came the General Election in 2010, and a change of government.  It faced a fiscal crisis and had to rein in some major spending commitments by the previous government to address the budget deficit, and freezing development of this highway project was one way to do that.

The road itself is considered critical because it is frequently congested and carries high volumes of truck traffic linking the West and East Midlands (including the city of Birmingham) to the ports in Suffolk and Essex at Felixstowe and Harwich.  About a quarter of the traffic involves HGVs, which makes it a critical freight corridor.  It suffers from peak congestion as commuters travel between various towns, with Cambridge as a key attractor.  Whilst some efforts have been made to promote rail freight (successfully) and public transport, it is not considered likely that mode shift can alleviate the remaining regular congestion, and the route is considered to be a bottleneck on the development of the Midlands, given it provide the primary port access for the region's towns and cities.

The map above is a detailed description.  The upper part depicts the Huntingdon Southern Bypass (which looked like it could be tolled) , the lower part the doubling of capacity on the A14 northwest of Cambridge from 2 to 4 lanes each way, and then the widening of the Cambridge northern bypass (with a series of junction and link improvements.

It appears that France's EcoTax (HGV distance based road charging/tolling system) is now on hold, although the latest reports indicate that it will still be introduced on 1 January 2014.  It is not because of any technical problems, it is politics.

France does protests on a level unseen elsewhere

I am not surprised.  The politics of France is peppered with disruptive protests by vested interests unhappy whenever governments implement major changes to the status quo - typically by specific interests negatively  affected (never by the wider group of citizens positively affected).  The OTRE (Organisation des Transporteurs Routiers Européens), a trucking industry association, comprised mainly of smaller operators, has protested that it would hurt their businesses.  Their protests have included road blocks, with a deliberate attempt to halt foreign trucks (they aren't so keen on competition from their European partners).  Protests have included vandalism and arson against enforcement gantries (which include ANPR cameras, laser profilers and DSRC detectors).

It is difficult to imagine that level of anger in many other countries.

Ecotax isn't a creation of Hollande's socialist government, but wasn't opposed when in Opposition

The Ecotax proposal was approved by the previous centre-right Sarkozy administration, and was supported by the Socialists (who run the current government) at the time, but some in the government now think that the amount that Ecomouv - the consortium that won the contract to develop, install and operate the system - is paid, is excessive (Ecomouv is to receive 20% of the gross revenue, which is quite generous).  Ecomouv is a consortium comprised of Autostrada (the well known Italian toll road owner/operator), Thales (a French technology, aerospace and defence company), SNCF (the French national railway), SFR (French telecommunications company, primarily operating mobile services) and Steria (French IT-services company).  

So the socialist bent of the French Government is coming out in thinking that the private sector may be profiting too much from the system.  

My view is that costs are quite high, although they ought to come down over time, and part of the procurement is to allow for competitive service delivery, which ought to keep pressure on costs (although it isn't clear that Ecomouv has quite the same pressure). 

However, the simple point is that a large government contract to collect revenue is always going to be a chance for operators to ensure they minimise costs so they maximise their own revenue.  That obviously is controversial when it comes to a tax.  Given the system does involve GNSS based technology with on board units, communicating via the mobile phone network, the simple point is it will be costly to introduce.  owever, I would not be surprised if political risk is factored into the price - which is wise.

Meanwhile, it appears, in rather typical French style, that government is now negotiating with protestors over what to do next - even though the contract with Ecomouv binds the French Government.  In short, the key risk is that rates will be lowered, but Ecomouv will insist on receiving the fees it contracted for.  General taxpaers, the interest group that seems to be least loud, may pick up the difference for a short while at least.

According to the Jakarta Post, the city will proceed with the first stage of a congestion charging system (called electronic road pricing because of its parallels to the Singapore system) in early 2014.  Jakarta Governor Joko Widido ideally would like to see it operational in the first quarter of 2014.  However, the Jakarta Transportation Agency believes a bylaw needs to be amended before there is full legal authority to start collecting tolls.

The system is expected to be very similar to that in Singapore, primarily because the proximity has enabled officials to observe the results of the Singaporean system, which is clearly the most comprehensive and successful such operation to date.  All motorised vehicles (except motorcycles, and there is some debate about whether they also should be included) using the charged roads, would need to have a DSRC transponder installed with a read-write smartcard inserted, that would deduct stored value from the card every time the vehicle passed under a charging gantry.

Prices are expected to vary by individual roads, and have different charging periods.   Previous plans to introduce a controlled zone based on only allowing vehicles with odd or even numbered licence plates are to be scrapped.  

In advance of the new system, an unspecified number of new buses are to be introduced, with the intention that the charge will first apply to the Rasuna Said area because of the busway corridors that exist through it. The initial charge will be Rp. 21,000 (US$1.87), but one report indicates that prices could be lowered if traffic levels drop by more than is necessary to achieve free flow traffic.  A previous post I wrote described where it looked like charging would be introduced.

Interestingly, it appears that there is strong political interest in having a state wide electronic vehicle identification system in place by 2015, to enable rapid, accurate and effective enforcement of traffic laws. Jakarta's electronic road pricing system will be compatible with that. 

I am highly sceptical that such a system can be operational by early 2014, with the testing, distribution of transponders and enforcement processes fully effective in such a time, but I thoroughly applaud the decision to move forward.   Jakarta has chosen a bold approach, but I predict some big issues around enforcement and managing the changes in traffic patterns that come from an incremental introduction of such charges.   It may have been better to await the implementation of the electronic vehicle ID programme, as the ability to more readily enforce traffic laws (and deter and remove non-compliant vehicles), may deliver some useful gains in reducing congestion.

Nevertheless, if Jakarta can make this work, it will be the largest city in the world with such a road pricing system, given its metropolitan population of over 25 million people.

UPDATE:  It would appear that the complexities of introducing a Singapore style system in less than 6 months are causing some concern, as a report from the Jakarta Post seems to be indicating a partial backdown, as there is now some interest in introducing a "manual" system rather similar to the original Singapore Area Licensing System that was introduced in 1975.

What is proposed is holographic stickers for monthly or annual access to the city centre, essentially an urban "vignette".  This would be far simpler to implement, although the enforcement would be labour intensive, requiring a large number of enforcement officers targeting parked vehicles, or visually identifying vehicles crossing cordon points and pursuing them for fines (or sending them violation notices).  It is thought the idea may be implemented once 800 new buses are added to the urban fleet, allowing for the expansion of services.  The article suggests "scanners" could be used at parking lots, but this is far from tried and unless the stickers had some sort of RFID device (and it was illegal to install them incorrectly, and it was possible to read a number plate of a vehicle that didn't have one), this seems quite an unwieldy approach.

It is suggested that buses to the charged area could be free, but meanwhile the "vehicle transfer fee" (a tax on transferring ownership of a car) is to be increased to 20% of the vehicle's value.  I'm unsure what that will do other than make a small difference to the cost of ownership, and encourage people to continue to operate older cars.  

What all of this implies is some mismatch between decision-making and good quality advice for the authorities.  Yes, Jakarta could implement an urban vignette, but the fundamental problem of any system - enforcement will be little easier with that compared to an electronic option.   It would appear that there ought to be a rethink, and perhaps some more consideration that Jakarta cannot simply transplant Singapore's success.

With the announcement of the Investing in Britain's Future programme for infrastructure investment, the UK Government has essentially decided to fund all of the prospective projects on the Highways Agency's books in the coming years, included the long mooted A14 upgrade.  That project is expected to cost £1.5 billion and involves 25 miles of upgraded and new highway, with new lanes and a new bypass.

I've written previously about proposals to toll parts of that project.  It now seems that the idea of building a new expressway parallel to the existing road, and tolling it, has been dropped.  Now it is just the Huntingdon Southern bypass that will be tolled, so that only a relatively small proportion of the project's total costs will be recovered directly from road users.

So it will be a new section of road that is likely to be tolled, at fairly modest levels (£1-£3 between 0600-2200, with no tolls at other times).  The technology planned to be used is an Automatic Number Plate Recognition system, presumably with prepaid and postpaid accounts (although details have not yet been developed).

The new tolled route will be superior to alternatives, not least because part of the existing route is to be demolished (the bridge over the railway at Huntingdon).  This is likely to be controversial as it will mean the untolled alternatives will be substantially inferior to the current option (which will be gone).   The reason for that is entirely to ensure the new tolled route generates enough revenue to justify the toll.  I'll leave it to others to determine if that fits into the "only toll new capacity" position of the Government, when the old capacity is substantially reduced.

It looks like this will be the UK's next new toll road on the strategic road network, with construction to start in 2016.  At the moment, this final proposal is out for public consultation (the full consultation pamphlet is available here), but I expect it to proceed in full.

The Oregon State Legislature has now passed the first legislation to allow for the implementation of a distance based road user charging system for cars on existing roads, in the United States.

Extensive background about the Oregon system was written and linked to in these articles:

Advocates of distance based road pricing look to Oregon in the coming months

Oregon progresses pilot of vehicle mileage tax

The SB810 Road Usage Charging Bill passed the Oregon State Senate by 24 to 6.

It passed the Oregon State House of Representatives by 48 to 12.

It now awaits the signature of Governor John Kitzhaber, who is understood to be fully supportive.

What it means is that Oregon will be implementing distance based charging for ultra fuel-efficient vehicles (those with greater than 55 MPG fuel consumption).

This provides a benchmark approach that some other states are likely to follow, whereby a small number of road users - those which pay little to no fuel tax - will be paying to use the roads directly.   It offers a long term path to shift vehicles from taxing energy use, to taxing road use.   Most Oregonians will notice nothing, unless they purchase such fuel efficient vehicles, and over the next decade or two, more and more will.

I don't have to explain to readers what a significant evolutionary step this is, and how long term the policy is.  A stark contrast to the approach of some states and countries.

I will be open, that I played a very small part in this project a couple of years ago, assisting the team at D'Artagnan Consulting LLP, which has been one of the key firms advising and developing the system architecture for the Oregon Department of Transportation.

However, those who know this project understand that it is, in particular, through the efforts of Jim Whitty - Office of Innovative Partnerships and Alternative Funding Manager at Oregon Department of Transportation - who over some years, with his team, have taken the best experience from across the US and across the world (dare I say that sometimes Americans can be accused of minimising the relevance of experience from other countries, Whitty did not), to develop a solution for Oregon.

I congratulate Jim his team, both within ODOT and his advisors and consultants, on this landmark success.

ODOT Road User Charging website

Hungary - Budapest unlikely to introduce congestion charge in short term

Following on from the report last year that the Hungarian Government had suspended development of a congestion pricing scheme for Budapest (which had received money for its metro system from the European Commission contingent on introduction of such a scheme), Caboodle reports that the Budapest Public Transport Centre, CEO David Vitezy, says that it wont happen in the next two to three years.

He says that until there is more public transport capacity, it can't be done.  He wants the fourth metro line (under construction) and some new tram lines built first.  I'm slightly curious about this, given Budapest functioned for many years with the existing public transport network and much less car traffic, and has had relatively static/declining public transport usage for some years.

However, I suspect the politics around this are too difficult for now.

India - Andhra Pradesh state may establish hypothecated roads fund

According to The Hindu, the Andhra Pradesh Road Development Corporation (APRDC) is considering replicating what has been done in four states (Assam, Kerala, Maharashtra and Uttar Pradesh), by setting up a dedicated roads fund which would receive revenue from motoring specific taxes.  The primary reason being to allow for better quality and longer term funding decisions on road infrastructure, than ad hoc annual funding decisions competing with other public spending.   In addition, it is intended to support the autonomy and accountability of the APRDC in delivering improvements to the network.   Taxes on motor vehicle ownership and fuel, tolls, and other revenue sources may be dedicated to the roads fund.  A key priority is to fund major safety improvements to reduce the high accident and road fatality rate on the state's roads.

USA - Texas - article on tolling

The Texas Tribune has an excellent four part series of articles on toll roads in the state.

- Part One. Includes an interactive map of toll roads in Texas, which looks like not much given the size of the state, but are clustered around major cities.

- Part Two.  Describing the rise of tolling in Texas.  Noting that fuel taxes have not risen in Texas in 20 years, that more than 150 miles of toll roads have been built in the past six years and the growth in private sector interest in building, owning and operating such roads.

- Part Three. Focusing on HOT and other toll lanes in Texas.

- Part Four.  On the failed Trans-Texas Corridor proposal and what came after.

Given it is the British Columbia Provincial Elections on 14 May, I thought I should outline some of the latest developments in debate over the past six months.

The NowNewspaper reports on how Surrey Mayor Dianne Watts thinks road pricing would be a fair and equitable way to raise revenue for public transport in Vancouver.  She suggests to radio station CKNW that it could replace property tax and reduce fuel tax.

Delta Mayor Lois Jackson also says it might be fairer than property taxes, but it hasn't been researched enough.  The Delta Optimist reports that she is less than impressed by proposals for more property taxes to pay for Vancouver public transport.

The Globe and Mail reports that Richard Walton, the chairman of the TransLink mayors’ council, says that road pricing has to be a new way of funding, not an additional tax.  

The Vancouver Sun reported on how the Mayors of Vancouver's boroughs rejected a property tax increase to pay for public transport.

I will report shortly about the outcome and what lies ahead for British Columbia in road pricing.

Apologies for those who follow this blog, I have been unable to produce any content in the past few weeks due to a number of factors including being extremely busy with work, a severe family illness and a bereavement, as well as some travel (and my birthday).   As a result I have also been unable to present a paper I submitted to the 9th ITS European Congress in Dublin, which I should have been talking to today.

My friend Steve Morello, from D'Artagnan Consulting LLP, is presenting on my behalf today.

I hope to resume regular service within the next week or so, in the meantime I will publish a few posts I had nearly finished before the recent interruptions.

As has been previously reported, there had been a lot of debate as to whether it was worthwhile to privatise the Ohio Turnpike.  

According to an article on Cleveland.Com, the revenues for the 241 mile long Ohio Turnpike for 2012 were at a record US$270 million (with an expected profit of US$15 million).

Governor John Kasich is keen to utilise the value of the toll road to support other transport infrastructure projects in the state.  The law currently restricts the net revenues to being spent on transport projects within one mile of the road.

Tolls increased by 10% in January 2012 and traffic volumes have increased, making the toll road a lucrative asset for the state.  It has been reducing staff and consequential costs.

So the decision has been made not to privatise the road, but instead have it issue bonds which will essentially mean the state is borrowing against future revenues from the Turnpike to pay for other transport projects.  US$1.5 billion in bonds will be issued.  

A website called Ohio Turnpike Analysis contains more details. With a specific report of more in-depth analysis here, supported by Big Four accountancy firm, KPMG.  Indeed that report had been commissioned to specifically restrict options to those that exclude privatisation, but could include a lease to a concessionaire for the revenues.

In announcing the decision on the Turnpike the website states:

While the state could have realized more money by leasing the Turnpike, maintaining public control of the Turnpike and keeping the Turnpike Commission independent helps keep tolls low and workers on the job. Better coordination with ODOT keeps virtually all Turnpike revenue in Northern Ohio.

The Ohio Turnpike Commission is to be expanded into the Ohio Turnpike and Infrastructure Commission, which will have new "expanded authority" over major transportation projects in Ohio.

In addition, there will be a cap on tolls as follows:

Tolls for local passenger trips that are paid with EZ Pass will be frozen at current levels for the next 10 years. For all other tolls (longer passenger trips and all truck trips) any increases will be capped at the rate of inflation, or approximately 2.7 percent annually, assuming sustained traffic growth at the historic 1 percent rate. This low, stable rate will be less than half the rate of increase that passenger tolls have seen over the past 20 years and almost a full percentage point less than past increases to truck tolls.

Comment

It is always curious to see how reluctant authorities in the United States are to embrace private enterprise, capitalism and free markets when it comes to roads, especially when compared with countries that many Americans would consider to be more regulated and pejoratively, socialist (e.g. France, which has had little hesitation to have a large network of privately owned highways).   The rhetoric around it is remarkably parochial (with the implication that only people from Ohio could run the road "properly").  

What is almost completely absent is this analysis is any idea of the capital value of the Turnpike. The private sector has to account for its assets, but the public sector should as well.  It should make a return on that capital value, because taxpayers' money is tied up in it.  They should understand why their money is making more than a market return or less than that, otherwise it isn't clear whether the asset is being well managed or not.  Of course the only way to get a market capital value would be to talk to the market.  What would it be worth if it was sold, unencumbered (or encumbered by specific legislation)?  It would be dependent on revenue forecasts and expected costs, then the analysis can be done as to whether the surplus, after renewals and depreciation is worth more than the expected sale price.

There is a reasonable case to be made for reducing the risk of monopolistic pricing of the Turnpike, but beyond that if pricing can be efficient, and also reflect demand, there is scope for it to improve utilisation and get better value out of the asset.

In short, it appears that retaining the asset in state ownership is a political decision based on parochial and  long term financial grounds (better for the money to stay in Ohio, and better for the state to spend the revenues rather than monetise the asset, and let the private sector enjoy the revenues).  

The estimated value of a lease was a net NPV of US$1.8 billion, but I would have liked there to be some consideration of the most radical option - selling it.  Not that this is what should be done, but that it would provide a benchmark of value, to measure others against it.  The value of the sale money can then be treated on its own merits.

What I hope is that the new Ohio Turnpike and Infrastructure Commission efficiently transitions to fully electronic free flow tolling, adopts international best practice in asset management and customer management, and so replicates as much as is possible the efficiencies the private sector would bring to its operations.  It should also apply this to how it will supervise and manage other infrastructure projects financed through the forthcoming bond issue.

However, I also hope that the broader issues of sustainable revenues for Ohio are looked at more widely.  The Ohio Turnpike is not enough in itself to generate revenues to replace declining fuel tax yields.  Moreover,  Ohio should look at how it can leverage revenues from transit traffic and improve pricing overall to get better network utilisation, and better distribution of charges across users.  

The Ohio Turnpike may not be privatised now, or in the near future, but it should raise the debate for others. Why should states own roads, especially toll roads?  What are the deadweight unseen costs of maintaining that ownership?

Reuters has published an interesting article by Felix Salmon where he examines more closely the basis for the data behind TomTom's congestion indices.

Some of his points:

- TomTom's data comes from people who have its devices in their cars when they are turned on and being used.  Most peak time commuters are far less likely to be using satellite navigation services for their daily commute compared to occasional users of the road.  As such, both the driving habits, the speeds and the weighting of traffic volumes based on the presence of such devices will be skewed away from regular users.  

Now I think that over time, this may change as these systems also advise on traffic conditions more reliably.   Anything that encourages people to always have the system on will help, but for now it is at least questionable as to whether the sampling of peak users is representative.

- TomTom doesn't have any measure of confidence levels in its data, because it hasn't actually measured the congestion by any other means.  That makes the indices curious, but hardly a sound basis for major public policy decisions.

- Measures of congestion on a percentage basis distorts delays for short trips relative to longer ones.  A half hour delay on a one hour journey would be seen as less of a delay than a 10 minute delay on a 15 minute journey, which it is, in one sense.  Yet, 10,000 people enduring a half hour delay is more significant than a 10 minute delay.

What this all means is that, beyond individual corridors, it is astonishingly difficult to generalise about cities accurately, comparing performance between cities.  That doesn't mean TomTom should be pilloried for what it has done.  It is interesting what it has compiled, but it isn't much more than that.

Columnist Kingsley Guy in the South Florida Sun Sentinel has commented on the proposal from the Florida Metropolitan Planning Organization Advisory Council (take a breath) that the state introduce a 2/c mile tax on road use.

The proposal comes simply from concerns that fuel taxation is becoming increasingly less reliable as a source of revenue to fund the state's transportation expenditure.

The state has 12 different fuel/vehicle ownership taxes (plus two Federal fuel taxes), two of these taxes haven't been increased since 1941 and 1943 respectively (meaning they are now worth 7-8% of what they originally were set at).  3 are inflation adjusted.

Sources of Florida state transportation trust fund revenues

Black line shows where revenues have to be to remain constant in real terms

FMPOAC concludes that six options should be looked at.  These are:

- Index all fuel taxes to inflation;
- 1c optional Municipal sales tax;
- Increase State Highways fuel tax by 2c a year, above inflation;
- Vehicle Mileage Tax;
- 5c local Diesel tax for counties;
- Redirect part of fees that were shifted from transport funding to the State Transportation Trust Fund.

On VMT it said:


This recommendation is to have the Legislature commission and fund an extensive effort to deal with the systemic issues of fuel taxes becoming less sustainable as a primary surrogate for a transportation user fee. While fuel taxes served as an adequate substitute for a true user fee for decades, significant increases in mandated vehicle fuel efficiency and the introduction of all electric and plug‐in hybrid vehicles are eroding transportation revenues. It is recognized that there are significant concerns over the concept of charging users of the highway system based on each mile traveled. These include privacy of citizens, the cost of implementing such a system, and institutional issues associated with revenue sharing. This effort is intended to address these issues at a minimum, deploy a demonstration of the concept and develop a business plan and implementation roadmap to move Florida to a VMT‐based system.

Guy rightly rejects Virginia's bizarre hypothecation of a new sales tax to pay for transport, as if people who rarely drive should pay more for potholes (through their shopping) than a trucking firm does.  May as well pay for electricity through general taxation, or telecommunications.   

He notes that tolling in Florida has had a distance dimension to it, and that is widely accepted.

However, he also notes some important concerns:

- Privacy.  Suggesting an odometer only option.  Which is fair enough, as long as it cannot be defrauded.  However, privacy does need to be respected, not dismissed.  Too many wingnuts think distance based road pricing is part of a conspiracy  (one that would be far better implemented if done in cahoots with mobile phone operators!);

- Fraud.  He expresses concern about people cheating a distance based system, which is fair enough, but this can be addressed and has been elsewhere.  Enforcement is a key part to any such system;

- Visitors.  A big issue for any state only system is covering those from out of state quickly and efficiently.  I'd suggest some sort of vignette (time based charge), but there are other options too.

- Heavy vehicles.  He notes that fuel tax charges heavier vehicles more, and that there needs to be a reflection of weight as well.  He's right, and fuel tax does this very poorly, as it tends to charge the smaller trucks too much, and the heaviest ones not enough.  Notice that the trucking sector can often be very unhappy about better pricing of roads, partly for this reason.

- Transition.  He wonders if there may still be a fuel tax as well as distance charging.

He also notes that there remains an issue of poorly spent money, which is separate from that.

I'm encouraged that Florida is starting to look at this issue more seriously.  The state has done well to use tolls to a wide extent, which has helped it a great deal and will help it with any transition to more direct user charging.  However, it could do worse than look at progress in Oregon, and the lessons learned from distance charging in other countries as well.

In 2011, a regulation on traffic management and engineering was signed to facilitate ERP, now with there being legal approval at the financial level, there are no legal barriers to implementation. 

The Jakarta Transportation Agency (which has an almost impenetrable website) has said that work will start on the design and concept, including establishing where and by how much motorists will pay.  The current talk is of implementation in 2014 according to the Jakarta Globe.

Electronic Road Pricing will replace blunt HOV rule at peak times

The intention is that ERP will replace the current vehicle rationing system in place in parts of Jakarta, this is essentially a peak time HOV system that requires all cars to have 3 or more occupants.   It applies to specific roads between 0700-1000 and 1630-1900 on weekdays.

This has resulted in entrepreneurial Jakartans standing beside the roads approaching the "3-in-1" zone charging a small fee for hitching with motorists.  The Jakarta Globe has an article about the "Jakarta Jockeys" as they are called, typically charge Rp.15000 (US$1.54) each to be the third (or even second and third) occupants of cars driving into the restricted zone.  Police officers currently enforce the HOV system on sight, issuing fines of up to Rp.1 million (around US$103) for violations.   The roads the system applies to get revised regularly, but the whole system will disappear when ERP is introduced.

The scheme will also replace the odd/even vehicle demand management system that was just introduced in March 2013.  That system restricts vehicles with odd or even number plates from entering certain areas at peak times on specific days, essentially alternating access during weekdays to reduce congestion.  

ERP will contribute to major reduction in congestion

ERP is intended to be the major contributor to a target of reducing traffic delays by 40% by 2014 according to the Jakarta Post.  Apparently only 40% of time spent on the roads by commuters is spent moving.  56.8% of trips into Jakarta are undertaken by car.  Traffic has been increasing by 11% per annum, but road capacity by 0.01%.  

Beyond the urban congestion charge, tough enforcement of illegal on-street parking and on-street vendors on major routes will increase the usable capacity of those roads.  The city and Indonesia itself is loathe to ban people from buying vehicles, but may also consider other measures to restrict vehicles (e.g. banning even or odd numbered licence plated vehicles from certain days).

I wrote previously about where I thought it might be implemented.

Blue is Phase 1, Yellow Phase 2 and Red Phase 3 of proposed Jakarta congestion pricing

The city has stated that the prices would likely be in the range of Rp. 6500 (US$0.67) and Rp. 21000 (US$2.16) would be adequate to make a meaningful difference to congestion, prices would vary according to time of day, size of vehicles and location, with higher prices for the most congested routes and crossing points.  The expectation is that a mix of individual routes and cordons will be charged, it is worth bearing in mind that Jakarta has quite a few (manual) toll roads, so is not unfamiliar with road pricing.  There are separate concepts to adapt Jakarta's toll roads towards fully electronic free flow technology, both to address toll plaza congestion and to allow for more dynamic, peak pricing.

"The administration said that the provisional trip charge reflected inflation and economic growth and was based on a survey of motorists and the tolls charged by turnpikes and ERP systems in other countries."

The expectation is that the system will resemble the Singaporean one, with a DSRC type system with on-board units required for all vehicles driving on the charged roads, and prepaid smartcards inserted in them that can be topped up at various retail outlets.  Of course it will also require extensive number plate recognition based enforcement.  

Decisions on exact implementation have yet to be announced.

Australia – Survey says distance based congestion charge would change behaviour

According to AAP, reported by Perth Now, a survey from the University of Sydney has indicated that a distance based congestion charge of A$0.05/km (US$0.08 mile) at peak times could see 22% of peak commuters driving at different times (assuming a charge between 0700-0930 and 1630-1830) and 13% to shift to public transport.

The survey comprised 1000 adults. 66% said they had no flexibility to change travel times for commuting, but the other 34% said they did.

Obviously a survey isn’t a wholly reliable measure of behaviour, but what I find telling is the potential for time shift. Far too many think congestion pricing is about mode shift, when there is as much (if not more) to gain from changing time of travel to periods when there remains spare road capacity, which means getting optimal use of the network.

Canada - British Columbia debates road pricing

According to Straight.com, British Columbian Green Party leader, Jane Sterk, has come out in favour of "pay-as-you-drive" road pricing for Vancouver, to reduce congestion and raise revenue to pay for public transport.  The same article notes that the current Minister of Transportation and Infrastructure for the province, Mary Polak (Liberal), says the issue is up to the cities to come up with a proposal and convince the provincial government that it has public support, whilst the Opposition spokesman Harry Bains prefers to consider other measures first.  The general election for British Columbia is on 14 May.

Meanwhile, the Delta Optimist has published an opinion piece by Ted Murphy who says that road pricing is likely to be the best option:

It stands to reason those who put the greatest strain on the system, and those who are most likely to benefit from any improvements, should be the ones that pay the largest share of the tab.

Conversely, it doesn't make much sense for homeowners, who are an easy mark but don't necessarily tax the transportation network, to continually be gouged every time TransLink is in need of more cash.

There's much to be worked out when it comes to road pricing, and there will undoubtedly be resistance to the idea of paying to traverse roads that up to now have been free, but at the end of the day I suspect it will be the favoured option.

It's not a question of if, but how, they're going to extract more money from us, so they might as well do it in the fairest way possible.

It isn't clear as to whether British Columbia voters think the same way.

The Independent in Ireland reports that toll booth barriers cost them on average an extra (Euro) 0.99c each time (US$1.30) in wasted fuel.  This is with DSRC toll tags that enable automatic payment, but require trucks to slow down to a crawl to trigger the lift of the barrier.

This is crazy of course. The M50 toll road in Ireland was converted to electronic free flow a few years ago, largely because of congestion (it being the ring road for Dublin).  There ought to be a transition towards at least a mix of free flow lanes and barrier lanes.

South Africa - 24 years to repay debts for Gauteng Freeway Improvement Project

Eyewitness News reports that the South African National Roads Authority Ltd has said that it will take 24 years of toll revenues to repay the debts incurred to build the Gauteng Freeway Improvement Project. This is based on the (R)30c/km (US$0.05 per mile) rate agreed by the Government.  The maximum monthly that can be charged is R550 (around US$61).

USA - Maryland - Intercounty Connector exceeds forecasts

At a time when there are more than a few examples of toll roads that have demand well below forecasts, it is perhaps good news to report on the InterCounty Connector in Maryland (Maryland Route 200), a fully electronic toll road that opened in 2011.  According to the Washington Examiner, estimates of 30,000 daily users by June 2012 have been exceeded on the western end of the road by September 2012 (to 35,000) and not far behind on the eastern end (26,000).  The road raised US$19.7 in the year ended June 2012 compared to projections of US$18.7 million.

The Star Online reports that the Singapore Land Transport Authority has been trialling a GPS based electronic road pricing system on one road for a year, with the intention being that such a system might replace the existing gantry based electronic road pricing scheme.

According to Yahoo:

"Kapsch TrafficCom, MHI Engine System Asia and NCS, ST Electronics (Info-Comm Systems) and IBM Singapore, and Watchdata Technologies and Beijing Watchdata System were awarded the tender" in 2012 to develop a system within 18 months as replacements for the ERP system, each getting S$1 million (US$812,000) to do so.

Singapore's existing system has been the benchmark for urban congestion charging since it was introduced in 1997.  It charges different prices by location and time of day at all of the charging points, enabling differentiated pricing.  Prices are reviewed regularly up or down, depending on congestion levels, with the intention being to maintain minimal levels of service speeds.  As a result, congestion on Singaporean roads is relatively rare for a city of its size.   It is efficient pricing par excellence, and a far cry from the very blunt charge in London, and the slightly less blunt charge in Stockholm.  Revenue is not a relevant influence on prices.

If successful, the GPS trial could mean 80 gantries currently used for Singapore's congestion charging system would be replaced, and vehicles equipped with the existing prepaid card based tag system would need new charging equipment installed.

However, the report doesn't include good news for those with concerns about privacy, as it says it will be used to enforce other laws:

like catching speeding vehicles and those which beat red lights, spotting illegal parking or tracking hit-and-run drivers.  It can help find stolen cars, assist police in solving certain types of crimes, and aid in tracking offenders.

Singapore's authoritarian reputation appears to be the chief concern.

Some bigger questions arise, as such an all pervasive system that would charge for every kilometre travelled could replace the punitive ownership taxes, by focusing on usage.  Singaporeans seem to treat the ownership taxes as just another cost for owning a car, although the other deterrent to ownership is the limit on the number of cars that are registered - people buy and sell and bid for a limited number of permits to own a car that can double the cost of owning a car.  The result, according to the article, is only 12 in 100 own a car in Singapore, compared to 24 in 100 in Hong Kong, a similar city "state", which does not have restrictions on car ownership and punitive taxes (but car parking is largely provided by the market, which prices parking at a premium in this territory with land scarcity in its inner city areas).

Odds are that Singapore will transition to distance, time and location based urban congestion pricing within the next few years.

In the meantime, the Singapore Land Transport Authority is now assessing the outcomes of the trials to consider the next stage, which may be a tender for full implementation.  However, there is currently no deadline for implementation of a next generation ERP system.

I've written before about Oregon's efforts to develop a Vehicle Mileage Tax intended for the most fuel efficient vehicles to replace its fuel tax.  It has successfully run a pilot of various technologies and systems, with the intention being that it become a mandatory requirement for all vehicles with a fuel efficiency above the threshold of 55 Miles per Gallon (5.1 litres per 100km).   Key is choice, with there being technology and non-technology options, with both private and public sector provided options.

It is expected that there will be vote this week in the Oregon House of Representatives for House Bill (HB) 2354B in the House Revenue Committee.  The expectation is that it will be passed onto the Joint House-Senate Ways and Means Committee.  HB2354B identifies all vehicles that get an estimated 55 MPG or better being subject to distance based tax.

In the Senate, there is a Bill (810A) that provides for a volunteer programme of 5,000 to choose to pay on a distance basis in the state.  

It may be that the Bills will merge meaning that (guess) all vehicle 55MPG or better get taxed up to the first 5,000 that want to volunteer (although I'm unsure quite why many would do so).   If it were up to me, I'd start off with all newly registered vehicles (there are hardly any in that category now anyway).

The House Bill needs a 60% majority because it is a new, mandatory, tax measure. The Senate Bill, because it authorises a voluntary measure, only needs a simple majority to pass.

Whatever happens, one of the bills or a merged one may go for a vote in the next month or so.  That would authorise the implementation of the first VMT/distance based road usage charging system in the USA for cars.

It would be a huge step in policy, albeit a small impact on almost all Oregonians. However, it would provide a basis to protect future revenues for highways in the state.  As vehicles become more and more fuel efficient, more will shift from paying by fuel tax to paying by distance.

If Oregon demonstrates that this can be done, in a way that largely has public acceptability, that doesn't threaten privacy or mean people are paying more than they should for roads, then it opens the door for other US states (and other countries) to start making this transition. 

Most "managed lanes" or "express lanes" in the USA are what I'd call pure HOT lanes.  They are tolled, but High Occupancy Vehicles (HOVs - cars with 2 or 3 or more occupants) are allowed to use them for free.  More often than not such lanes are conversions from HOV lanes (also called "transit" or "carpool" lanes).

Not Georgia's I-75 Express Lanes project, which I mentioned previously in an article about public attitudes to such lanes.

These are new build lanes.  Brand new capacity.  These are pure toll lanes (although local buses can use them for free), with all cars using them having to pay.  Trucks are not allowed to use them.

Atlanta Forward blog has published a debate on the pros and cons of the I-75 Express lanes project The project is a reversible Express toll lane (between 1 and 2 lanes) between SR 155 and SR 138 along an over 12 mile stretch of the Interstate. It is under development now and will be completed in 2016. 

The lanes will be northbound (towards Atlanta) in the AM peak and southbound in the PM peak. Tolls will be dynamic, so will vary in real time according to demand on the lanes. 

A DSRC transponder will be offered for those wishing to use the lanes, or they may choose to pay after usage with a bill sent to the vehicle owner’s address after the number plate has been captured by cameras. The latter option will be more expensive. All revenues from the lanes will be used to pay the capital costs of the lanes, which are estimated to be US$150 million. Trucks are curiously not allowed to use them. 

It will be interesting indeed to see if the lanes can pay for themselves, as this is rare (and explains why such lanes are rare outside the US – as most HOT/toll lanes are conversions, not new lanes). 

The arguments for the toll lane are: 

- They provide a new option; 

- The new capacity will not get congested as pricing will ensure that; 

- Some will use them every day, but most wont. Only when there is a time sensitive appointment, like a meeting; 

- The lanes benefit other travellers because they will reduce congestion on untolled lanes, and buses will have unhindered trips.

Arguments against tolls on the lanes are: 

- Untolled lanes would be used more; 

- Most users will be local, wealthy, extravagant or late; 

- It’s “UnAmerican” to pay (I actually though it was un-Soviet); 

- Gas tax is fairer because everyone will pay and then other road improvements can be built. 

Naturally I’m supportive of the lanes, because ignoring pricing is ignoring an opportunity for those who want new capacity to have to pay for it. It is also right that people pay for premium service when they need it. Unpriced roads risk congestion, the toll lanes promise a standard of service that the “free” egalitarian public domain roads can’t promise.   

Hopefully Georgians will come to see them as an asset, and that it provides a valuable option.  However, my other interest is whether the lanes will pay for themselves.

If so, they provide a new model for considering how new capacity can be paid for.

China - Poll rejects congestion pricing

China Daily reports that an online poll (yes I know) by China Youth Daily saw around 75% of respondents oppose congestion charging for Beijing, preferring to support "improving the city's planning process, the road repairing projects, and the traffic management mechanism" to reduce congestion.  Good luck with that then.

Hong Kong - Hopewell retains BBB- Fitch rating

Reuters reported in October 2012 that Hong Kong based toll road investor, Hopewell, retained its credit rating with Fitch.  Hopewell Holdings owns 68% of Hopewell Highway Infrastructure Limited, and Fitch reported:

Hopewell Highway Infrastructure Limited (HHI), continued its stable performance in the financial year ended June 2012 with a 5% increase in revenue. An overall increase in traffic volume is driven by continued economic growth in the Guangdong province, and improving connections to local road networks and strategic locations. In particular, the West Route enjoys synergies from completion of Phase II, and average daily traffic grew by 39% in FY12.

A new tariff framework effective from June 2012, as well as the "Holiday Toll Free Policy" effective from October 2012 will adversely affect cash flow generation capacity of the toll road portfolio. Fitch expects the toll road portfolio's EBITDA to decrease by around 15% as a result in FY13. 

Hopewell is in joint ventures with Chinese companies over five toll roads in the Pearl River Delta area of Guangdong province in China.

India - Toll tags may be mandatory

A report from the Deccan Herald quotes N R Gokarn, CEO, National Automotive Testing and R&D Infrastructure Project (NATRIP), a government led project, as saying that "RFID tags" that identify vehicles are likely to become compulsory across India.  This would help with identifying vehicles more generally, as well as facilitating a shift towards electronic free flow tolling.  The National Informatic Centre (NIC) contains data on over 90 million vehicles including owners and insurance details, and it is intended that any such system enable ready access to that database for tolling.

India - IRB acquires MVR

LiveMint reports that IRB Infrastructure Developers Ltd has acquired 74% of MVR Infrastructure and Tollways Ltd.

IRB's corporate profile states:

The company, along with its subsidiaries has constructed or , operated and maintained around 8,000 lane kms of road length so far and one of the major road developers in the country. The aggregate size of all our BOT projects (both completed and under execution) is around Rs. 170,552 Million (US$3.1 billion).

MVR Infrastructure and Tollways is a construction and toll road management company based in Tamil Nadu.

UK - Manchester still not interested in congestion charging

A rather odd little news report from the Manchester Evening News notes that a survey recently conducted by the AA indicates 80% of those polled oppose congestion charging for Manchester.  A referendum in 2008 saw a 79% "no" vote for a proposed congestion charging scheme that was to raise money to pay for major public transport improvements.

This is hardly surprising.  People wont vote for what they see as a new tax, especially since central government decided to give Manchester the money for some of the public transport improvements anyway, presumably as an election sweetener, and Manchester local authorities borrowed money to pay for the rest.  Meanwhile, Manchester was hit by the recession, and traffic volumes have not increased since 2008.  Any deal for congestion charging needs to offer something in terms of improvements to roads or reductions in other taxes to have any chance of being supported.

UK - Birmingham's transport authority wants private toll road nationalised

I've written about the M6 toll road before.  It was fully privately financed and built, and runs at a loss, without a penny contributed by taxpayers.   It is heavily under-utilised, in part because tolls are highly priced (but revenue maximising) and in part because the travel time savings are not high, except at peak times when the untolled parallel motorway is congested.

This upsets the planners at Centro - the West Midlands Transport Authority - which is responsible for transport planning in the wider metropolitan region surrounding Birmingham.  Centro has no authority over the motorways, but according to the Birmingham Post, Chief Executive, Geoff Inskip wants central government to buy the M6 toll road, reduce or eliminate the tolls, and so relieve the existing untolled road.  It even suggested tolling the existing untolled road at peak times, to help pay for the purchase.

Now I'm no fan of nationalisation, but tolling the existing route at peak times would provide some "competitive neutrality" between the routes.  One idea is that vehicles are charged to use both routes through fuel tax, but none of that fuel tax goes to the owners of the M6 toll road.  If a deal was done to reduce tolls by a proportion reflecting that contribution, it might make a small difference.

USA - New York - Citizens' Budget Commission recommends higher tolls

Capital New York reported in October that the lobby group "Citizens Budget Commission" proposed that 25% of funding of the New York public transit system should come from tolls:

The commission argues that not only should drivers' tolls cover the upkeep of bridges and tunnels, which they do now, but they should also underwrite a quarter of mass transit services, thanks to all of the "harmful consequences" that drivers cause but do not pay for, like "noise, congestion, air pollution and greenhouse gas emission."

To that end, the commission would raise tolls on M.T.A.-controlled bridges and tunnels to as much as $9 in cash. Right now, drivers pay $6.50. Once the 2013 and 2015 hikes go into effect, drivers will pay $7.50.

Further, the commission proposes raising vehicle registration fees, which are now amongst the lowest in the country, and the gasoline tax.

The CBC also says congestion pricing should also be considered, again.

It also proposes fare increases for public transit.   This doesn't mean tolls on untolled crossings, but raises the obvious question as to why not, as the inequities of only charging some crossings simply becomes exacerbated.