Does fuel tax reduce congestion?

The answer to that question is yes, but not very well. Andrew Coyne from the Nanaimo Daily News (Canada) writes a good summary article about why full network congestion pricing is the best single tool for addressing traffic congestion, compared to building more roads, adding more public transport and simple cordon pricing. I'd counter his claim that London and Stockholm congestion charging haven't work so well because of induced demand within the cordons, because this simply isn't true. In London, road space was reallocated to pedestrians, cyclists and buses. Nevertheless, whilst he doesn't address the real concerns people have about privacy (which I believe can be overcome, but cannot be ignored), it isn't a bad article as to why road pricing needs to be comprehensive to properly address congestion. So far, nobody has dared try it.  Singapore may be the first to do so?

South Australia not going to have toll roads

According to Australian public broadcaster, ABC, "Chief executive of the Department of Planning, Transport and Infrastructure, Rod Hook, told 891 Breakfast this morning that Adelaide's road future could come at a toll". His view was quite simply that tolls would be needed as a source of revenue perhaps in order to get continued Federal funding for South Australia's highways. The Labor, Liberal and Family First parties in the state of South Australia all oppose the introduction of tolls, even though tolls are widespread in use on highways in Victoria, New South Wales and Queensland.

Toronto 407 toll road continues to perform well

The Globe and Mail reports that the 407 ETR in Toronto has had a good year. Trips increased 1% year on year, but revenue increased 10.6%. This is due to an increase in tolls at peak times by between 5-10% indicating that users are still willing to pay to use the road at those times. Notable is that revenue in the latest quarter is 83% higher than the same quarter last year. Revenue per trip is around C$6.37 (US$6.28). “Unbilled trips” (those either not identified or not able to be pursued for enforcement) are now at 2.2%, which is attributed to improved technology (presumably better resolution of Automatic Number Plate Recognition images).

407 ETR is owned by the Canada Pension Plan Investment Board (40%) , Spanish infrastructure company Cintra Infraestructuras SA (43.23%) and Canadian engineering firm SNC-Lavalin (16.77%).

Total revenue was C$188.4 million (US$185.9 million) for the year till June 30 up from C$170.3 million (US$168 million).

Tolling pushes ahead in Indonesia but PPPs not yet a success says Minister

The Jakarta Post interviews the Public Works Minister of Indonesia who says that Public-Private Partnerships are not yet a success, but progress has been astonishing:

For instance, when constructing the Jagorawi toll road in 1978, the state set up a company called PT Jasa Marga that acted as a toll road operator. However, Jasa Marga also emerged as regulator because we did not open the service to the private sector. We revised the law on roads and established the Toll Road Authority Agency (BPJT) as regulator in 2004. This law puts Jasa Marga only as operator and it has to compete with other investors if it wants to construct toll roads. It really attracts the private sector to invest in toll roads.

The key problem apparently being that interest rates for borrowing for Indonesian projects are high, demanding a high rate of return from projects.
 

Meanwhile, the Jakarta Globe reports on lending having been approved for a new 34km toll highway southwest of Surabaya.

Decline in demand but increase in revenue on Jamaican toll road

According to Go Jamaica, the Toll Authority of Jamaica has reported a third consecutive annual decline in traffic volumes on its tolled highway. The report says there has been a 5% average decline in 2010/2011 compared to the previous year. However, revenues are up by over 4%, presumably due to higher tolls or longer trips taken by those vehicles on the road. I went to the Authority's website to learn more, but it is not kept up to date, with the latest news release being in November 2010, and there being no annual reports published on its website (or not easily found). Hardly a model of transparency, or maybe this isn't seen to be a key distribution channel to supply information.

It's not easy to find Jamaica Infrastructure Organisation's website, but it does have some more information. JIO is the name of the concessionaire company responsible for the three toll roads. It has up to date prices. Which even its regulator hasn't got. There is even a frequent user discount.

Connecticut

Tri-State Transportation Campaign reports that Connecticut is engaging a US$1.4 million study of congestion pricing along the I-95 corridor between Greenwich and New Haven. An additional US$800,000 study will examine road pricing along I-84 in Hartford. Both studies, funded by the federal government, will take approximately 18 months to complete and will look at congestion pricing in the two corridors, which is expected to focus specifically on the feasibility of high-occupancy tolling (HOT) lanes.

The Milford-Orange Bulletin reports on some interesting background to tolling this stretch of highway:

Connecticut abolished its tolls in the 1980s, in part as a result of a horrific 1983 crash on I-95, in which a truck plowed into a line of cars at the Stratford toll station, killing seven people. The federal government also threatened to withhold transit money if the state did not remove the tolls.

Commuters who pass through the Interstates 91 and 95 interchange in New Haven experience a total of 5.7 million hours of delay per year, while commuters who pass through the Bridgeport-Stamford corridor suffer 16 million hours of delay per year, (Bureau of Policy and Planning Bureau Chief Thomas J.)Maziarz said.

The average length of the southbound I-95 traffic congestion at 8:30 a.m. on a weekday, which the DOT has identified as the peak time for traffic, is 20.3 miles, he said. Congestion is defined as an area where traffic moves at 30 mph or less. 

 

Just another Interstate highway which might get tolls introduced to provide a congestion free option, with additional revenue.

Italy

Dow Jones reports that toll road operators Atlantia has said that highway traffic on its Italian toll-road network declined 8.7% in the first three months of the year from the same period in 2011.

Namibia

The Namibian Economist reports that the Namibian government now has the facilities to collect road user charges at its national border crossings.   Why is this interesting?  Because Namibia has a VMT (vehicle mileage tax) system, or rather a weight-distance road user charge for all vehicles over 3.5 tonnes.  The rates are here.   Starting at N$0.07 per km (US$0.009) it appears to work by prepaying in 100km increments, correlated to odometers.  All of the revenue is dedicated to a roads fund which is required to prioritise spending on maintenance and renewals above everything else.

Nevada


The Las Vegas Sun reports that the state is considering options to allow toll lanes and roads. This includes "added lanes in Clark County on Interstate 15 from Sahara Avenue to Rancho Drive at an estimated cost of $400-$500 million".  These would be toll lanes, with existing lanes remaining untolled. Bill Hoffman, assistant director of engineers for the Nevada State Transportation Department said "allowing a private firm to do this project could cut the cost by $100 million, create 4,100 construction jobs and get the project completed more quickly. He said firms that design, build and maintain projects due a better job since they know they are on the hook for the maintenance costs."

Orange County, California

The LA Times reports that operators of toll roads in Orange County are planning to convert to fully electronic free flow tolling in the next 16 months.  The plan is for all users to have accounts, either with tags or number plates, with occasional users having to pay within 48 hours of usage or face being fined.   The roads affected are route 73, 261, 241 and 133 toll roads.

Toll prices were increased on 1 July already, and the drive to eliminate manual tolls is intended to reduce operating costs, as well as improve flow by eliminating stopping at tolling points.

Spain

Spanish toll road operator Abertis is interested in new PPPs with the Spanish government as the latter seeks private sources of finance to kickstart new infrastructure projects due to a lack of public funding. An article from Reuters make a number of interesting points about the presence of Abertis in the tolling market:

- There appears to be low interest in refinancing debt stricken toll roads in Spain as “Chairman Salvador Alemany played down the possibility of extending its Spanish motorway concessions -- two of which expire in 2019 and 2021 -- in exchange for helping the government resolve highly indebted Spanish toll roads”;

- The US, Brazil and Mexico are key target markets for growth;

- Portuguese operator Brisa is no longer a strategic asset, but Abertis will “not sell at current market prices”.
It is undoubtedly a difficult time for any investor in toll roads in the south of Europe, but also an opportune time to diversify, as long as there are decent prospects for growth, a steady core business and a stable business environment.

Toronto

The Star reports that the Toronto City Council has voted to “develop a long-term funding strategy" that would outline “a diverse array of public and private revenue tools” to finance rapid transit expansion.” This includes the role of tolling including options to introduce road pricing on existing roads.

In parallel, “Metrolinx, the province’s regional transportation authority, is also working on a strategy to pay for a massive public transit expansion throughout the Greater Toronto Area and Hamilton… Metrolinx has until June next year to develop a funding framework. Options under study include road tolls and other forms of congestion pricing, a levy on commercial parking spaces, a regional fuel tax, express lane fees and a regional sales tax.”

Here is hoping that it takes a wide strategic view of how to proceed, because for people to accept any form of road pricing on existing roads, they tend to need to see that at least part of the money goes on roads or offsets other taxes.  However, it's clear that one big issue will be governance.  What happens if the city and Metrolinx want conflicting approaches?

Uganda

China Daily reports that the Chinese Government is providing a four year loan for a 37km highway (with a 13km spur) from Entebbe Airport to Kampala that is estimated to cost US$350 million to build. It is described as a “world class superhighway”, and will have manual tolling. One criticism has been the condition that construction contracts be granted exclusively to Chinese companies. The existing route is regularly congested.
Vancouver


According to North Shore Outlook North Vancouver District Mayor Richard Walton supports introducing road pricing as a sustainable source of future income to replace property taxes:

Tolling stations, Walton said, could be located every five kilometres — not just at bridges — or at highway onramps and offramps. And incentives can be built into such plan. For instance, trucks transporting goods over the Port Mann Bridge after 10 p.m. could be exempt from any charges, therefore making night travel more attractive and lessening traffic congestion during the day.

It would take, Walton admits, some time to implement a comprehensive road-pricing arrangement and motorists would need time to make any alternate plans.

But it could mean a move away from using property taxes as a way of funding transit shortfalls, a crutch mayors are clear they will not entertain any longer.

Of course it raises the wider political issue as to whether motorists are happy paying a charge which is used to subsidise alternatives. I would argue strongly that if it is about replacing existing taxes and also helping to fund at least maintenance of the roads concerned, then it will be far more acceptable.  

Gothenburg

Further to an earlier report, a press release from the firm has confirmed that Q Free is supplier for delivery of road side equipment, infrastructure and service and maintenance for 2 years with an option for additional 6 years for the forthcoming Gothenburg congestion charging scheme.  The price is NOK 143 million (US$25 million).

India


Fitch ratings has released its latest report on Indian toll roads.  Highlights include:
- First-year actual traffic levels are a strong indicator of the accuracy of traffic forecasts and hence of a project's economic prospects;
- Traffic volume forecasts are systematically over estimated, because of sponsor bias, lack of data and lack of analytical rigour.  Some cases see traffic 45% below forecasts.
- High inflation has meant inflation-proof toll increases have mitigated low demand, but demand elasticity responses to ongoing increases are unclear;
- Most projects are highly leveraged so highly susceptible to failure to meet forecasts;
- Even given short term pressure, most projects retain long term capability to service debts;
- More recently some concessionaires have been allowed to toll completed segments once 75% of a project is completed, which mitigates some of the current challenges.

London

The Evening Standard reports that embassies in London have now accumulated unpaid charges and fines for London's congestion charge worth a total of £58 million (US$91 million).  Those that do not pay claim it is a tax, so diplomats are exempt from paying it.  However, some embassies do pay.  The biggest debtor is the United States, which owes £6.1 million, followed by Russia, Japan and Germany.   Curiously a website from the Liberal Democratic Party claims that the US embassies in Oslo and Singapore do pay the toll and road pricing charges in those cities, but then again Oslo is clearly a toll paying for specific roads, and Singapore road pricing is also a charge metered on usage.  Maybe the next major change to the London scheme should be to render it more similar to the others?  Of course in Stockholm, foreign registered vehicles are exempt, so making that comparison is not possible.   Around 50 embassies refuse to pay in London.  Of minor interest to me is that my country of birth, New Zealand, does pay, but Australia doesn't.  This link shows a list of those who have not.  Curiously as well, South Korea doesn't pay, but North Korea does (or doesn't drive into central London at charging times)!

South Africa

There continues to be extensive debate about tolling in South Africa, with two recent reports indicating strong political resistance to expanding tolls. One report from the Independent Online claims that the KwaZulu-Natal (a South African provincial government) Department of Transport will continue to oppose plans to introduce tolls on roads along the “Wild Coast”. Meanwhile the City of Cape Town is reported to still be interested in taking two cabinet ministers to court following plans for tolls to be introduced as part of improvement proposals for existing highways in the city (the Winelands project involving the N1 and N2) from the South African National Roads Agency Ltd (SANRAL).  The City is claiming that SANRAL did not adequately address its concerns through its disputes resolution process.  There is another political dimension here.  Cape Town is governed by the Democratic Alliance (DA), South Africa's leading opposition party (the national government is of course governed by the ANC).  This battle is, in part, about the DA challenging the dominance of South Africa's ruling party.

Meanwhile, the trade union federation COSATU has been driving protests against tolling, but this article from South Africa Report doubts the union will achieve its aims.  It says that COSATU's position is "rooted in its opposition to privatisation" and it presumably sees user pays as part of that (and reflecting that SANRAL is a commercial, although state owned, company).   It also highlights some debating points from Deputy Transport Minister, Jeremy Cronin, of the South African Communist Party, who makes some interesting points arguing why tolls can be justified.  One such point being that the alternative is general taxation, with everyone, including those who cannot afford a car, paying for what is a facility predominantly used by the relatively affluent.   Another being that if tolling is to promote mode shift, other modes must be available and be of good enough quality.

IT Web South Africa reports that the toll cap for the Gauteng Freeway Improvement Project only applies to vehicles paying with a tag and beacon account, not those paying through ANPR detection.  The articles also describe how the opposition Democratic Alliance is opposing tolls, and how SANRAL is dealing with misinformation about payment options.

Toronto

The world's first fully electronic free flow toll road (ETR 407) is to be extended with the Highway 407 East project.  It will be extended in two phases, the first a 22 mile extension east to Oshawa, the second extension to Highways  35/115, according to the Montreal Gazette.  SNC-Lavalin has been named as the preferred consortium to design, build, finance and maintain the tolled extension.

An article in York Region.com suggests it could be based on two surveys.

A survey conducted by Leger Marketing for the CBC found half of Canadians surveyed said they would pay $3 a day for road tolls. 

Another poll, conducted by Angus Reid for the Toronto Star, showed 37 per cent of Torontonians moderately support and 18 per cent strongly support the idea of a congestion charge.

However, as optimistic as this may look for advocates of congestion charging, I would prefer to be sceptical.  The CBC poll talks of road tolls, but most people see tolls as something paid for on a new road.  Would that many support new tolls on existing roads?  The Toronto Star poll is more compelling, and does seem to give a mandate to look at options in more detail.  The Greater Toronto Civic Alliance seems supportive, as it is seen as one solution to growing congestion and to help fund public transport improvements.   Other opinions expressed are mixed.  However, Toronto does have one advantage - the 407 toll road was the world's first fully electronic free flow toll road in the world.  So silly arguments about technology can be avoided, but what could you do in Toronto?

The city is fairly flat and whilst there are some natural boundaries to the south and east the west and north have no obvious urban boundaries for a city centre congestion charge.   The Google Earth image below shows how the city actually melds from residential to commercial rather organically.  Putting charges on roads to the north and west would be artificial.

This suggest a wider solution is needed, such as distance charging, perhaps as an option at first to replace other taxes.  The problems of Toronto are not unusual, but it still remains that no city has yet implemented distance based congestion charging, primarily because of the cost and complexity of dealing with vehicles from outside the city.  Vehicles not registered or equipped for distance charging still need to be charged.

Hopefully Toronto will take a very open approach to this, but I think the whole province of Ontario needs to take a lead and see this issue as being one of how to charge for road use in the future.  For it would be far more effective to implement distance charging for the whole province than for Toronto on its own.

The Daily Telegraph reports that the UK city of Bristol is proposing a levy on parking spaces at workplaces in the city to help fund a bus rapid transit system. The intention is that it can raise £27 million from 10,000- 12,000 parking places. The charge would be effectively a tax of £1 a day imposed on owners of the parking places. Whilst it is driven by revenue, it is also hoped it will encourage a switch to public transport. The bus rapid transit system is estimated to cost £194 million, with £15 million to come from existing local authority funding sources and the remaining £152 million would come from a grant from central government if approved.  The programme this is being considered under was the same one Manchester was seeking to gain funding from if it had voted for a congestion charge (workplace parking levies are seen as a form of demand management like congestion charging).  Whether this controversial measure actually proceeds in Bristol is unclear, although Nottingham has managed to introduce it.   This isn't a form of road pricing, it is a tax on parking, so isn't strictly within the remit of this blog.

The big transport issue in Toronto today is the battle between the Mayor and the Council over spending on public transport improvements.  He wants a new light rail line to be underground.  The Council disagrees.  However, one of the options under consideration to pay for any of this is congestion pricing according to the Globe and Mail.

Missouri

TV station KOMU reports that Missouri Senator Mike Kehoe is sponsoring a bill to turn I-70 into a toll road. The story says tolls would charge US$0.10 – US$0.15 a mile with the intention being to fund at least US$2 billion renewals on the road.


North Carolina


Trucking website Landline reports on concerns that tolling I-95 in the state would raise far more revenue than is needed for the proposed reconstruction and upgrade of the highway.

According to documents provided by the state, tolls would last for 40 years and bring in approximately $30 billion. That is nearly double the combined $4.4 billion in reconstruction costs plus the $10 billion to $12 billion in ongoing lifecycle maintenance of the roadway.

This suggests a bit more effort is needed to demonstrate what will happen with revenue beyond that forecast or whether tolls will be adjusted to avoid this.

Atlantia

Bloomberg reports that Italian toll road owner Atlantia has signed an agreement with freight operator Gavio SpA for Gavio to buy Atlantia’s share in construction firm Impregilo (which owns concessions in Argentina and Brazil). It also includes an option to buy Atlantia’s Turin- Savona toll road.  This follows the drop in Atlantia's credit rating which parallels concerns about demand on its main asset - Autostrade - which owns and operates most of Italy's national toll motorway network.  Atlantia is driven in part to expand its shareholding in South American toll roads by gaining control of its subsidiary.

Bloomberg also reports "Gavio’s Societa Iniziative Autostradali & Servizi (SIS) toll-road unit will shift its 45.765 percent stake in Autostrade Sudamerica, which controls Chile’s Autopista do Pacifico motorway, to Autostrade per l’Italia for 565.2 million euros...Autostrade per l’Italia will also buy a further 8.5 percent of Autostrade Sudamerica from Mediobanca SpA (MB) for 104.6 million euros, Atlantia said."

Greenbang claims to be the "smart technology website" so it is understandable when it published an article about a future using intelligent transport systems (although not called that) to better manage traffic.  However to say that in respect of congestion "the traditional response has been to build new roads, expand mass transit or institute congestion pricing" is a little off the mark.  Build new roads and expand mass transit, yes.  However, is congestion pricing traditional?  Maybe in Singapore, as it has been around in one form or another since 1975, but when the number of cities that have implemented it remains less than 10, it is hardly "traditional".  Whilst congestion pricing isn't the silver bullet to congestion, no single policy measure is likely to be more effective, and given the lack of widespread lack of implementation in part because of concerns around cost and technological complexity, I would have thought Greenbang could do better embracing congestion pricing rather than dismissing it (especially since no city other than Singapore has really introduced a sophisticated congestion targeting form of congestion pricing across a network).

New York Times writes about HOV to HOT lane conversions


An interesting article has been published in the NYT about a few of the implementations of HOV to HOT lane conversions in the US.  It writes about the Atlanta I-85 dynamic HOT lanes and moves in California and Virginia to remove the toll exemption for first generation hybrid vehicles.

Toronto is well known to tolling professionals as being the site of the highly successful 407-ETR toll road. Leased to a private consortium, it was the first fully electronic free flow toll road in the world. You may think that Toronto may be fairly open to more tolling, even tolling new lanes.

According to Inside Toronto, the Deputy Mayor of Toronto City, Doug Holyday has been promoting widening the Don Valley Parkway and tolling for the additional lanes.

However, the proposal was rejected by the council.

What a pity. It at least deserved some investigation into whether it would be financially viable. Building new toll lanes could theoretically mean the lanes might pay for themselves, but most importantly, it means those benefiting the most, pay for it. An economic argument can be made for the lanes to not have to be fully funded by the toll, as other users of the road benefit from some users paying to use the toll lanes instead of the existing lanes. In fact, the principle is little different from a brand new road.

If a city can’t even agree to new capacity being tolled, it is difficult to see how it would even consider congestion pricing.