Friday, 5 February 2016

Bergen implements congestion charging on its urban toll system

Martin Standley informed me that Bergen has introduced congestion charging on its urban toll ring as of the 1st of February.  This is not a new charge or tolling system, just the evolution of the Bergen toll ring into effectively an urban congestion charge.  The system has 11 charging points.

A map of the tolling points is here.  Road users either use the Norwegian DSRC toll tag account system AutoPASS, pay online up to 3 days after crossing a tolling point or subsequently receive a bill by post (after number plate recognition has detected your vehicle's chargeable activity).

The system has been fully electronic free flow since 2004, and congestion charging applies between 0630-0930 and 1430-1630 (yes you read correctly) weekdays.  The peak charge is 2.3-2.6x higher than the basic charge.  The fee for heavy vehicles (all above 3.5 tonnes) is double that for light vehicles.

The purpose of the congestion charge element is to, unsurprisingly, reduce congestion and lower emissions.

The Bergen "toll company" website explains how Bergen has had tolls since 1956 to fund various road projects, but the Bergen toll ring commenced operation in 1986 as the first toll ring in Norway. 

Thursday, 4 February 2016

Belgium's heavy vehicle road user charge to start 1 April

Belgium looks set to be the 11th country in Europe to introduce a distance based road pricing system (legally a toll in EU Member States) on 1 April 2016 (counting Switzerland, Germany, Austria, Czech Republic, Slovakia, Poland, Russia, Belarus and Iceland).

Belgium will withdraw from the Eurovignette system after that date, as all vehicles with a gross vehicle weight of over 3.5 tonnes will be required to have an On Board Unit (OBU) to pay the new "kilometer charge" which has been branded as Viapass.  Although not all roads in Belgium are subject to the charge, it will be a legal requirement to have an OBU for any heavy vehicles using any roads in the country.  Uncharged roads are technically tolled subject to a zero Euro tariff.  Around 3,000 km of roads will be charged.

Viapass logo
It is not being implemented by the Belgian Government, but by the three regional governments of Belgium of Wallonia, Flanders and Brussels.

Purpose of the charge

The primary reason given for the charge is that it will better reflect the costs imposed by heavy vehicles on Belgium's road infrastructure, particularly the costs imposed by foreign vehicles (as Belgium has considerable transit traffic passing between countries and to and from its ports).  Distance based charging (compared to the Eurovignette) more directly reflects volumes of traffic and can also better incentivise more environmentally friendly vehicles (as experience in Germany indicates). 
All revenues are treated as revenue attributable to each regional government (based on distance travelled in each region). 

Basis for the charge

All vehicles with a Gross vehicle weight of over 3.5 tonnes will pay by distance based on:

- Weight;
- Euro emission rating;
- Road classification.

The tariff schedule is below in Euros per kilometre.  The weight refers to the full configuration of the vehicle (powered and trailer unit).  As you can see, charges vary by weight band and Euro rating on a logical basis (heavier costs more, as does the more polluting engine rating).  

Slightly more interesting is the higher set of charges for distance travelled in the Brussels urban area not on major highways, this appears to clearly reflect an interest to disincentivise the use of local arterial roads and streets by heavy vehicles (to reduce congestion contributed by heavy vehicles and the exposure of pedestrians and residential areas to pollution from such vehicles).

Curiously, in Flanders and Brussels the charge is legally a tax, and not subject to VAT, but in Walloon where roads are managed by a private company it is legally a fee, so is subject to VAT (as it is a fee for a service provided).
Belgium heavy vehicle road user charge tariff table
Walloon region charged road network
Flanders region charged road network
Brussels metropolitan charged network (all roads, different rate for peripheral highways
What's significant about the Belgian Viapass system

Viapass will be the 11th distance based heavy vehicle road charging system in Europe (counting Belarus, although it includes foreign cars in its system).

Viapass will be the 5th GNSS assisted (Switzerland being assisted), and 4th GNSS based heavy vehicle road charging system in Europe (and the 6th in the world - counting the GPS options for New Zealand and Oregon systems).

Viapass will be the first Benelux country to introduce distance based road charging (after multiple attempts by the Netherlands.

Viapass is the first distance based heavy vehicle charging system in Europe to charge for use of all roads in a city (Brussels - Oregon and New Zealand charge all public roads in both jurisdictions).

Viapass means Belgium withdraws from the multi-country Eurovignette system for heavy vehicles.  The remaining members of Eurovignette are Denmark, Luxembourg, the Netherlands and Sweden.

Belgium was original intending to introduce a vignette (time based charge) for light vehicles across the country, but suspended that element pending the successful introduction of the heavy vehicle charge and a pilot undertaken on distance based charging for light vehicles.

Wednesday, 3 February 2016

D'Artagnan Consulting

I'm pleased to announce that I am now a Principal Consultant at D'Artagnan Consulting LLP.

I joined D'Artagnan Consulting because it is at the leading edge of advice and development of road user charging systems in the United States and increasingly in Australia, with a focus on end to end development from policy development through to support in pilot development and implementation.

I have supported D'Artagnan on its work in Oregon and Western Australia, and am currently doing so in its work with CALTRANS on the California Road Charge pilot program. 

As I have previously, I will continue to be transparent about projects that I have been personally involved in (or which D'Artagnan is advising on).  The purpose of this blog will continue to be to inform and provide commentary on road pricing matters around the world.  I have a backlog of pieces I am pulling together about various locations, with an emphasis on those with the most innovative charging - involving distance based charging in most cases.

In coming days, weeks and months the look and feel of the blog will be evolving to make the links to D'Artagnan Consulting clearer and to make it easier for you to use.

I hope you keep reading and keep informed.

Scott Wilson

Monday, 1 February 2016

Auckland motorway tolls re-emerge as revenue raising option

With news that the New Zealand Government has decided to fund its 50% share of the capital costs of the NZ$2.5 billion (US$1.6 billion) proposed underground rail loop in central Auckland, the issue has emerged as to how the Auckland Council can raise the revenue to pay for its share.  A previously floated proposal of tolling all of the motorways has re-emerged, as it would appear to offer both a source of revenue and introduce a mild form of congestion charging.

Auckland's motorway network
However, it faces some major challenges:

1.  It has been assessed before and been found wanting.  The option of charging motorways only in Auckland was appraised in the Auckland Road Pricing Evaluation Study in 2006.  It concluded that the main problem with this option was that it would divert sufficient traffic onto parallel local roads (a 6% increase in traffic on those roads) to worsen congestion on those roads, exposing local residents to increased pollution.   It also concluded that there would be barely any modal shift (0.1%) (Source: Table 4.5, Appendix 15, Economic Impact Assessment) and that it was the worst performing of any of the options considered in terms of net economic impact (with a BCR of around 0.7) (Source: p6. Appendix 19, BCR analysis).  Indeed it showed that the revenue raised was barely over half of the benefits to users, indicating a net loss - as congestion savings on the motorways are significantly offset by delays on local roads.  Overall speed changes would be less than 1 km/h.

An illustration is seen in the map below, showing how easy it is to use parallel routes between two of the most heavily used points on Auckland's motorway network.  In red is the Southern Motorway with between seven and ten lanes, in blue are the local streets that could be used to bypass part of it.


Southern motorway at Newmarket, with some parallel routes

The conclusion of that study is rather damning (comparing it to cordon charging options and parking levies):

This scheme is relatively simple in concept and targeted in terms of tackling particular congestion problems.  It also provides fewer social mitigation challenges as free alternatives are provided (the uncharged network).

This is, however, a significant weakness of the scheme.  Essentially it reduces the incentives to motorists to change behaviour through switching modes or travel patterns. Instead they simply change their route.  This has the effect of diverting traffic from the strategic network onto local roads and while congestion is reduced on the charged strategic network it tends to increase on the local roads which are the only alternatives to the charged routes.  The higher the charge is set, the more pronounced this effect becomes.  As a consequence the charge which can be realistically imposed is relatively low and the cost of collection represents a high proportion of the charge... Furthermore the cost of increasing capacity on the local uncharged road network is high and more than consumes the net scheme revenues.

In short, it will jam up Auckland's local roads and if the money raise is diverted into the rail scheme, it will leave nothing to fix the local road bottlenecks. 

2.  Motorways are State Highways.  Auckland Council has no authority over them as they are owned by central government.  Without central government authority (which shows no sign of being granted), it cannot happen.  Bear in mind government already effectively charges for using these motorways (and local roads) through New Zealand's weight/distance road user charges for heavy and light diesel vehicles, and fuel tax.


The issue has emerged this year as it is the year of local body elections including Mayoral elections.  Incumbent Mayor, the left of centre Len Brown, is in favour of the proposal, despite there being clear opposition to it expressed by the Government.  Other announced candidates are either opposed or lukewarm towards it, and Len Brown is not contesting the next election (candidacy is still open). 

Clearly the idea is technically fairly easy, as either DSRC technology with ANPR, or ANPR alone could deliver a system with gantries located either at on and off ramps or a series of strategic points along the motorway network, but Auckland's well established motorway network has one major problem - its interchanges are very closely spaced by global standards.  This means it is quite feasible to use motorways for short trips and to avoid motorways for such trips.

My view is that with a few exceptions (e.g. Auckland Harbour Bridge, Mangere Bridge, SH16 west of Waterview) the benefits are likely to be not worth the cost, but then it is not being driven by the objective of congestion management, but revenue raising. 

Auckland Council's primary revenue raising instrument is taxation on property prices (rates).  Given reports of the significant gains that CBD property owners and investors would get from the underground rail loop, it probably is more appropriate to look at rates on the "winners" from the rail project than to adopt a road pricing scheme that may have net negative economic impact.

Wednesday, 13 January 2016

Change is coming

Happy New Year everyone.

It's been a couple of months since I posted here, because I've been pursuing some possible changes to this blog.

2016 will bring a new partnership and a lot of regular new content, with the intention being to have at least weekly content from the 1st of February, with new directories of content and regular updates from what is happening all over the world.

In the past year there have been great leaps forward made in the United States, particularly in piloting and examining alternatives to fuel tax, from distance based charging to maximising the scope of tolls.  Both heavy and light vehicle charging are expanding in Europe, and in Australia serious steps are being taken to look at transitioning away from ownership and fuel taxes to distance/weight based charging.

In Indonesia and China, particularly Hong Kong, congestion charging looks like establishing itself to address chronically severe congestion and help alleviate poor air quality.

There are no websites with consistent regular up-to-date information from all around the world about the economics, politics, policy and technical challenges about direct charging for road use.  This blog intends to become the world's leading resource for road pricing, road user charging, urban congestion charging and innovations in tolling.

Watch this space.

Tuesday, 6 October 2015

Oregon Road Usage Charge - some background

Often ignored in Europe and elsewhere, is the admirable progress made in the state of Oregon towards rolling out road user charging (called "road usage charging" to add to the lexicon of road pricing).  Oregon is, now, charging (some) cars, for using all of the roads across the state, by distance.  Only New Zealand, with the application of its weight and distance based Road User Charge has a parallel (as all diesel powered vehicles, including cars, prepay blocks of distance to use public roads there).  However, unlike New Zealand, which is a charge focused on heavy vehicles, which also captures light ones (because of the absence of diesel tax), Oregon is focused on light vehicles that have very high levels of fuel efficiency (including no consumption of fossil fuels).   It has its eyes very much on the future, as it sees this as replacing fuel tax.

The Mileage Based User Fee Alliance (MBUFA - yes "mileage based user fee" adds to the lexicon, unfortunately) has released its latest newsletter, which handily outlines what it calls the "myths" of the Oregon scheme.

Those on the mailing list for MBUFA got this, but it is unfortunately not accessible on MBUFA's website.   So I have replicated it below, in full (emphasis added where relevant).  Apologies for the US English, commentary follows.

BUSTING MYTHS ABOUT OREGON'S ROAD USAGE CHARGE PROGRAM

The Oregon Department of Transportation is first in the nation to create a per-mile charging system (thanks to Oregon's 2013 Senate Bill 810) that will help fill the widening gap in transportation funding anticipated with declining fuel taxes and rising construction costs. The Road Usage Charge Program will assess a charge of 1.5 cents per mile for up to 5,000 cars and light commercial vehicles and issue a gas tax credit to those who volunteer to participate.

Opinions on this funding model vary, from generally positive to vehemently opposed. And there are many misperceptions about what the program will do. Reactions like these were considered carefully by ODOT and the Oregon Legislature before deciding to implement the program. Next time you come up against a myth about Oregon's Road Usage Charge Program, consider the following.

Myth: It's a new tax, on top of everything else the government charges.

Fact: The road charge works as a replacement for the gas tax, not an additional tax.

Participants in the Road Usage Charge Program will receive a credit of gas tax paid while they are in the program. The system will calculate gas consumed and gas tax paid as it also calculates the per-mile charge. If the two are equal, the motorist pays nothing. If the gas tax paid exceeds road charges billed, the driver will be eligible for a refund. And if the road charge exceeds what was paid in gas tax, the balance will be due from the motorist.

As it stands, the gas tax is becoming obsolete as vehicles consume less fuel. Over time, older vehicles will phase out and the entire fleet of vehicles will become highly fuel efficient, vaporizing the gas tax. Oregon's Road Usage Charge Program is a fair and sustainable funding model that will ensure our roads are maintained safely for every motorist well into the future.


Myth: State government will now track your whereabouts with GPS.

Fact: GPS is not required to participate in the program.

Senate Bill 810, which created the Road Usage Charge Program, does not require GPS. In fact, it demands that at least one mileage reporting option not use GPS, and that motorists be given choices for the devices and reporting services they will use.

With the advent of the smartphone in 2007, many consumers have become more comfortable with GPS technology because it gives them immediate information and services at their fingertips. They may like the convenience that a GPS-enabled device offers for road usage charging-no need to switch "on" or "off" when traveling out of state or on private roads; miles are automatically recognized as billable or not. Other folks are not as comfortable, and they will exercise their choice to not use location-determination technology. Whatever their choice, having options empowers participants to select the plan that best fits their lifestyle and driving habits.


Myth: It is a disincentive to owners of fuel-efficient vehicles.

Fact: These drivers favor the fairness of road use charging.

In ODOT's focus group research (2012-13), electric vehicle owners tended to be in favor of road use charging. They appreciated the fairness of the model as they voiced their concern for maintaining our roads (on which to drive their new vehicles). They agreed that motorists should fairly pay for the roads they use.

While a road charge would be a new bill for them to pay (instead of paying tax at the pump, as they did with their old car), savings in fuel consumption far outweighed the prospect of a road charge. They were just thrilled to not have to visit the pump anymore! Also, multiple incentives were known to be available for purchasing fuel-efficient vehicles, state and federal, which added up to thousands of dollars against the purchase price.

When faced with the realization that the gas tax places greater financial burden for maintaining our roads upon less affluent drivers who purchase vehicles in the secondary market (less fuel-efficient), the logic of a per-mile charge became clear. Some said, "I want to do my part."

Turns out, every driver wants good and safe roads to drive on, no matter what car they drive.


Myth: It's unfair to rural Oregonians who drive longer distances.

Fact: Every driver is different, with no significant net difference between rural and urban.

Some say it would be unfair for rural drivers to pay a road usage charge because they must drive longer distances to do basic things such as go to work, school, medical appointments and the grocery store. While this may be true for some rural drivers, nearly all Oregon motorists already pay a distance-based tax-the fuel tax.

But the fuel tax is not a perfect proxy for road use because it imposes a higher cost per mile on people who drive less fuel-efficient vehicles. Some drivers-for example, those with working vehicles such as pickup trucks-pay much more per mile than others. Someone driving a Ford F250 15,000 miles a year pays $410 in Oregon fuel taxes whereas a Toyota Prius driver pays $90 for traveling the same total distance.

Recent ODOT surveys found no consistent theme for rural driving. Rural drivers are actually quite diverse and have many travel behaviors. Some live in towns or close to them while others live far away on working properties. Some drive short distances and less than urban drivers while others drive longer distances and more than urban drivers.

Bottom line, extremely rural Oregonians reported driving much longer distances for medical appointments and shopping, but that was offset by less frequent trips than their urban counterparts. The net difference? Not much. 

                        
Myth: A government-run system is certain to be problematic and cost a lot of money.

Fact: The program uses private sector vendors to provide high performance at low cost in a competitive, open-market system.

It's true that the cost to collect Oregon fuel taxes averages about 0.5% of revenue-a real bargain! That figure reflects a fully operational, mature program with three million vehicles. And it excludes capital costs associated with establishing the system back in 1919 (Oregon was the first in the country to implement the gas tax, too.)

Operating costs for the Road Usage Charge Program will start out high but using private vendors to manage collection will reduce system costs over time. ODOT expects vendors will use the per-mile charging system as a platform for marketing other products and services, such as pay-as-you-drive insurance, tolling, and travel concierge-or perhaps those services would serve as a platform for the road charge. Many of the costs of system implementation and operation would be borne by the industry, and their customers could benefit from value-added services, discounts, and open-market innovation and upgrades.

It's worth the investment. As the number of program participants grows and the market for value-added services expands, costs will decline substantially. ODOT estimates when the number of road usage charge payers reaches one million, operating costs will drop to below five percent of gross revenues per month.

What's more, by enlisting private sector companies to provide technology and billing service options, program participants will benefit from innovation that is naturally driven by the open market (versus a "closed" system entirely run by the government).

The "connected car" is becoming reality. Many vehicles already have factory-installed telematics systems that could be used to wirelessly report miles driven. In time, motorists may be able to simply drive and receive a bill by email that is bundled with other services, such as insurance, cable, parking or mobile phone charges. They would pay online via smartphone and roll on!

Looking Ahead

Years from now, the road usage charge model could transform the way Oregon drivers pay for the roads they use every day. It offers a way to equitably assess fees based on the value a motorist gets from the public infrastructure. And because technology is advancing so quickly, the system can maintain privacy even while delivering higher levels of service and more seamless ease of use.

No solution, not even Oregon's, can address every set of circumstances. Still, Oregonians are proud to be blazing a new trail-high-tech, responsive and practical-keeping alive our tradition of innovation that stretches back to the days of sputtering Model-Ts, roads of mud, and the nation's first gasoline tax.

My commentary

Let's be clear about what Oregon is not.   It is not a congestion charge and there is no sense that this will be a precursor to charging by time of day or location (although in the long term it is possible to conceive of pathways towards that).   What it is doing is shifting from payment of roads through fuel tax to paying for them directly, by actual use.  It demonstrates a path forward for jurisdictions that wish to transition from fuel tax (or indeed could do so with vehicle ownership/licensing taxes) to usage based charging.

Yes the Oregon scheme has a limitation, with a cap of 5,000 vehicles allowed to move onto this system.  Hopefully, the politics behind this will mean that the cap can be removed in due course, and there can be some expansion of the programme further.

Washington State and California are both watching Oregon closely, and have been undertaking their own work to develop charging programmes.  It is far from inconceivable that both will move forward in broadly similar ways, and if the entire Pacific seaboard of the United States is starting to charge cars by their actual use of the roads, maybe it will be time for other countries to catch up?

Thursday, 9 July 2015

UK government freezes fuel duty again, establishes Roads Fund and fiddles with Vehicle Excise Duty

Since 1936, when the previous Road Fund was wound up, the UK Treasury has been vehemently opposed to any form of tax hypothecation (dedication of revenue for one purpose).  The primary argument against it is that it reduces the flexibility of government in the use of its revenue, and can result in the hypothecated fund having too much money, and so spending on that purpose ends up being wasted.  

It would appear that all of that has been pushed to one side with yesterday's budget by Chancellor of the Exchequer, George Osborne, who announced three measures relevant to the charging and management of roads:

- Reform of Vehicle Excise Duty for cars (the tax on owning cars);
- Establishment of a hypothecated Roads Fund in England with the revenue generated in England from VED;
- Another year of freezing fuel duty.

No, it doesn't mean that there is any move to road pricing soon.  However, the setting up of a Roads Fund in particular will establish a closer relationship between what is paid by motorists (for owning a vehicle if not using it) and what is spent on roads.

Monday, 15 June 2015

Australia: Interest grows in moving from fuel tax to distance charging

According to the Australian Financial Review, in a bold and brave step, the Australian Automobile Association (AAA) has declared that it supports a longer term shift from fuel taxes to charging road vehicles on a distance basis.  This comes on the occasion of the Australian Financial Review sponsored National Infrastructure Summit held in Sydney.

The AAA has 7.5 million members and represents eight subsidiary motoring associations in Australia's six states and two territories, and is essentially a lobby group for private car owners, but it has clearly thought much deeper about the how roads are charged and paid for than many such organisations elsewhere across the world.  It estimates that motoring taxes in Australia (including fuel and ownership/licensing taxes) collect around A$34 billion (US$26.2 billion) per annum, with spending on roads at around A$24.5 billion (US$18.9 billion). 

At present, there is no specific move from the Australian Federal Government to implement distance charging, but the debate has certainly livened up.  At present, the Federal Government is seeking to index fuel tax to inflation for the next two years, which the AAA supports as an interim measure, but AAA Chief Executive Michael Bradley wants the Government to think longer term.

Currently 47.4% of fuel tax collected in Australia is spent on roads (after rebates for major non-road users of petrol and diesel, specifically in agriculture, mining and fishing).  The AAA wants this increased to 50%, but its concern over fuel tax is one of equity.

Mr Bradley said:

"Fuel taxes disproportionately affect regional and poor people. It discriminates by geography and it's a blunt instrument that does not allow for time, distance, mass and location – any of these variables – to be taken into consideration"

It's concerned that fuel taxes fall heaviest on low-income households, particularly those in regional and rural areas with few or no alternatives but to drive. Not only do those motorists face, on average, further to drive than those in cities, but are also less likely to be able to afford the newest most fuel efficient vehicles.  

This begs the obvious question as to whether distance charging would exacerbate that, but the AAA wants such charges linked to providing a service, rather than being treated as just another tax.  It is also supporting the use of congestion charges as part of the system, which will mean lower costs for off peak and rural driving.

The report says:

In a submission to the government's tax white paper, the AAA said roads are the only remaining major public utility not subject to usage charges that can vary by time of day, as is the case for telecommunications, gas, water, electricity and other forms of transport.

Notwithstanding that time of day charging for water is not common, this is the key point.  The AAA is supporting a shift to direct charging that replaces existing taxes and the idea of a trial where users are charged by distance, and get a rebate in fuel tax when they fill their vehicles.

Federal Government has mixed views

According to the news website news.com.au, Assistant Infrastructure Minister Jamie Briggs is "interested" in the idea and seems to want further discussion of it.  His chief concern is around estimates that congestion costs could rise to A$31 billion per annum by 2031, and that building new roads and public transport wont adequately address this.  He said:

“In today’s world we generally accept that you pay for the service you receive. Road pricing remains the exception,” 

This implies a genuine interest in a more commercial, consumer based way of charging for and managing roads.  However, his more senior colleague, Deputy Prime Minister and Infrastructure Minister Warren Truss is much more sceptical claiming that distance based charging using satellites wouldn't pass the "pub test" and that the public wouldn't be ready for charging by time of day.  His quote was:

"I think people still like to be able to visit their girlfriends without the whole world knowing – or their wives knowing,"

This resurrects the widely held fear that such charging would mean an end to privacy as to vehicle trips, even though it is clear that options to preserve this can be maintained.  Still, when rejection is about public acceptability, it is much more intelligent than opposing it outright.

The Labor (opposition) Party's Infrastructure spokesman, Anthony Albanese said road charging would only work if "the right policies were implemented", which has to be the tautology of the National Infrastructure Summit. 

Greater state and private interest

Mike Baird, Premier of New South Wales said that government had to explain the benefits of tolling, and that the state government's priority was to make the wide range of tolls on roads in Sydney more "efficient"

Whereas the Chief Executive of toll road owner, Transurban, Scott Charlton argued that fuel tax income is "drying up" claiming that replacing a 20 year old car with a new one costs the Federal Government around A$350 (US$270) per annum in revenue.  He said:

"The driver of a late model fuel efficient car is paying far less in fuel excise than the driver of a less efficient car ... despite them having the exact same impact on congestion and on infrastructure"

Which is dead right, although some would argue there is benefit in lower environmental impacts, this doesn't address the infrastructure or congestion issues.  Transurban is to introduce a "pilot study" in Melbourne to test the impact of three versions of road pricing on motorists' behaviour.  These are:
- Price per trip/access charge;
- One off charge based on anticipated distance;
- Distance based charge.

Also included in the pilot are variations based on time of day and CBD based charging.  It is unclear how this pilot will work, particularly outside its own roads, but it is clear Transurban sees a business case for supporting wider road pricing in Melbourne.  

Wider issues

Charlton also indicated that mass adoption of driverless vehicles may be expected by 2030, which could change car use and reduce the incidence of second car ownership and traffic levels overall.  

John Daley from the Grattan Institute (a thinktank) has claimed that Austalia has stagnant car use, with statistics from the Bureau of Transport Infrastructure and Regional Economics claiming passenger kilometres by car are stable, which suggests the assumption of continuous growth in car use may be wrong (but also that increased road capacity will necessarily induce more traffic).  

In other words, assumptions about future endless growth in car traffic seem to no longer hold true, at least in the Australian context (although similar observations are being made in some other developed economies).

Studied to death

None of this should be that new, given that the Australian Productivity Commission and the Henry Tax Review have both recommended a shift away from fuel and ownership taxes to distance based charging.  The problem for Australia is jurisdictional.

Fuel tax is charged at the Federal level, so moves to replace that would have to come from that level of government, although the size of the country and the complications of having States with varying degrees of interest in distance charging means that there is some reluctance at the Federal level. However, vehicle ownership/licensing/registration taxes are charged by States, which suggests moving from those taxes to distance charging could happen at the state level.  Yet, it is far from clear that it would be worth it just to replace much of those taxes at the state level.

The suggestion of a pilot at the Federal level would make more sense, but what is needed is not just a strategy for charging, but what to do with the money, how charges will be set and how to transform roads into a service.  If one state can work with the Federal Government, and start a pilot which addresses both fuel and ownership taxes, it would suggest that there could be some way forward. However, Australian politics typically sees different parties governing at state and federal levels. 

The clear impression is that the Federal Government is waiting on a state pushing for distance charging, whereas states are more enthused about a Federal push.  For now, it appears more discussion is the future, with the hope that the more it is talked about, the more work might be done to make some progress, implement a pilot, and start a transition down a path of reform that can be largely agreed upon.

That would mean:
-  Option to replace most of ownership taxes with distance based charges;
-  Partial rebates of fuel taxes for those paying distance charges;
-  Creation of new structures to set charges, distribute revenues and for roads to be managed on a more commercial basis;
-  Options to move from pilot trials to full scale charging either by geography, vehicle type or some combination of both.


Tuesday, 9 June 2015

Dartford Crossing issues

I was invited by BBC Essex radio to be interviewed on the James Whale breakfast show this morning, specifically about the Dartford Crossing - the UK's busiest tolled crossing - because of a range of issues arising from its conversion to fully electronic free flow tolling.

A recording of the programme is here (and will remain for 30 days) and the segment I was in starts at 2:11 into the programme.

Regardless, I thought it might be useful to write a number of key facts about the Dartford Crossing given the debate in the county.  It is clear the toll remains highly unpopular, not least because it was original sold to road users on the basis that when the capital costs of the crossing were repaid, the toll would be removed.  The first single lane each way tunnel was opened in 1963, followed by a second tunnel in 1980, which was connected to the M25 on the northern side in 1982 and southern in 1986. Subsequently, the Queen Elizabeth II Bridge was completed in 1991.  



As effectively the only tolled section of London's only ring motorway - the M25 (although technically the crossing is not part of the motorway, in practice it works as part of it), it is controversial, because there are no alternative local crossings of the Thames by road for another 12-15 miles west, at the heavily congested (untolled) Blackwall Tunnels.  Local cross Thames traffic must use the tolled crossing, although a discount scheme means residents of the Dartford and Thurrock Boroughs can pay £20 a year to get unlimited use of the crossings.

Dartford Crossing charges with and without an account.


Dartford Crossing facts
  • The Dartford Crossing raised just over £80m in gross revenue in 2013.  This revenue is accounted for in Department for Transport accounts, but it not dedicated to any specific purpose.  Given around £40m is spent per annum on the Crossing and its associated approach roads, it is reasonable to assume it offsets this.
  • The Dartford Crossing design capacity is 135,000 vehicles per day, it currently just exceeds that;
  • It cost £384 million to design, build and operate the free flow tolling system for the next seven years, but it did cost around £26 million per annum to operate the previous system;
  • £42.5m was spent on the Dartford Crossing in 2013, of which £26.7m went to Connect Plus, the British/Swedish/French consortium that holds the PFI contract for the upgrade and maintenance of the entire M25 and the Crossing.  Another £15.8m was spent on capital improvements to the crossing  for fire safety and for the introduction of free flow tolling;
  • Connect Plus subcontracts management of toll collection of the Dartford Crossing to SANEF, a French company that owns and operates many motorways in the northeast of France;
  • There is currently a 10% non-compliance rate, but after one year this should be expected to come down. In the first year of the London Congestion Charge, just over 5% of chargeable events were violations.  Good practice at free flow tolling roads elsewhere is around 2-3% non-compliance rates;
  • Around 3% of vehicles using the Dartford Crossing are foreign registered vehicles;
  • 22% of foreign lorry trips, and 40% of foreign car trips currently do not pay, but around 18,716 vehicles are being pursued for unpaid tolls through a European debt collection company;
  • 10% of penalty charge notices were reported unpaid in December 2015;
  • The system of detection is purely using Automatic Number Plate Detection (ANPR) cameras, which now can achieve accuracy readings of over 90% (some of the latest systems achieve 98% accuracy), although the actual accuracy of the Dartford cameras is unreported;
  • According to DfT calculations, the benefit/cost ratio of converting to free flow tolls at the crossing is over 4:1. 84% of the benefits come from travel time savings;
  • Congestion costs at the Dartford Crossing are estimated to be around £15 million per annum
  • Proposals for a new crossing range in cost from £1.2 billion to £3.4 billion, and all options include full or partial funding from tolls.  At the current schedule for development, a new crossing will not be completed until 2025. A preferred option is expected to be announced later this year.
The options A and C in this map are now the ones under consideration for the new Lower Thames Crossing

Call for much wider road pricing in London

London's congestion charging scheme is world famous, in the esoteric world of road pricing, because it was the first major Western city, to adopt charging of existing roads.  Its success is such that it ceased to become a political issue after its implementation, (notwithstanding the poorly targeted Western extension of the original central charging zone, which was scrapped by the current Mayor Boris Johnson because of local unpopularity and modest traffic impacts). 

Discussion about expanding the scheme further has been largely limited to the Green Party, which as a vocal minority has keenly supported an ambitious concept of charging cars and trucks by distance largely to penalise such traffic to reduce congestion, and to raise revenue for its own preferred projects to favour cycling and public transport.  Whilst this would make a significant impact on the environmental impacts of road transport (and congestion), it would appear to reflect more of an ideological opposition to motorised road transport that involves private cars or lorries, rather than an interest in optimising the use of the network or an efficient level of pricing.   

Yet the merits of road pricing are widely acknowledged not only by some environmentalists and opponents of growth in motorised road transport on the political left, but also laissez-faire free-market proponents who are more neutral about growth in road transport on the political right, who believe in more efficient allocation of road space.

So it is interesting to see Baroness Jo Valentine, Chief Executive of lobby group London First, in the Guardian advocating a vastly expanded road pricing scheme for London

London First is described as:

representing the capital’s biggest employers in financial services, property, transport, hospitality and retail, along with its universities. Its stated aim is “to make London the best city in the world in which to do business.”

The article cuts across a number of major issues for London, such as housing and governance, but transport is always a big issue.  

Baroness Valentine proposes a radical expansion:

“You need pan-London road pricing,” she says. “Probably not right out to the M25, but to the north and south circular. The population’s growing, the roads are never going to keep up with the natural growth in demand, so you’ve got to ration it in some way. I would do more sophisticated road pricing than we have at present more widely. You’ll get a version of it with the new river crossings, if those are ever built.” Again, she thinks the sums would soon add up: “If you relieve congestion in London, that produces economic benefits and the Treasury benefits too.” 

How could you expand pricing to the A406/A205?

There could be a few different ways of doing this.  The existing zone is relatively tiny in the context of greater London, as seen below

Existing London congestion charge zone

Expanding out to the North Circular (A406) and South Circular (A205) roads would be a significant expansion of the charged area, as can be seen below. 

London congestion charge if expanded to the "circular" roads.

The most economically efficient way of doing this would be with distance based charging, that had a time and location element to it, but to do this would require the use of either dedicated on board equipment or the realisation of the concept of using a mobile phone app, securely linked to the vehicle, to enable such charging.  The potential to cleverly target congestion, discouraging "rat running" on local roads and maximising utilisation of the network is considerable.

The bigger problem is dealing with occasional drivers into the zone.  Having a single flat charge, as exists with the current congestion charge, to be effective would need to be high, and so excessively blunt for those crossing the outer cordon (or taking a single trip within the area).  An alternative would be to adopt an Italian style multiple zone scheme, splitting the area within the ring roads into multiple cordons, so that motorists pay to cross multiple zones.  Of course, any multiple zone system creates distortions at the boundaries of zones, so design would have to be careful to minimise these.

However, any options to create a new congestion charge based on existing ring roads have their own difficulties, because in all cases they involve compromises.

The first point to note is that at the eastern end, the two roads don't meet up over the Thames, but are connected by a free car ferry which is wholly unsatisfactory as a major arterial crossing in a major city.  However, one option could be to adapt the route to be bounded by the A12/Blackwall Tunnel or to build the proposed Thamesmead Crossing to bridge the gap.  Another point is that parts of the North Circular and all of the South Circular roads are far from being dual-carriageway grade separated main highway standard, but are actually residential streets in many cases indistinguishable from neighbouring ones.  Quite simply, if these roads are meant to carry traffic around a charging zone they are severely inadequate in some locations, as can be seen below.  The blue lines are where the roads are 2 or 3 lanes each way, grade separated, the red lines are where the roads are either not grade separated (and have significant bottlenecks) and between 1 and 3 lanes each way.  Note also the gap to the east.  

Gaps in London North and South Circular roads

A simple approach would be to create a second charging zone outside the existing one, but that would only penalise movements from outside the zone to inside it, not around it.  Of course the lack of any real differences between outside and inside the boundary in some locations would make such a charge quite arbitrary.  Look here at the suburban commercial district Forest Hill, which would be divided by a road that is indistinguishable.

Forest Hill, red line is the south circular road
Assuming that the billions of pounds needed to build serious orbital highways to fix this aren't going to come soon, if at all (given it would involve heroic levels of tunnelling), then it is difficult to envisage a congestion charge being introduced to the South Circular road without it causing serious disruption along that route.

Vignettes?

None of this is a reason not to consider various options, one floated is a "vignette" whereby motorists from outside London pay to cross the greater London boundary (which could mean most journeys within the M25 ring motorway), although the congestion reduction impact would not be significant beyond that point.  However, once again, it could be a start, charging both to use a vehicle within London and for entering London, although what is the value gained from such a blunt move?

Better deal for motorists?

What will be essential is to link any charge to delivering a better standard of service to motorists in London.  A lot of money is being spent on upgrading intersections in London, by and large to accommodate cyclists.  For safety reasons (and because of significant increases in cycling at peak times), some of these projects are justified, but in some cases they are increasing motorised traffic congestion.

Jo Valentine is a cyclist, but says that the current programme to reallocate road space on many routes to dedicated (and in some cases segregated) cycling lanes also imposes costs on other road traffic, in the form of congestion.  From 1996 to 2009, central London has seen approximately 25% of its road network capacity transferred to walkways, cycleways, bus lanes or public space (Source: Travel in London Report 4, 2011, Transport for London, Figure 4.12), although over than time demand for that road space has declined by about 12% (in significant part because of the congestion charge) (Source: Travel in London Report 4, 2011, Transport for London, Figure 4.13).  In effect, it means the congestion charge has meant reallocation of road space has been more tolerable than it would have been otherwise.  

I couldn't source readily the most up to date data on central London traffic figures, but extrapolating from 2007 data which indicated that 42% of motorised vehicle trips are chargeable, it appears that around 21% of vehicle trips into central London are by cars that are not exempt or 100% discounted from the congestion charge (because of disability or being ultra low emission vehicles).  So the scope for modal shift in central London appears to be low.  This is hardly surprising, as driving in central London is notably slower than using the Underground or cycling until after around 10pm and before 6am.

So if there are going to be more charges for motorised road users, there needs to be a consideration of using much of the new revenue either to offset other charges or to improve roads, either by addressing bottlenecks (the Bounds Green bottleneck on the A406 seems obvious), or by more tunnelled highways to take traffic away from pedestrians, cyclists and town centres.

The potential is there for traffic congestion to be significantly improved in London through charging, but the quid pro quo needs to be for the revenue from charging to be recycled either by reducing other taxes (e.g. the council tax contribution to road maintenance) or addressing the major shortfalls in the network.  The Greens understandably want to use congestion charging in London as a stick to relentlessly contain road traffic, but I believe most of their objectives can be achieved by taking a more consumer led approach.

It's time to talk about roads as a utility.