California's Road Charge - A study in policy paralysis

Forbes Magazine recently published an article headlined "California Mileage Tax—Pilot Programs And Permanent Policy Inertia" by Andrew Leahey. It noted that California has been studying road user charging (which it calls Road Charge for a reason that is banal and barely worth noting) for nearly 10 years and there is next to no indication that the state will be implementing distance based road user charging soon. 

This is despite nearly hysterical media coverage in recent weeks because of legislation that will essentially continue the status quo for another decade.  This is adequately answered by this article in The Californian, but it is fairly damning of the California Road Charge program that this sort of coverage repeats.  

The idea that it would be "extremely intrusive" to implement RUC is highly misleading. The idea that it is "inequitable" to charge according to how much distance is travelled, is extraordinarily simplistic (after all, what does the gas tax do?), the idea that rural locations will suffer the most was refuted by research undertaken by RUC America years ago. What is unfortunate is that so much work has gone into pilots and studies in the state, but poor knowledge about the concept remains.

California has run pilots which have demonstrated success and generated plenty of useful data. The first pilot was one I worked on, which had over 5,000 participants, testing a range of mileage measurement and reporting options, and considering what the public response was to it.  Since then California has run further pilots and studies, all examining more detailed elements of how "Road Charge" might be implemented, but there is no political mandate to actually introduce it.

In short, while many politicians and public servants know that California will have to introduce a means to charge electric (and hybrid and more fuel efficient vehicles) to use the roads, and it almost certainly will involve charging by distance, the actual political courage to advance it to implementation isn't there. As a result, there is a willingness to keep a program of investigating road user charging going, in perpetuity, until the time comes.

In the period California has been studying road user charging, Hawai'i has piloted and implemented an actual revenue raising program (as of last year), albeit it is currently an option for EV owners instead of paying a flat annual fee.  Likewise Virginia has implemented a revenue raising program, as has Utah (Oregon was already operational in 2015).  Iceland has gone from investigating to rolling out road user charging for ALL vehicles on all roads as of the past month.

Meanwhile, 4.3% of light duty vehicles in California are EVs, 5.4% are hybrids, 1.3% PHEVs (Source). That's around 34% of all light duty EVs in the United States.

There are no great technical issues hindering the introduction of Road Charge in California, but rather political ones, which seem astonishing in a state where the Democrats have 75% of the seats in the State Assembly and State Senate, as well as the Governorship of the state.  

California's Road Usage Charge Technical Advisory Committee was set up by legislation in 2014 and a Bill before the State Assembly will extend it till 2035.

Leahey's article states:

What is really being tested is not a system, or the finances, or even the equity. What is being tested is political tolerance. The pilot is determining how long the state can talk about a road usage charge, create advisory boards, and extend pilot frameworks without triggering significant backlash or having to actually legislate the hard decision.

In other words, California will watch other US states implement road charging, and at some point there is hope that it will be just a formality, because few politicians are willing to stake any political capital on the outrageous idea that... the use of all cars, regardless of energy source, should be charged to pay for the costs of maintaining and renewing the road network.

Of course California has taken another approach, which has been to raise the state's gas tax.  It was increased by US$0.12 per gallon (US$0.0317/litre) in November 2017 and again by US$0.056 per gallon (US$0.015/litre) in July 2019.  Since then, legislation has mandated an inflation adjustment to the gas tax every year from 2020, meaning it is now US$0.612/gallon (~US$0.162/litre).

This is the highest state gas tax in the USA, so in effect California has been incentivising a shift towards more fuel efficient, hybrid and electric vehicles by taxing gasoline powered vehicles more.

There is a flat fee on EVs of US$175 per annum, but this is lower than the average gas tax paid per annum for a gasoline car.  The effect is that around 11% of car users in California are paying less to use the roads than others.

Is that the worst outcome? Probably not, although it costs California taxpayers the resources to keep officials occupied, and pay for consultants to update information. It is entirely plausible by the time California gets to actually implement Road Charge, that there are fair questions to be asked about data collected in 2017 and its relevance. Certainly there is some ongoing technological and cost evolution in that time.

Meanwhile, I can only hope that any future narrative about road user charging in California isn't about it being a "new tax" but a replacement, to level up what vehicles are charged to use the network.

(oh, and the reason why it's called "Road Charge" and not a "road usage charge" or "road user charge", is because it was thought that the acronym RUC rhymed with a rude word.  I had no idea such a word was so blasphemous in the state of California!)

Congestion pricing - the United States awakens

Singapore pioneered a basic form of urban congestion pricing in 1975, and introduced what is still the most sophisticated, economically rational and effective congestion pricing in the world in 1998, called ERP (Electronic Road Pricing).  In 2020 it is transitioning its operating technology to GNSS On Board Units (albeit to initially apply the same mix of corridor and cordon charging as applies today, but with the focus on delivering more information about pricing, traffic, parking and alternative modes through the system).

However, if you've been following the recent very public debates and commentaries about congestion pricing in the USA you'd be excused for thinking it is new and innovative.  Innovative it is, it is just that the US has come a bit late to the concept, but what is driving it is not so much congestion, but the desire to use congestion pricing to raise revenue - typically not for roads.

For many years congestion pricing in the USA has largely been referred to in the context of express/HOT/toll lanes. Although such lanes offer options to pay to bypass congestion on some highways, they are not "comprehensive" in addressing congestion and more importantly are not technically able to be implementing except on roads with limited access. In most cases they have been implemented by converting high occupancy vehicle lanes to HOT/toll lanes. It is rarely economic to build new lanes and charge just for them (because there is insufficient willingness to pay for the capital costs of new capacity, particularly when such capacity may only be utilised for short periods during weekdays), so HOT/toll lanes are rarely seen outside the USA.

The positive example of toll lanes is that they demonstrate that the instrument of price is effective in managing demand so that a road can operate in free flow conditions, but of course such lanes are not practical on most roads and they always have an unpriced alternative.  At best they offer an option in some cases, and demonstrate the concept.

So full congestion pricing has not been seen in the US to date. By that I don't mean having peak pricing on an existing toll road to spread demand on that road (this is seen on many crossings, such as the Golden Gate Bridge, E-407 Toronto and the Sydney Harbour Crossings), but rather pricing of a network or placing a cordon (either on its own or as an area charge) on a zone, with priced access at set times/days.

This isn't common as all. Although there are many low emission zones in European cities (which prohibit or heavily charge vehicles that don't meet low or ultra-low emission standards) and restricted access zones to cities (this is seen in many Italian cities, keen to preserve historic centres of cities ill suited to large volumes of vehicle traffic), the only cities that charge a network or a zone for access on a significant scale are:

- Singapore

- London

- Stockholm

- Gothenburg

- Milan

- Dubai

- Tehran.

There are a handful of smaller examples, Oslo transitioned from a cordon set up for revenue raising to one that has a congestion management purpose now, but by and large congestion pricing is hard to implement.  It's been investigated in multiple cities in the UK (Bristol, Cambridge, Leeds, Manchester, Edinburgh) and elsewhere in Europe (Dublin, Amsterdam, Copenhagen, Helsinki), but has always come up against one major issue - public opposition.


What has woken up the US?

How about the US then? Suddenly cities, states and the media have discovered congestion pricing because of one simple reason - New York is going to do it. This follows previous attempts to introduce it, most notably by former Mayor Michael Bloomberg, who had his proposal for a cordon on lower Manhattan vetoed by the State Legislature.

The New York Senate and Assembly have approved it, along with the State Governor. The details are to be worked out by a new Traffic Mobility Review Board, but it is essentially a cordon that starts at 60th St, excluding FDR Drive and the West Side Highway. All of the net revenue is to spent on the public transport network, specifically the subway, bus network, the Long Island RailRoad and Metro-North. Private cars are only to be charged once a day, whereas ridehailing/sharing and taxi services are already subject to a surcharge of between US$0.75-US$2.75 per trip, depending on the service since 2 February 2019.  Although Charles Komanoff indicates that the effects will be much less than promised (still a 2.5% increase in average traffic speeds is worthwhile).

Some of the details to be worked out include:

· Charge rates (will they vary by vehicle type)

· Area charge (will vehicles be charged for circulating within the cordon as well as or separately from crossing the cordon)

· Direction of charge (will there be a charge for entering AND exiting the cordon)

· Time of operation

· Variation of charge by time of day

· Discounts and exemptions (it might be fair to assume that emergency vehicles and NYC transit vehicles might be exempt, but will the ride hail/share surcharge liable vehicles be exempt too)

· How those entering lower Manhattan on tolled crossings will be treated

New York is basically implementing a simple charge, primarily to raise revenue for other modes, so it will be interesting to see what impact it has and whether it is designed to spread demand by time of day, as much as it is to raise revenue. It will clearly be a trailblazer, although it is unlikely that other US city has either the density of public transport or geography to lend itself to a relatively simple cordon as the solution.

What about the rest of the US?

San Francisco has studied charging before, and looks like pursuing it again. The San Francisco County Transportation Board Authority voted earlier this year to spend US$0.5m on a study of downtown congestion pricing, suggesting that it has already decided that a downtown cordon is worth pursuing. It will be interesting to see what impacts that might have, and particularly how boundary issues are addressed. The San Francisco Mobility Trends report indicated that "vehicular traffic entering San Francisco grew 27% since 2010, although public transport use also rose 5% and cycling by 6%, on a 9% population increase (indicating that the growth in population is pushing a big increase in driving), with a decrease in private car travel speeds by 23%. It's hardly surprising that pricing access to downtown is a priority, although hopefully it will mean pricing that varies by time of day.

Los Angeles has already had a study released by Southern California Association of Governments (SCAG) which proposed a pilot cordon at Westside LA, for a number of reasons (see page 94 of the below report).

Proposed Westside LA cordon from SCAG study

 The Mobility Go Zone and Pricing Feasibility Study indicated that it could result in a 19% drop in private cars entering charged zones, and a 9% mode shift to public transit, with 7% each to walking and cycling. Whilst this might be a good place to start, LA is going to need a much more comprehensive solution to address congestion across the region. LA Metro is about to launch a study that looks more widely at options, with the intention that pricing would support a package of improvements to public transport and active modes.

Boston, Portland, Seattle and Washington DC are all considering congestion pricing, which has to be welcome. The US has gone through a couple of eras in urban transport policy, from the 1940s to the 1970s the focus was almost entirely on building roads to meet demand. That has tailed off, with a focus from the 1970s of building (mostly rail-based) public transport infrastructure to try to attract motorists from their cars, in other words supplying alternatives. More recently, cycling has had a boost in some cities, but the primary argument in all cities is one of what to supply, rather than how to manage existing demand and supply.

California launches Road Charge pilot

On the 1st of July the most populous and richest state in the US launched its pilot programme to trial road user charging, for both light and heavy vehicles, called the California Road Charge Pilot Program.  

California Road Charge pilot logo

For the next nine months, participants will simulate paying for road use by distance or time, after which Caltrans will assess the performance and public reaction to the various charging options.   Undoubtedly this is the highest profile live pilot of road user charging for cars anywhere in the world, and so not only is it being watched in the US, but around the world.

 Over 7,500 individuals had expressed interest in participating in the pilot with 5,000 having been chosen to participate.   Selection of participants has been partially focused on achieving a demographic spread based on income and location as seen below:

Target Demographic of California Road Charge participation

Charging options

Participants have five different options to choose:

1. A prepaid time permit which allows unlimited use of the roads over a fixed period of time, in 10 day, 30 day and 90 day increments (akin to vignette systems seen in Europe);

2. A prepaid distance permit, prepaying mileage in advance in 1000, 5000 or 10000 mile increments (similar to New Zealand's traditional Road User Charge system for light diesel and heavy vehicles);

3. A postpaid odometer reading distance charge, with the motorists reporting mileage through odometer readings;

4. Postpaid automated distance reporting using on-board vehicle technology without location; 

5. Postpaid automated distance reporting using on-board vehicle technology with location (to distinguish off-road and out of state driving).

The process for participation is outlined below.

California Road Charge pilot volunteer process

Privacy matters

I'm more interested in the three latter options, partly because I doubt that a time permit can co-exist with a distance based permit without road users gaming the options to their advantage.  There are advantages and disadvantages of all, and the key reason why there are multiple options is privacy.  In the US, there is considerable concern that any distance based charging system involving GPS will become a mass surveillance system.  This is being addressed in two ways.  Firstly, by offering options that do not involve location data being collected.  Secondly, by having private companies offer the service and collect the charge.  This separates the state government from the collection of data.

Competition

The pilot is not being operated by a one-size-fits-all single operator, but rather choice is the keyword, with competitive delivery of account service delivery.   This competitive dynamic should help to ensure the performance of all participating companies is enhanced, and may offer a taster of how deployment of this sort of system may progress in the future.

Azuga and Intelligent Mechatronic Systems (IMS - branded as Drivesync) are offering multiple mileage based accounts for participants (covering options 4 and 5).   Azuga offers options including a plug in device for the vehicle, a car's built in telematics (if compatible) and a smartphone app.  Drivesynch offers a plug in device or a car's telematics.   

Arvato Bertelsmann is operating the California State Account Manager, which is supplying options 1 to 3.  EROAD is offering solutions for heavy vehicle participants (options 4 and 5). 

Purpose

The reason for the pilot is simply revenue. The chart below is the California Air Resources Board forecast of future traffic demand and fuel consumption in the state.  This pilot is intended to develop a medium to long term solution to this problem which cannot be resolved by simply increasing fuel tax.

The basis for the pilot is Senate Bill 1077 which Governor Jerry Brown signed into law on 29 September 2014, which requires the state of California to design and implement a statewide pilot program to study the implications of a road charge model no later than January 1, 2017.

The Bill states as follows:

(a) An efficient transportation system is critical for California’s economy and quality of life.

(b) The revenues currently available for highways and local roads are inadequate to preserve and maintain existing infrastructure and to provide funds for improvements that would reduce congestion and improve service.

(c) The gas tax is an ineffective mechanism for meeting California’s long-term revenue needs because it will steadily generate less revenue as cars become more fuel efficient and alternative sources of fuel are identified. By 2030, as much as half of the revenue that could have been collected will be lost to fuel efficiency. Additionally, bundling fees for roads and highways into the gas tax makes it difficult for users to understand the amount they are paying for roads and highways.

(d) Other states have begun to explore the potential for a road usage charge to replace traditional gas taxes, including the State of Oregon, which established the first permanent road user charge program in the nation.

(e) Road usage charging is a policy whereby motorists pay for the use of the roadway network based on the distance they travel. Drivers pay the same rate per mile driven, regardless of what part of the roadway network they use.

(f) A road usage charge program has the potential to distribute the gas tax burden across all vehicles regardless of fuel source and to minimize the impact of the current regressive gas tax structure.

(g) Experience to date in other states across the nation demonstrates that mileage-based charges can be implemented in a way that ensures data security and maximum privacy protection for drivers.

(h) It is therefore important that the state begin to explore alternative revenue sources that may be implemented in lieu of the antiquated gas tax structure now in place.

(i) Any exploration of alternative revenue sources shall take privacy implications into account, especially with regard to location data. Travel locations or patterns shall not be reported, and legal and technical safeguards shall protect personal information.

The Bill establishes already that charges that vary by location are not being considered.  California's Road Charge is not a trojan horse for any form of congestion pricing.  It is seen as a pure revenue replacement exercise.

Of course California is at the forefront of plug-in electric vehicle takeup in the US as seen by this image from the US Department of Energy in 2015:

Electric vehicles in the US by state

California is clearly the highest, with Hawaii second (and also investigating running a pilot) with Washington, Georgia, Oregon and Vermont the remaining states with more than 1 per 1000 people.  Of course Washington and Oregon are developing or running pilots already.   Yet road user charging isn't primarily about electric vehicles, but about fuel efficiency.   Road Charge would replace California's gas tax if it were implemented.

Fuel tax isn't a good way of charging for road use

Fuel tax is a very poor way to charge for road use.  It is only a very rough proxy for road use and about the only thing it is useful reflecting is CO2 emissions.  It is not even good at reflecting noxious emissions, as highly fuel efficient diesel vehicles may emit many more toxins than less efficient petrol vehicles.

Fuel tax cannot reflect variations in infrastructure costs or demand/supply.  Neither can it adequately reflect the increased costs of wear and tear imposed on roads by heavier vehicles, as fuel consumption does not rise at the same rate as wear and tear which increases exponentially along with weight per axle.   Likewise, fuel taxx charges light vehicles differentially for infrastructure costs even though the marginal costs imposed by all of them are identical.  Those with smaller, newer vehicles pay less than those with larger, older ones.  

I hope that the California Road Charge Pilot gets a good response from participants and lots of useful information to inform the assessment of the options.  Getting the public involved is important.  I wish all participants the very best.  California, the USA and the world are watching.

More details at the pilot project website.

California Road Charge brochure download here

California Road Charge Pilot Technical Advisory Committee meeting details here 

Disclaimer: D'Artagnan Consulting is supporting Caltrans in managing the California Road Charge and I am working on the California Road Charge Pilot Program.

California's Road Charge Pilot Program progressing

The most exciting trial of road charging in the world today is the one that is about to start in California.  California is going to pilot 5000 volunteers, a mix of private and commercial vehicles, for five options that it seeks to appraise.  The policy intention is clear.  The intention is to replace the fuel tax with a new way of charging for road use.  Why? Because the significant growth of electric, hybrid and ultra-fuel efficient vehicles is eroding gas tax revenue, and even the existing proposal to increase the gas tax for the first time (and remove the current fuel tax swap) will not provide a sustainable solution to California's highway funding dilemma.

It is no exaggeration to say that the rest of the US is watching California.  If the California Road Charge Pilot is a success and there is broad agreement to implement it, then it is likely other states may follow.  Yes, Oregon was first, but California has the largest GDP of any state in the USA (indeed its economy is larger than Brazil, Italy, India or Russia).  

As California prepares for the launch of its road charge pilot program on 1 July, Caltrans has  announced the companies that will be managing the accounts for the 5000 volunteers during the pilot:

- Azuga (Azuga is already an account manager for the OReGO pilot in Oregon);

- Intelligent Mechatronic Systems (a Canadian company that supplies telematics and connected car technology);

- Arvato Mobility Solutions (a German company that provides outsourcing solutions for mobility); and 

- EROAD (a New Zealand company that is an account manager for the NZ and Oregon weight-distance road charging systems).

Azuga and Intelligent Mechatronic Systems (IMS) will offer mileage based accounts and Arvato will offer a state-run account management service.  EROAD will manage all heavy vehicle accounts for the pilot.

The pilot has an excellent website here which has useful information.  There are links to other information including this fact sheet (PDF).  Details on decisions on how the pilot will be implemented are here (PDF).

The following five charging options are to be piloted:

- Time permit: Purchase of unlimited use of the roads for a set period of time (similar to "vignette" systems in various European countries);

- Mileage permit:  Purchase of a set number of miles to use the roads, in advance.  Once the permit is exhausted, an additional permit would be required  (similar to New Zealand's manual Road User Charge system);

- Odometer charge: Pay for miles used based on periodic odometer readings, after they have been driven.  This is similar to manual weight/distance taxes in a few US states.

- Automatic mileage reporting including general location: Pay based on in-vehicle technology measuring distance travelled.  A third party service provider would receive this information and bill the account holder.  Location information would only be used to avoid charging out of state and off-road miles.

- Automatic mileage reporting without general location: Similar to the above example, but no geographic data is supplied.

All but the first option involve distance charging, but all but the last distance charging option would raise the issue of crediting for out of state or off-road miles.

Volunteers will not actually pay any charge, but will choose options of simulated charges to test the technology and participant responses to the various road charge options. Azuga, IMS and EROAD may provide value added services at no cost to volunteers as part of the pilot. Volunteers will choose an account manager in June.  The graphic below outlines what volunteers need to do to participate.

California road charge volunteer process

(Disclaimer: D'Artagnan Consulting is advising Caltrans on this project)

NOTE:  This is the 500th post of this blog.  I hope you enjoy reading the posts and find them interesting and informative.  I know I have covered some matters in past years that I have not covered more recently.  Rest assured I have more time to dedicate to blog articles, so there will be consistently fresh content every week.  Best regards, Scott

Vehicle ownership tax mooted for California

Like many US states, California too has issues around raising sufficient funding to pay for highway maintenance and construction.  UT San Diego reports that Toni Atkins, Speaker of the California State Assembly has proposed, in essence, a motor vehicle ownership tax at US$52 per annum.  She suggests it could be higher for trucks (based on weight) and electric vehicles (because they don't pay fuel taxes), but would be hypothecated to transport funding. 

Arguably this is an efficient way of recovering at least part of the fixed costs of the highway network, which by some measures accounts for an average of half of all network maintenance costs.  This is the network degradation due to the effects of radiation from the sun, rain and changes in temperature. 

Charging all vehicles a "network access charge" isn't a bad idea in that context, and it parallels similar taxes in other jurisdictions.  In the UK it is called Vehicle Excise Duty, and is related to vehicle weight and CO2 emissions, although none of the money raised is dedicated to spending on transport, it can cost a vehicle owner anything from nothing (for low emission vehicles) to US$1676 for the highest emission vehicles (full schedule here).

In Australia, vehicle registration fees are set by states, with heavy vehicle rates set them to offset the undercharging inherent in charging diesel tax (as the heaviest vehicles do not pay enough diesel tax to reflect the damage they cause).  For example, in the state of Western Australia an average car will cost US$167 to register.  By contrast, the heaviest truck combination will cost US$7551 a year to register.  That incentives high utilisation and also incentivises vehicle fleet owners to buy vehicles that are suited for what they want to do, and not to purchase those that are too big.  

However, such charges have some fundamental weaknesses, most notably that they reward those who use the network the most, and in the absence of charges for congestion or by location, it is a blunt mechanism.  It also can incentivise evasion, as some will choose to supply false details for registration or register in neighbouring jurisdictions to avoid higher charges.  

A better option for fixed charging operates in some European countries in the form of "vignettes", whereby an access charge is set for using just motorways and major highways.  It means that the stereotypical "little old lady" who only drives around town doesn't get hit, but heavy commercial users and most others do.  For countries and states where driving off of major highways is a huge inconvenience, it works.  It's worth noting that it is primarily applied in Europe as a way of also capturing foreigners using national highway networks.  The access charge itself is time based, so that you can buy a vignette for as long as a year, or as short as four days.

However, revenue only grows as vehicle fleet numbers grow, not traffic.  So it can never replace other means of charging, only supplement them, and even then for it to fully recover fixed costs it would have to be at levels that would incentivise too much evasion to be desirable.

In my view, whilst there are sound reasons why such charges could be turned to in the past, today it is more questionable as to whether they should be introduced now beyond simply recovering the administrative cost of operating the vehicle registration database.   However, it is still a closer link to road use than any talk of a sales tax on everything everyone buys, to subsidise roads.

Far better will be to charge for the use of the roads, by distance and eventually location, weight and time of day.  That's both economically efficient and equitable, the question is how to get there.

City of Cupertino’s opposition to HOT lane misguided

According to the San Jose Mercury News, the City of Cupertino is opposing a proposed conversion of a HOV lane on California State Route 85 on grounds that unfortunately very misguided and seem to more of a kneejerk response to political polemic than being evidence based. The proposal is to convert existing HOV lanes on the highway to HOT lanes, extending them slightly to the south on route 101. Full details are given here. 

It includes adding a lane between SR80 and I-280 by using the median strip land, another auxiliary lane and some bridge widening. Santa Clara Valley Transportation Authority and Caltrans are pushing the project, which has yet to be approved for funding, to get better utilisation out of existing lanes, whilst preserving the lanes availability for HOVs included buses.  Cupertino appears almost ideologically opposed to the project.

The FAQs about the project and how the lanes will work from here, but I find Cupertino's concerns (detailed here) as worthy of a response.  I also think they miss my key criticism of HOT lane schemes - that they don't always appear to be based on financial or economic viability.

News briefs - Australia, Belarus, Israel

Australia - Queensland Government to privatise motorway company

Queensland Motorways is a company owned by the Queensland Investment Corporation, the Queensland State Government's holding company for commercial state owned enterprises.  It owns three key toll roads in Queensland, but also acquired from Brisbane City Council the Go Between Bridge, which I profiled over two years ago as being an unprofitable disaster.

Queensland Motorways have paid the Council A$112 (US$98) million for the 50 year tolling rights to the bridge.

Previously it acquired the disastrous Clem 7 toll tunnel motorway, which is subject to a lawsuit over demand and revenue forecasts.  It paid A$618 million (US$538 million) for the road, not bad given it cost A$3 billion to build.

So now the Queensland Government thinks it is a good time to divest itself of this investment.  The Australian reports it is worth about A$4 billion (US$3.5 billion)

The report says:

Groups likely to be interested in Queensland Motorways include superannuation heavyweight Industry Funds Management, Abertis/Hastings and groups out of Canada including the Canadian Pension Plan Investment Board or the Ontario Teachers Pension Plan.

Of the listed groups, Transurban could purchase the asset with partners, a source said.


Belarus - tolling of existing highways to be expanded

ITS International reports that the Belarus electronic toll system has been expanded to a network of 118km of highways as of January 2014.  This expands the extent of the network to 933km, with the whole system installed and operated by well-known Austrian toll systems provider, Kapsch.   The expanded network will include eleven new gantries for charging and enforcement. The report claims that customers are registered from Belarus, Ukraine, Russia, Poland and Lithuania.

The system uses DSRC, not GNSS technology, paralleling that which has long been in place in Austria, and similar systems on networks in the Czech Republic and Poland.

I wrote about the Belarus system a couple of years ago.   It is branded BelTol  and charges cars €0.04 (US$0.06)  and up to €0.12 (US$0.17)  per km for trucks. Both rates seem rather cheap.  Germany charges between €0.14 and €0.29 per km for trucks, Slovakia €0.08-€0.24 and Austria €0.16-€0.44 per km.   No toll system in Western Europe charges cars by distance across a network electronically.


Israel - New HOT lane being studied

According to Israeli business news website, GLOBES, Ayalon Highways Ltd (a central government owned company responsible for managing Israel's Highway 20) is investigating the value of introducing a HOT Lane on the highway between Roads 1 and 5.  

However, the report is contradictory, which some claiming that a lane will be taken from the existing road, and the Ministry of Transport claiming that discussions are about a new (additional lane).  

The road will connect with the privately owned H-1 HOT lane that was opened in 2011 between Ben Gurion Airport and Highway 20, which I noted at the time,  and is driven entirely by heavy congestion on the existing lanes.  

The proposed lane would offer toll free access for buses, but the "high occupancy" requirement would be 4 car passengers, suggesting that there is a real interest in ensuring the lane maintains a good level of service, although it is far too early to consider what the potential toll levels would be.

Proposed new HOT lane in blue, existing H1 lane in yellow

Intelligent parking in London and San Francisco, a future for market priced parking?

London smart parking

The City of Westminster, one of London's inner city boroughs (encompassing the West End and many of the locations in central London tourists are familiar with), is launching intelligent parking and Atlantic Cities has a good article about the upcoming system.

3000 sensors are being placed in parking bays (there are 10,000 in Westminster, which is rather low given the density of streets, reflecting the long standing policy to eliminate on street parking from many major roads and dedicate road space to bus and cycle lanes and expand footpaths. 

The report says the 3000 sensors are being installed at a cost of £650,000 (US$1.07 million).

It enables motorists to use mobile apps to check parking availability, including crucially disabled parking bays (often ignored in discussions about reducing motoring).  

Further details are on the Westminster City Council website here.  

Map of Westminster relative to the rest of London here.

USA- California - San Francisco intelligent parking

I reported over two years ago on San Francisco's intelligent parking trial.  According to SF Park the trial has come to a close, with the parking sensor devices having been switched off at the end of 2013.   SF Park says:

This means that the real-time information on parking space occupancy will not be available for mobile apps and similar uses. The SFpark data feed and app will continue to show meter parking rates, as well as real-time space availability and rates at parking garages. The SFMTA will continue to conduct demand-responsive rate changes to find the lowest rates possible to help ensure there is a minimum number of open parking spaces on each block to reduce circling and double-parking.

In other words, the system will no longer be useful for identifying occupancy on the kerbside, but it will be for parking garages.  Meanwhile, pricing at parking garages will appear to be variable, and there appears to be a continuation of some form of variable pricing for kerbside parks.

The results of the trial will be interesting, as dynamically priced kerbside parking has great potential to save time, fuel, reduce congestion and stress for those seeking to park, as well as pricing parking efficiently so that some may decide to drive at different times, use other modes of transport or (inevitably) go elsewhere (which is good for areas that have surplus capacity).

My opinion

News briefs - Australia, China, USA (California, Texas, Washington)

Australia - CEO of South Australian borough calls for congestion pricing

Unley is one of the boroughs of Adelaide and according to the Herald Sun, the Unley Council  Chief Executive, Peter Tsokas has proposed to the South Australian State Government, that congestion charging be introduced to raise revenue for public transport.  He specifically called for charges on some roads at peak times to manage congestion.  The reaction has been negative from the Royal Automobile Association of South Australia, although not completely dismissive:

Automotive policy manager Mark Borlace said congestion charges were more suitable in heavily gridlocked traffic zones.  He said the priorities for Adelaide should be improving traffic flow on the city rim, upgrading the north-south transit corridor and improving public transport connections. "When you know that people have ways of going around the congested areas where you don't want cars, then you can have those kind of behavioural things (such as congestion charging)," 

A South Australian state government spokewoman said the government was opposed to tolls and congestion charging.  It's notable that all of the comments under the article were anti congestion charging, except for one that advocated tolling for a new road as long as the toll paid for the road and ended after the debts for constructing the road were paid.

Of course, any debate about congestion charging in Adelaide ought also to include whether it would be an option to replace some existing taxes.

China - Future for congestion charging

Charles Komanoff writes in Streetsblog about his view on where congestion pricing might head in China.   He notes rightly that air pollution is as much an issue as congestion, but revenue generation is not important.

However, the key problems China faces in implementation are around the vested interests and potential losers from any sort of implementation. China needs a comprehensive strategic approach to how road vehicles are taxed and charged, which simply doesn't exists at present.  A key part of this is having the legal framework to enforce any fines or violation notices in a country where traffic safety violation enforcement is haphazard at best.

China has a long way to go, and it could do worse than encourage Hong Kong to implement one of the options extensively studied well over a decade ago, and to encourage at least one mainland city to introduce a cordon charge.

California - Orange County rejects tolling new lanes on I-405

Further to the post I wrote in December on this,  Orange County voted to add an additional lane to the I-405, but rejecting tolling according to the LA Times. It appears that there was little argument made about making highway expansion more sustainable and efficient, but rather that because improvements are partly funded out of a sales tax (don't ask, it's a weird socialist concept that some in the US adopt of dedicated taxes on retail activity to pay for roads).  Voice of OC describes the rather shallow debate.  Whereas NBC reports that the new lanes will cost around US$700 million, which of course will come predominantly not from those using them or directly benefiting from them.  

Texas - HOT lane fines unenforceable

Associated Press, carried by The Trucker, reports that  Houston Metro has no means to legally force non-compliant motorists to pay fines.  Apparently US$740,000 in fines have been issued, but although violators are notified three times of the fines and asked to pay, there is no legal means to enforce it.

This is absolutely laughable as a public policy failure.  Questions ought to be asked.  Who approved for such lanes to be introduced without a legal means to enforce violations?  Was it an oversight by policy makers, or did politicians ignore warnings and decide to press on regardless?  Is this a case of a system being introduced designed by engineers, without advice from lawyers or policy consultants?

Given this is now news, I wouldn't be surprised if, within a few months, the lanes prove to be an abject failure when it becomes well known that the fines are simply requests to pay with no means to do anything about it.

Enforcement is a core component of any electronic free flow tolling system, and needs to include the legal means to treat non-payment of tolls, and fines, as debts that can be recovered like any others.  At the very least, it seems absurd that such fines can't be treated as a penalty for trespass - for unauthorised usage of HOT lanes might be seen as such, if the law would properly define it.

Meanwhile, a report from local TV station KFox14 in El Paso notes that the new toll lanes on the Border Highway are not physically separated from the untolled lanes, but separated by double white lines.  This raises concerns that some road users will weave to avoid detection in the lanes and weave back across the lines, but the answer to this is to enforce the existing prohibition on crossing double white lines on the road. Enforcement of that law is expected to effectively enforce the separate toll lanes.   Hopefully, this should work if done resolutely and sufficiently.

USA - Trucking lobby sceptical about distance based taxation

I read with some amusement an article in The Trucker.Com commenting about Oregon's plans to introduce a vehicle mileage tax.  The key points being:

The American Trucknig Association being concerned about "collection costs, privacy and information security issues, significant potential for evasion and various very difficult institutional issues, including the potential for a lack of interstate interoperability".  Given almost all of these issues are resolvable, I think there may be a bigger concern that the charges set will inevitably mean the heaviest trucks travelling the longest distances will pay more.  The problem is that there is little evidence in the US as to whether there is an appropriate recovery of infrastructure costs now.

What is needed is not resistance, but a reasoned economic debate about the true infrastructure costs of highways and how to efficiently allocate those costs among types of vehicles.  Sadly in the US there is precious little decent analysis about this, and insufficient political will to let charges for road use be based on objective values.  

Washington - State discusses options for future revenues

The Kent Reporter notes that the Washington State Transportation Commission is completing an evaluation of the business case for ways to replace the gas tax with a road usage charge system.

It is intended to report in January 2014 about options to move forward with charging vehicles according to how much they use the roads, rather than fuel, with this work being informed substantially by the trials underway in Oregon.  The findings of work done so far can be found in this presentation, which outlines the key issues very well.  According to this paper, the final report will be issued on 11 January.

News briefs - Brazil, UK, USA (California and Texas)

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.

BR-040 in red

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.  

I-405 upgrade corridor

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?

News briefs - Australia, Denmark, Indonesia, Italy, USA

Australia - Heavy vehicle charges review starts

Transport and Logistics News Australia reports on how the National Transport Commission is consulting on proposed changes to the heavy vehicle charges system (most of which are about how the charges are calculated).

The article is perhaps more interesting for its summary of how Australia charges trucks to use its roads. It is not road pricing or tolls, but a reasonable means of trying to be as efficient as possible in using fuel tax and ownership taxes.

Rather than the widely used non-system of political/bureaucratic guesses as to what might be charged, it involves calculating costs attributable to heavy vehicles, costs attributable to all vehicles and then setting charges to recover from heavy vehicles their share of infrastructure costs. 60% are recovered from fuel tax and 40% from vehicle ownership taxes.  Fuel tax is collected at the Federal level, but ownership taxes at the state level.

The principles applied are as below:

• Full recovery of allocated infrastructure costs while minimising both the over and under recovery from any class of vehicle;
• Cost-effectiveness of pricing instruments;
• Transparency;
• The need to balance administrative simplicity, efficiency and equity (e.g. impact on regional and remote communities/access);
• The need to have regard to other pricing applications such as light vehicle charges, tolling and congestion;
• Ongoing cost recovery in aggregate;
• The removal of cross-subsidies between vehicle classes.

Now without distance and weight based charging, the system is going to be very much second best, but this system for setting charges is more advanced than that used to set charges in much of North America and Europe.   It is, at least, based on setting clear objectives with the need for transparent economic analysis to be used to base charges, and it does provide a framework which could be easily adapted to weight/distance based road user charging.

Denmark - Environmental Economic Council calls for road pricing to replace ownership and purchase taxes

The Copenhagen Post reports that the head of Det Miljøøkonomiske Råd, the environmental economic council, Hans Jørgen Whitta-Jacobsen, has suggested replacing the extortionate vehicle ownership taxes with a distance based road pricing system.  Vehicle purchase taxes cost 105% of the purchase value of a car up to 79,000 DKK (US$13,778) and 180% for every Kroner of value above that.  This imposes an enormous tax on the purchase of a new car.   Ownership taxes start at DKK120 (US$21) for the most fuel efficient diesel cars up to DKK15090 (US$2632) for the least efficient.  All of this makes car ownership expensive, and so doesn't target driving on the most congested roads (so penalises rural areas and those who without jobs accessible by public transit, walking or cycling).   His biggest concern is that such taxes discourage motorists from buying newer, more fuel efficient low emission vehicles.

Indonesia - PT Jasa Marga expecting increased revenue from growing network

The Jakarta Post reports that PT Jasa Marga, Indonesia's largest state owned toll road company, is expecting a 16.1% revenue increase this year, worth a total of US$671 million.   It has a network of 545km of toll roads with four new toll roads to open this calendar year (Nusa Dua-Ngurah Rai-Benoa road in Bali, Kebon Jeruk-Ciledug road in Jakarta, Gempol-Pandaan road in East Java and the Ungaran-Bawen road in Central Java). 

Jasa Marga is looking to facilitate up to 1.2 billion vehicle trips nationwide in 2013, 9.1 percent higher from the 1.1 billion vehicles last year.  80% of trips are on toll roads in greater Jakarta, indicating the sheer density of usage in that city.  Notable in the report is the roll out of the new e-Toll pass, which involves the use of a DSRC on-board unit, and a contactless smart card with prepaid credit that can be topped up.  Only 11% of transactions are at present using this technology, the intention is to lift this to 30% within two years.    Now the toll booths with this technology are not free flow, the tag activates the barrier arm, but the intention is to expand the number of toll booths that are electronically equipped to 111 by the end of 2013.   I would have thought that given the chronic congestion in Indonesia, lifting up take of electronic tolling to 50% of trips within two years should be a realistic goal.

Italy - Atlantia diversifies into airports

According to Reuters, Atlantia, Italy's largest toll road operator, is to buy Gemina, the airport operator best known for owning Aeroporti di Roma (which owns Rome's Fiumicino and Ciampino Airports).  The report said:

The deal will allow Atlantia, which also operates about 1,800 km of motorways in Brazil and Chile, to branch out into airport concessions in Latin America. It will not, however, generate meaningful cost synergies, a Milan-based analyst said.

USA - California- Santa Clarita (LA) looking at tolls to help fund new lanes

The website of radio station KHTS reports that Santa Clarita city (part of the LA metro area) is investigating whether to accelerate the widening of the I-5 freeway (the main northern freeway out of LA) between Highway 14 and Castaic by tolling the additional lanes.   The project would cost $310 million and the city has 75% of the funds needed to progress it (when divided over 30 years), and is hoping tolling the additional lanes may provide the remainder.  The proposal is to make the project into a PPP, with a private concessionaire recovering the cost over 35 years, using tolls on the new lanes only. The intention is for pricing to be dynamic maintaining a minimum speed of 45mph.  Curiously, the proposal maintains the HOT lane concept, by keeping the lanes free for vehicles with three or more occupants, which seems crazy if the key desire is to raise revenue.  The only purpose to keep HOT lanes is consistency, but beyond buses there is little good reason for new lanes to be free for any cars.   There is sense in applying the HOT principle if the lanes are underutilised HOV lanes, but why should well occupied cars occupying the same road space get access for free?  What evidence is there that this actually changes behaviour on any meaningful scale?  (besides a car with three people in it can split a toll three-ways surely)?

USA - Texas - Cintra wins concession for North Tarrant Express expansion

International Construction reports that Ferrovial subsidiary Cintra has won the concession to build the North Tarrant Express expansion in Texas.  Cintra is to be responsible for developing a 6.5 mile extension, with the state responsible for another 3.6 miles, but Cintra responsible for the tolling, operation and maintenance of the lot, with the total cost of both segments being US$1.38 billion.   The contract involves building two new managed lanes which will be tolled, but also the maintenance and operation of the untolled lanes.

The report says that "the Cintra-led consortium, NTE Mobility Partners Segments 3 LLC, also involves Meridiam Infrastructure and Dallas Police and Fire Pension System"