North Carolina's Triangle Expressway strictly penalising late payment

North Carolina's Triangle Expressway is the state's first toll road and the first fully electronic free flow toll road in the US built from scratch (i.e. built as a free flow electronic toll road, not converted).  

According to the News Observer, some motorists are facing penalty fees for non-payment that are many multiples higher than the original toll.  This, of course, is hardly unusual.   Fully electronic free flow tolling needs to be strict on enforcement, and bill payment.  However, it is shocking some of those who neglect toll bills of less than US$1. 

48% of users are registered with DSRC "Quickpass" transponders, automatically debiting tolls.  The remainder are identified by number plate and get sent bills in the mail.  For many the bills are so low (US$0.45 for example) they forget them, until there is a US$6 late fee added for each month it isn't paid, and another US$25 after the second month.  That adds up and the report mentions some users who now face paying over $40 for a one off usage of the road.  

In 10 months since the road opened, it levied US$1.42 million in surcharges for tolls worth US$771,000.  This is lucrative of course, but given the road only opened at the beginning of 2012, there is always going to be a period of users becoming familiar with how fully electronic free flow tolling works.   I'd give it two years to settle down, and by then there ought to be more like 75% transponder usage, and 90% of bill by mail users paying within one month.

North Carolina Department Of Transportation (NCDOT) wants to encourage motorists to get transponders and to pay on time, so is treating this as a chance to deter late payment.  However, one interesting element is how it gets information to bill out of state motorists,

It is easy to get number plate data for North Carolina of course, and the state has arrangements with five other states (and negotiating them with others), yet this means that vehicles from 44 states can, in effect, drive toll free on the road.  5% of users currently come into that category.  Yet, NCDOT is not being complacent, and if the numbers of users for individual states become worthwhile to pursue, it will seek arrangements with those states.  This is going to become more common, and I'd suggest states need to think about some sort of outsourced clearing house arrangement to minimise the costs of doing this, and to enhance the reliability of the data they all have on vehicles, owners and owners' contact details.

There is also interesting data that has been published on payment rates for the expressway after 10 months:

- 72% of those sent bills by mail pay within the one month billing period;

- 83% of bill by mail users are registered North Carolina vehicles;

- 12% of bill by mail users are with the four other states with NCDOT has a data sharing agreement with (California, Florida, Ohio, Texas and Virginia).

I've written a couple of pieces on some of the teething problems of this road, all of which ought to be object lessons in toll road developers actually taking experience from free flow toll roads elsewhere before developing systems and business rules from scratch.  None of the problems faced by North Carolina are especially new, except to that state, and I wager perhaps the designers?  I would have thought the experiences from Canada and Australia at least ought to have been easy to replicate here, or is it the problem of some that they simply don't believe that experience from "lower ranked" countries is worth applying in the United States?

The two issues reported on the expressway recently are:

- Double billing of motorists with two tags that are interoperable on the road; and

- Mistaken enforcement due to misreading of a character of a number plate.

I wish NC DOT all the best in what is a relatively risky endeavour, but one that will pay off, and hopefully what it is learning about enforcement, the hard way, will make it far easier to do more new free flow toll roads in the future.

News briefs - Indonesia, North Carolina, Washington DC

Indonesia - Jakarta to get six new urban toll roads

Jakarta has serious congestion, which is estimated to cost RP46 trillion (US$4.7 billion) a year in delays, wasted fuel and vehicle wear and tear, with fuel being the biggest cost (no doubt because the value of time in the city is relatively low on a per person basis).  The city is developing bus rapid transit, has plans for a metro and is widening existing corridors, but its most ambitious plan is to build six new urban toll roads.  The intention is for them to be tolled, not just to pay for the high capital costs, but to manage demand, so that the inexorable demand for road space is tempered by having to pay for it.

However, it is controversial as the Jakarta Transportation Council, an advisory body, says it will have "no positive effect" on traffic, according to the Jakarta Post.   The projects will cost RP42 trillion (US$4.1 billion).  Objectors say it will encourage sprawl and pollution, harming the environment and public health, although it is entirely plausible that the roads could be priced and managed to minimise this.  Some argue that as the new roads are being built above existing railways or roads, that the railways should be expanded instead.   The project was advanced by the previous Governor, with one argument made that the city has a small proportion of land dedicated to roads at 6.2%, when the target is 12%.

I'm hardly in a position to judge on this, particularly as it is easy for middle income people in wealthy countries to pontificate about what is good for developing countries, and also because I am technologically neutral.  Roads are simply transport corridors, and as long as they are priced correctly, and the corridor managed well, there is no reason for them not to be positive for public transport, and to allow road space on the routes bypassed to be given over to pedestrians, cyclists, carts, and to properly regulate parking.

The six roads are shown on this Jakarta Post map:

The first phase of construction will include the 17.8-kilometer route from Semanan, West Jakarta, to Sunter, North Jakarta, and the 11-kilometer route from Sunter to Bekasi.

The second phase includes roads from Duri Pulo, Central Jakarta, to Kampung Melayu, East Jakarta, and from Kampung Melayu to Kemayoran, East Jakarta.

The third construction phase will link Ulujami, South Jakarta, to Tanah Abang, Central Jakarta and the fourth will connect Pasar Minggu, South Jakarta, to the Casablanca area in South Jakarta.

The state company PT Jakarta Tollroad Development is owned by multiple local companies, "city-owned enterprises collectively hold the majority of shares in JTD, namely, PT Jaya Real Property (22,5 percent), PT Pembangunan Jaya Ancol (20 percent), PT Jaya Konstruksi (16 percent), PT Pembangunan Jaya (9 percent), PT Jakarta Propertindo (7 percent) and PT Jaya Land (3.5 percent)."

Jakarta is also planning an electronic road pricing system to manage congestion, with legal approval for introduction reached in October 2012.   I will write more on that later.  However, I would hope that before that happens, that all toll roads in the city get converted to electronic free flow systems, which will be necessary for any form of congestion pricing in any case.

In any case, the Jakarta Post reports that it is now up to current Governor, Joko “Jokowi” Widodo, to decide on starting any of the new toll road projects.   

North Carolina toll road faces double billing controversy

According to the Charlotte Observer:

At least 800 drivers on the Triangle Expressway have been double-billed this month, paying electronic tolls twice for every trip, the N.C. Turnpike Authority says.

The problem is fairly obvious, motorists travelling with two tags both of which are getting recognised and generating a bill.  The NCTA has its own "Quickpass" as its product, but some motorists also have the EZ Pass tag, used across 14 states.

You see the Expressway is fully electronic free flow, but as of the start of 2013, it has been interoperable with EZ Pass, so there are customers with both units, and so are being billed twice.

The NCTA blames motorists for this, because the terms and conditions for its contract with customers using Quickpass is for only one tag/sticker to be in a vehicle at any one time.   However, as true as this may be, the system should have avoided this problem in its architecture.

For the system architecture should not allow two chargeable events to be attributed to the same number plate.  This isn't hard to manage, as the system ought to reconcile these sorts of events (and indeed this will become more common over time), so that while motorists should only use one device at a time, the system should not charge an identifed vehicle more than once in a specific interval.

Washington DC sceptical about congestion pricing but it's hardly surprising

There have been various reports of what is essentially a public opinion survey about transport policy, that came to the conclusion that people in Washington DC are most accepting of tolled lanes, and least accepting of distance based road pricing.  Really? It took money to figure that out?  The Brookings Institute research is interesting in as far as it shows considerable support (60%) for toll lanes - but beyond that it isn't anything that any expert in this area could not have expected.

There have been surveys about road pricing for many years in many countries, and the conclusion is pretty much always the same. The majority oppose paying more to use existing roads, and the more complicated the proposal they more resistant they are.   They like it better if more money (whose?) is spent on more public transport and other alternative modes.  

The acceptance of toll lanes is obvious, as they are optional.  The lesser support for some sort of cordon based pricing is because it would not be, and distance based pricing is always clumsily sold as some sort of tracking system, and there are no explanations made of how much people pay now with fuel taxes.

The errors in this work look like (from the reports) to be:

1.     It provided details with little rationale as to what the merits of them are;

2.     It gave people little confidence in what any of the options would deliver (why would anyone support paying more without understanding or believing that conditions could improve);

3.     It provided options without reference to replacing the gas tax;

4.     Those undertaking the survey appeared to be unable to answer core criticisms of the public, such as thinking that a cordon creates congestion just outside it.

It was undertaken using public forums.  Maybe the 20th century would like to get it survey technique back.  The busiest people or those with the least flexibility are unable to participate in such a manner.

Now I am pleased these issues are being discussed in the United States, it has taken long enough, as only eight years nobody talked about pricing existing roads.  However, it would be good for the debate for surveys like this to not occur.  

Are surveys undertaken about taxation policy, health policy, how to manage the electricity or telecommunications networks?  No.  Why would anyone presume that the general public - who can attend such meetings - are sufficiently well informed to react intelligently to what is presented to them?  More importantly, why aren't the lessons learnt from those who have tried to do this actually being applied in describing options and managing such processes?

Washington Examiner damns plan to "nationalise" Dulles Greenway

In a local editorial, the Washington Examiner describes plans to socialise/nationalise the Dulles Greenway as one that will "saddle Virginia taxpayers with this white elephant".  The plan comes from Virginia House Transportation Committee Chairman Joe May, (R-Leesburg).  So yes it is a Republican wanting the government to take over a private business, ostensibly to subsidise the users of that business. The report states the road loses US$25 million a year, which would effectively be transferred to taxpayers.  

The private owner, Macquarie Atlas Roads, would of course seek to maximise the price that it would extract from a willing buyer, and the continuing unprofitable nature of the road would be hidden in the state's public debt and general taxation.

It all seems absurd.  The whole point of private road concessions is to transfer risk, which is what has been done in this case.  The road has been built, the tolls are relatively high, but increases are capped by the concession, and the continued losses are born by the investors.   Far better for the motorists on the road to be effectively subsidised by the private owners (which is a transfer into the state from foreign investors) than from taxpayers.

ead more here: http://www.charlotteobserver.com/2013/01/31/3823197/nc-turnpike-authority-double-bills.html#storylink=cpy

News Briefs - India, North Carolina, South Africa, UK

Apologies these are a couple of months late

India - GMR Infrastructure looking to sell down toll road investments

GMR Infrastructure owns six highways in India, and according to MyDigitalFC it is looking to sell between 50 and 74% of its stakes in three toll roads.

The report says:

GMR Highways has three toll roads and three annuity roads under operation spanning around 421 km. Also, there are three annuity-based assets under development, totalling around 309 km.

Overall, the company has spent around Rs 1,800 crore (US$332 million) on these projects till now.

Besides there are two toll roads under development in Tamil Nadu and Karnataka aggregating to around 260 km.

The company plans to use the funds raised from the stake dilution to finance the Rs 8,000 crore (US$1.4 billion) Kishangarh-Udaipur-Ahmedabad mega highway project and also partially pare debt in the highways business.

North Carolina - Environmentalists oppose toll roads, because they are opposing new roads

NewsObserver reports that environmental groups are legally challenging new toll roads in North Carolina on the grounds that the need for them has yet to be demonstrated, and that new roads by definition cause environmental damage.

South Africa - Toll operator saves tree

The Witness reports that TRAC (Trans African Concessions), the private concessionaire, that owns and operates the N4 toll road, to relocate 1km of road away from a 200 year old tree.  The gist being that the company was willing to pay R1million ( US$112,000 ) to respond to public concern about the tree.


UK - Conservative Party MP floats reducing fuel tax replacing it with tolls

Andrea Leadsom, MP for South Northamptonshire, has proposed that there be more widespread use of tolls in the UK, and that such tolls should enable a reduction in fuel excise duty, according to the Daily Telegraph.  She is a member of the Free Enterprise Group of Conservative backbenchers who themselves support a more market oriented approach to highways.

Some statements from MPs include:
- Kwasi Kwarteng, MP for Spelthorne  said "Our approach is you should reduce fuel duty, which should reduce its impact. Getting private finance into this makes sense. To expect the taxpayer to pay for our roads without making any distinction between those who do and don’t use it is unfair. I think if there was a real debate we could see a cultural shift.”
- Charlie Elphicke, MP for Dover was reported saying ""The M6 toll has been relatively successful,' he said. Mr Elphicke added that private finance should not only be used for new roads but tolling should be considered where existing roads are widened. "While public finances are in the state they are in, it is something worth looking at."
- Mark Pritchard, MP for The Wrekin said: "Toll roads have a part to play in a mixed economy of of providing new roads as long as there are safeguards about the financial viability and the prices are kept affordable.”

Of course I agree, but it needs to be more strategic, a more comprehensive new deal for motorists that engenders trust in pricing, which simply doesn't exist now.

News briefs - Australia, China, Indonesia, North Carolina, Ontario, South Africa

Australia - Chair of Australian Competition and Consumer Commission advocates congestion tax

According to the Herald Sun, chair of the Australian Competition and Consumer Commission (ACCC), Rod Sims, says that congestion charging, carefully managed, with some money used to support public transport, would make a meaningful impact on congestion and help provide funding to support infrastructure development.  He was making this point at a speech at the John Curtin Institute of Public Policy in Western Australia.

The ACCC is Australia's competition and consumer law enforcement body.  Although it has no specific role in its area, to have a highly placed officer of this body, responsible for consumer advocacy, raising this point adds to the growing number of views expressed in Australia supporting congestion pricing.

China - government declares certain public holidays to be toll free

China's introduction of toll free public holidays has had a mixed response according to state newspaper Global Times.

The report said:

The State Council approved a plan on August 3 to lift toll fees on passenger cars with no more than seven seats during four national holidays of Spring Festival, Tomb-sweeping Day, Labor Day and National Day.

This year's National Day holiday coincidently comes the day after Mid-Autumn Festival, which is governed by the lunar calendar, creating an eight-day national holiday. The State Council has ordered that passenger cars be allowed to travel free on the country's toll roads from September 30 to October 7.

Given China's toll roads are mostly privately owned, the issue has been whether the law has been consistently followed by the private road owners.  People were sceptical that the toll free period would come into effect, and the key reason it was introduced appears to be populism.

The toll free period started at midnight, resulting in large volumes of traffic travelling after that time.  It is not entirely clear from the reports, but it appears that few measures were adopted for traffic management at toll plazas, as the tolls still applied to vehicles with more than 7 occupants.  So vehicles would queue at toll plazas to be quickly flagged on.  One wonders why it would not have been easier to make all vehicles exempt and to have confined the traffic lanes at plazas to a number that avoided the use of plazas to cascade and then merge traffic flows.

Indonesian Government to create new toll road concession company

The Jakarta Globe reports that Indonesia's State Enterprises Minister, Dahlan Iskan, wants state construction company, Hutama Kurya, to become a toll concessionaire.

This would duplicate Jasa Marga, Indonesia's existing state-owned concessionaire, which reportedly has welcomed the move (presumably because it isn't about competition, but about capacity) and will help the company enter the sector.  The report claims that Hutama Kurya will be pursuing new toll roads in Sumatra

Meanwhile, another report notes that Jakarta TollRoad Development, a consortium that includes Hutama Kurya, has raised additional capital from PT Jaya Real Property (JRPT) and PT Jaya Konstruksi Manggala Pratama (JKON), which are part of the Pembangunan Jaya Group, the operator of Ancol Dreamland amusement park in North Jakarta.

JTD is a consortium of PT Hutama Karya, PT Pembangunan Perumahan (PP), PT Wijaya Karya (WIKA), PT Adhi Karya (ADHI) and PT Citra Marga Nusaphala Persada (CMNP).

One project that the firm plans to bid on is a 67-kilometer-long toll road that will connect all five of Jakarta’s municipalities. Based on previous reports, the project will require a total investment of Rp 40 trillion (US$4.19 billion).

North Carolina looking beyond fuel taxes

Business Journal reports that North Carolina Secretary of Transportation Gene Conti has said that the future of highway funding for the state is likely to be tolls and vehicle mileage tax, rather than fuel tax.  A key reason appears to be that the state has one of the highest fuel taxes in the US.  

Ontario to help build toll road for access to mining region

In some countries, developers ask the government to pay for and build the roads to gain access to land they want to develop.  In Ontario, the provincial government has said it will help do that, but will charge all road users to use it according to Wawatay News Online.  The project is intended to be a 300km new road to access an area called the "Ring of Fire" which is rich in mineral deposits.  It is not intended to be a public road, but a road purely for shifting cargo and for access to the mining developments, but is intended to be fully self funding by providing access to all of the adjacent mining claims.

South Africa - Cape Town and SANRAL disagree on tolls for new road proposal

IOL news reports on how a proposed new road in Cape Town, the R300, is showing up the split in policy on tolling in the country.  On the one hand, the City is promoting the road, but not as a tolled route. The City of Cape Town is against tolling on principle and is seeking a "new model" for funding major road plans.  However, national highways company, SANRAL is proposing that it be a toll road.  In any case, there isn't funding for the project at present.

Review of toll roads in the US SouthEast

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

It reviews the following roads:

- Triangle Expressway (North Carolina's first toll road);

- Southern Connector (South Carolina, tolled part of I-185);

- GA 400 (Georgia);

- Veterans' Expressway Toll Road 589 (part of Florida Turnpike system);

- Foley Beach Express toll road (Alabama).

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

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

Florida pursuing tolled upgrade of existing highway

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

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

Potholes on Indian toll road highlights poor incentives

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

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

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

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

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

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

North Carolina story shows importance of quality control in enforcement

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

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

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

Ohio Turnpike Director advocating wider use of revenues

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

The report also summarises the financial position of the road:

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

Ohio Turnpike thwarts trucking scam

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

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

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

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

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

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

Texas concerns about enforcement of free flow tolls against Mexican vehicles

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

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

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

The report notes:

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

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

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

Ratings news: LBJ Express, Madrid-Toledo, SANRAL, North Carolina Turnpike Authority, Manila

Note:  Apologies some of these have been delayed a couple of months as it was a draft article I forgot to post.

LBJ Express Lanes - Texas

Fitch Ratings affirms LBJ Infrastructure Group’s infrastructure bonds issued in 2010 at 'BBB- The bonds were issued to finance the LBJ Express lanes project in Texas.

Key comments are:

- Strategic location of the project “located in a highly congested area north of Dallas and near the Dallas-Fort Worth International Airport. The solid economics of the service area have benefited from considerable population and employment growth over the last decade” 

- Pricing flexibility will be retained to competitively price tolls against the demonstrated congestion which exists at peaks, interpeak and in weekends in both directions. 

- However, managed lanes do bring considerable uncertainty around revenue, given free parallel lanes and the sensitivity of demand with economic conditions. 

The LBJ freeway (IH-635) project is currently in the second year of a five-year construction period. The construction project upon completion will include an eight-lane general purpose freeway, a four- to six-lane managed lane facility, and a continuous two- to three-lane frontage road system with access ramps. As of March 2012, the total value of work completed for design and construction is $494.9 million, approximately 23.9% of the $2,074 million total project cost. Construction activities in the first quarter of 2012 included roadway demolition, utilities, earthwork, structures, and noise walls.

New express lanes will always carry considerable risk, based on demand for existing untolled capacity.

AP-41 Madrid-Toledo, Spain

Bloomberg reports that the highway between Madrid and Toledo, which is managed by companies including Grupo Isolux Corsan SA, Comsa SA, Azvi and Banco Espiritu Santo SA, has declared itself bankrupt at the Albacete court. The AP-41 toll road has over 500 million euros (US$646 million) of debt. It has faced financial ruin due to the collapse of the Spanish economy, as demand has dropped well below forecasts.

The road's profile is summarised below:

The new Madrid-Toledo (AP-41) toll road makes it possible to travel comfortably and safely from the Spanish capital to the imperial City, declared a World Heritage Site by UNESCO, in approximately 30 minutes. The 71.5 kilometre-long motorway, which passes by some of the most interesting and historical towns in the Community of Madrid and Province of Toledo, has new interchanges and a service area. This is a modern, fast alternative to the current A42 motorway, providing a trip without traffic back-ups and at a low cost. 

It's certainly without congestion, as it is following the news last year about the Alicante ring road's lack of demand.  Of course, the bankrupt road will continue to operate with tolls, with the creditors receiving the revenue.  However, given Spain's overall banking crisis, it would appear that this road will simply be another bad asset for some time, until its value is substantively written down.

SANRAL, South Africa

BusinessTech reports:

Moody's reduced the credit rating of the South African National Roads Authority Ltd following the North Gauteng High Court’s decision on 28 April 2012 to block the implementation of electronic tolling on the country’s largest toll road, the Gauteng Freeway Improvement Project (GFIP), pending a final court resolution on the matter.

The road agency’s global scale, local and foreign currency issuer ratings have been downgraded to Baa2/P-3 from Baa1/P-2, and the South African national scale issuer ratings has been downgraded to A2.za/P-2.za from Aa3.za/P-1.za.

More recently, the government agreed on a significant reduction in e-toll rates, in return for which the authorities extended a R5.8 billion budget allocation. Thus far, the delayed implementation of e-tolls has resulted in revenue losses of approximately R2.7 billion for SANRAL, which is a sizable 40% of its estimated 2012 annual budget.

These losses will grow by an estimated R100 million each month that the delay continues and will gradually erode the company’s cash buffer.

It has since reported that Sanral will experience significant financial pressure post October 2013 in the event that e-toll revenues are still not earned by the entity

Tolling the Gauteng project is now subject to court proceedings which are underway based on challenging the legality of using fully electronic free flow tolling.

For SANRAL's sake, it can only hope that the case is dismissed and it can get on with introducing tolls on the upgraded highways, but if it fails then South Africa may well need to look at a new approach to tolling and taxation of motor vehicles.

North Carolina Turnpike Authority

Marketwatch reports that "Fitch Ratings affirms the 'BBB-' rating on the North Carolina Turnpike Authority's (NCTA) approximately $294.5 million Triangle Expressway System senior lien revenue bond"

The Triangle Expressway will serve as a major alternative to congested free roads and as a key route to the main employment center in the region, the Research Triangle Park (RTP). Solid historical county and corridor population and employment growth is expected to continue and should support assumed traffic growth rates. 

Low Initial Toll Rates and NCDOT Planned Annual Increases: There exists the potential for lower traffic and revenue given uncertainty with perceived value of time savings and potential sensitivity to toll rates given the limited number of toll roads in the area. In Fitch's opinion the road has moderate economic ratemaking flexibility given higher-than-average wealth levels and a 2013 toll of approximately $0.15/mile. 

Significant state support for the project will be in the form of a $25 million annual payment from the state of North Carolina, which will support debt-service payments, after paying debt service on state appropriation bonds (rated 'AA?' by Fitch) (largely on the back-end of the toll revenue /TIFIA loan debt amortization), a construction assurance agreement, an operations and maintenance guaranty agreement, and a guarantee on the renewal and replacement reserve.

The Triangle Expressway will be an all-electronic road payable by either a transponder or video toll. A video will take a picture of a license plate and a bill is mailed to the driver. The NCTA currently has a tolling policy associated with the road. Two toll rates will be set: one for transponders and one for video tolling. The rates will differ across vehicle type. Initial toll rates are estimated to be around $0.15 per mile (2013 dollars). Given wealth levels of the greater Raleigh-Durham MSA and potential time savings, Fitch views the rates as reasonable. Should traffic levels not materialize as expected, Fitch believes there is some, albeit limited, flexibility to increase rates.

Manila Cavite Toll Road Finance Co

According to Reuters:  On May 22, 2012, Standard & Poor's Rating Services lowered its rating on the outstanding US$15.06 million Series 2010-1 notes (due 2022) issued by Manila Cavite Toll Road Finance Co. (MCTFC) to 'CCC' from 'CCC+'

Key points:

- the traffic of 11,000-11,500 vehicles a day on the extension road continued to be below the expectation of closer to 20,000 vehicles a day by the end of first quarter 2012.
- We believe traffic on the existing road is already reaching historical steady levels of 76,000-77,000 vehicles per day, and that traffic on the extension road is not likely to drop below its existing level of about 11,000 vehicles per day. However, it is the delay in the traffic ramp-up on the extension road that continues to hurt the project's performance. We believe traffic growth on the extension road has been affected by factors such as its relatively high toll rate, higher fuel prices, lack of awareness among potential road users, and road users getting comfortable with alternate routes.
 

News briefs this week: Hong Kong, North Carolina, Missouri

Hong Kong

The South China Morning Post report on candidates indicates that Albert Ho Chun-Yan, candidate for the Chief Executive position of the Hong Kong Special Administrative Region (for the Democratic Party), is the only candidate expressly supporting road pricing.  He is not ahead in the polls, but it will be interesting to see if the election on 25 March will result in whoever wins reinvigorating interest in road pricing in Hong Kong, as this was subject to a major study in the late 1990s including trials of GPS distance based charging using a site at the closed Kai Tak Airport.   Hong Kong has plenty of scope to introduce road pricing to manage congestion and is such an obvious place to introduce either distance or zone based congestion pricing (having already got tolls on the cross harbour tunnels).

North Carolina

In the Fay Observer, Jimmy Keefe - a member of the Cumberland County Board of Commissioners, serving District 2 - writes criticising the plan to toll I-95 in the state. He opposes it. His view is that the money from tolls will eventually go to other purposes, that the toll will be a burden and that it will drive traffic onto parallel roads. He seems not to approve of the upgrade, and he certainly doesn't offer an alternative for funding.

Missouri

The plan in Missouri to allow tolls on the I-70 Interstate highway includes the option for a PPP to rebuild the highway according to the website of TV station KOMU.  The intention is the upgraded highway be leased for some years.

It reports: MoDOT chief engineer Dave Nichols said. "We're looking for an opportunity to rebuild the corridor, relieve the congestion and keep the toll roads as low as possible."

Missouri DOT has a website about the proposal, which involves reconstruction of 200 miles of east-west highway.  Adding one lane each way would cost US$2 billion, adding dedicated truck lanes ( given a third of the traffic is truck) would cost US$4 billion.  US$2 billion would require a US$0.07 per gallon increase in fuel tax or US$0.003 increase in sales tax.

Banner for the proposal

Route of the proposed upgraded highway

News shorts: Bristol, Toronto, Atlantia and two articles mentioning pricing

Bristol

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

Toronto

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

Missouri

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


North Carolina


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

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

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

Atlantia

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

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

Greenbang claims congestion pricing is traditional

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

New York Times writes about HOV to HOT lane conversions


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

North Carolina seeking to convert Interstate highway into toll road

Hickory Daily Record reports that the North Carolina Department of Transportation has “ received conditional approval to participate in the Federal Highway Administration Interstate System Reconstruction and Rehabilitation Pilot Program”. What this means is that it has to prove that the section of I-95 it is seeking to toll would not be upgraded if it were not for the toll, but that it has passed the first hurdle of a Federal programme that could allow it to proceed.

However, the state does have to ensure that Federal funding for interstate maintenance will not be used as part of the upgrade project. The Federal Government conditions also mean that the tolling must take into account the interests of all travellers. The report indicates this means not imposing tolls excessively on commuters, but I would say this need not necessarily be the key point.

I would have thought ensuring revenues are collected from those who benefit the most from the upgrades would be in order, so that tolling is designed in a way that is proportionate. Electronic tolls are an obvious solution, and the more charging point the better chance there is of being proportionate.

The proposed upgrade includes capacity increases in some sections from six to eight lanes, upgraded interchanges and bridge replacement. The state claims it only has funds to pay 10% of the $4.4 billion cost for the project.

Route of I-95 in North Carolina

The state faces a clear conundrum. The line between new capital investment and maintenance is an artificial one, largely used for accounting and public policy purposes. You see maintenance is always seen as “essential” and “core” whilst capital investment is seen to be “additional” and “discretionary”. The real truth is that roads are depreciating assets that, to continue to operate, always need new capital poured into them. It seems simple to separate the capital for maintaining the road in its current condition, from improvements. Yet what is bridge replacement if it results in a new bridge that can handle heavier traffic or is aligned to allow for faster speeds or safer trips.

I believe the state is deliberately and reasonably mixing improvements with capital renewals because it has to, because the Federal Government persists with the notion that maintenance is separate even though funding for maintenance is inadequate.

The lack of funding available for major construction work such as proposed in North Carolina is raising the profile of tolling across the US like never before. Bear in mind also that other states are considering tolling I-95 as well.   It begs obvious questions about taking a co-ordinated approach so users might be able to have a single account and payment option for use of the entire highway.

News shorts: Norway, North Carolina, New Jersey, Pennsylvania

Norway

Norway is to change laws to allow local authorities to introduce congestion charging, primarily to help contribute towards reducing emissions.  Given Norway's recent history with tolling, with urban toll rings in Trondheim, Bergen and Oslo (and the latter is now effectively a congestion charge), this is unsurprising.  

North Carolina toll road to be “expensive”

The Triangle Business Journal reports that the Triangle Expressway, due to open in December, will be one of the more expensive toll roads in the US. It will be North Carolina’s first toll road and will be fully electronic free flow using DSRC and ANPR technologies. It will be 18.8 miles long between I-40 at Durham to NC55 Morrinsville. The cost is estimated at US$1 billion to be recovered over 50 years.

Those who drive it from NC 147 to Holly Springs will be charged as much as $4.15 when the 19-mile section is completed next year. For drivers who don’t buy remote payment devices called transponders, the rate of 22.2 cents a mile compares to 16 cents a mile on a toll road in Greenville, S.C., 13 cents a mile on a route in Austin, Texas, and 8 cents a mile on both the New Jersey Turnpike and a short toll highway in Atlanta. The local tollway also is relatively expensive for transponder-outfitted cars, but the 14.5 cents a mile they will pay represents a relatively generous 35 percent discount. The 14.5-cent rate is just above average compared to a selection of U.S. toll systems that use transponders, according to an economic analysis used to set rates here.

The key for me is whether the tolls match the infrastructure costs, if they aligned then it is difficult to argue that they are excessive.

New Jersey and Pennsylvania states pulling money from toll roads

The Inquirer reports how turnpike authorities in both New Jersey and Pennsylvania are being told to hike up tolls to help states meet general expenditure.

New Jersey Turnpike Authority last week agreed to contribute an additional $324 million a year to the state. Since 2007, the Pennsylvania Turnpike Commission has sent $3.1 billion - more than it collected in tolls - to Harrisburg for statewide use.

Tolls will go up again Jan. 1 on the New Jersey Turnpike (53 percent), Garden State Parkway (50 percent), and Pennsylvania Turnpike (10 percent for cash customers; none for E-ZPass users).

Given some of the debates about privately owned toll roads taking money from motorists, I wonder if it is practices like this that provoke the likes of Initiative 1125 in Washington!