UK government report pushes further for PPP toll roads

A report by non-executive Chairman of the Highways Agency, Alan Cook, has proposed that all new motorways should be toll roads built, financed and owned by the private sector according to a Press Association report.  He recommends that the Highways Agency, an executive agency of the Department for Transport be remodelled into a more business like agency, and that a strategy be developed for objectives on capacity, performance, safety and environmental outcomes over the next five years.  This includes new roads and improvements to existing ones.  He proposed that an independent board be established to provide oversight.

Meanwhile, Cambridgeshire Chamber of Commerce is opposing converting the A14 into a toll road along with a major upgrade according to Cambridge News.  It wants the road to be upgraded untolled as was previously the plan.

News briefs: UK, Canada, Maryland, New Jersey

UK

Parliamentary Under Secretary of State for Transport, Mike Penning has announced that the UK government will not be proceeding with its proposed 33% increase in toll charges this year (or 25% next year) on the busy Dartford Crossing, according to the Essex Enquirer.  The increase proposal resulted in a flurry of submissions to the government opposing it, given the underlying economic conditions.  The government has delayed decisions on increases until 2012, and there is speculation that increases may follow the proposed conversion of the crossing to a fully electronic free flow system to relieve the chronic congestion at the toll booths.  The government is also considering options to build a fourth crossing (it currently consists of two tunnels northbound and one bridge southbound), which would be funded by the tolls.  I previously reported on the Dartford Crossing issue late last year.  Trucking lobby group the Freight Transport Association supports the decision and is calling for the introduction of free flow tolls as soon as possible and any future toll revenue to go into additional capacity.

Toronto

The Star (Toronto) reported some interesting comments from former head of Metrolinx (the Toronto transport authority) at a conference on road pricing:

-  Most citizens believe governments already have the funds they need for transportation. (true)

-  Don't ask people to do things that are against human nature. (true)

-  Transportation agencies need to approach their industry as if it were a consumer product and sell convenience and availability. Transportation should be a lifestyle product, something the customer wants to be associated with. (true)

- You can make a regional case for road pricing but you have to remember to sell it locally. A lot of things come down to the individual and neighbourhoods. (true)

- Make sure you are getting the best capacity out of existing infrastructure. The Ontario government invested more than $300 million in high occupancy vehicle lanes but doesn’t charge for them. (true)

- The only thing people detest more than sprawl is density. (quite!)

- When it comes to pricing structures, it's all about choice. You have to provide people with alternatives. (the question is whether this is mode, route and time of day or part of these)

- Generally the public supports funding for capital — new vehicles, new transit lines or new roads. It is less enthusiastic about paying to operate and maintain those things.(obviously)

I wrote before that Toronto, which already has a free flow toll road, is debating adding a toll lane to an existing road.  However, the debate needs to be had for it to go further.

New Jersey

Bloomberg Businessweek is reporting that New Jersey Turnpike Authority toll roads are forecasting a $45 million shortfall for the year to September, 6% below target.  Part of the decrease is due to snowstorms and Hurricane Irene, but most is attributed to the economy suppressing demand.  This is not expected to cause major problems for the roads, as revenue is adequate to cover opex, capital expenditure and service debts.  Meanwhile, plans to increase tolls on two major turnpikes in New Jersey are proceeding, with the main intention being to general significant net revenues for the state.

New Jersey Turnpike tolls due to rise 53% in January 2012 on the 148 mile highway.

Garden State Parkway tolls due to rise 50% in January 2012 on the 173 mile highway.

Maryland

Website of radio station WTOP reports that the new Inter County Connector (profiled here) toll road will have a 50% surcharge for users without an EZPass, as Maryland's first fully electronic free flow toll road.

Sri Lanka's first toll expressway finally opens

According to Colombo Page, Sri Lanka's first toll expressway has finally been opened for traffic by Sri Lankan President Mahinda Rajapaksa. The E-01 Southern Expressway has been controversial, as I wrote earlier this year with a full profile of the road.

The fears being that the road would create bottlenecks and induce fraud, with concerns exacerbated by the ongoing delays to its completion.

The toll for the whole length of the 126km road (from Colombo to Galle) is US$3.50, and the construction cost has been about US$650 million. The expressway is two lanes in each direction, but has been built to be a full service operation by the Sri Lanka Road Development Authority which owns the road. A dedicated Police unit (Special Task Force) will be employed for traffic management along the road, with monitoring of conditions, including breakdowns and accidents by CCTV. The Special Task Force will also have first aid medical capabilities to respond to accidents, while a dedicated fire brigade unit will also be on hand. There are plans for further extensions.

The toll is to be collected manually using a closed system, whereby a driver receives a ticket from the entry point on the expressway (at any interchange) and then pays according to distance travelled at an exit point. 

All the best for all Sri Lankans using this new expressway, and also for those towns and villages that will now see through traffic removed from their roads, which is surely one of the major benefits of building such a major new route.

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!

Kauffman Foundation article proposes privatised roads with road pricing

Robert E. Litan, Vice President of Research & Policy, Kauffman Foundation has written an article published by the Huffington Post where he proposes a new approach to highway management and funding.

The article criticises the Obama Administration’s approach by saying how it neglects pricing:

the overall plan presumes that the first answer to congested roads and bridges is always new construction, when we know that roads, like electricity and telephone lines (more about them soon), are used most heavily in peak periods, but are almost always uncongested in off-peak hours. If congestion were priced to reflect this variation in demand, then economic activity would shift to different times of the day so that traffic is smoothed out. Yes, this would mean varied and staggered work hours at many locations, and yes for this and other reasons, congestion pricing is not wildly popular with the public. Yet, this is largely because voters have not been confronted with the choices involved.

Quite right, but of course any move towards better pricing is more complex than just building something, and so requires more sophisticated debate than politicians are often willing to undertake.

He think that voters need to be told either taxes go up or congestion pricing can be introduced, and that they might be more convinced of the merits if the choices are presented like that:

the initial evidence on high-occupancy-toll (HOT) lanes indicates that motorists in all income groups value the option of paying a toll to get to their destinations faster.

Yes, although extending the principle to currently untolled roads is always more difficult. However, he believes the wider solution is privatisation, because the private sector is better able to apply efficient pricing:

Relative to governments, privately owned infrastructure is likely to be more efficient and innovative because private owners have much stronger incentives to reduce costs and respond to users' preferences to maximize profits.

private owners are likely to encounter less opposition to congestion pricing than governments, since customers are used to paying for premium service from other types of private businesses (such as airline and train travel, credit cards, and so forth). Moreover, private firms are likely to apply congestion pricing to cater to users' varied preferences for speed and reliability -- for example, offering a few lanes with high tolls and little delays and lanes with lower tolls and more delay.

From a social perspective, greater use of congestion pricing provides a signal to help insure that only truly essential infrastructure projects are built.

This is perhaps one of the more neglected points, besides reducing congestion and being a new source of revenue, congestion pricing can help signal what new investment should occur. The other advantage of private ownership is innovation.

The challenge is dealing with concerns over monopoly power, and how local streets are part of public space, unlike other network utilities. Issues that will need addressing, but they are not reasons to dismiss Litan’s points outright.  He acknowledges this:

It is also possible that the experiments may reveal that governments may need to regulate the prices of some transportation links where drivers or fliers have few alternatives, but this should be the exception, not the rule, since price regulation introduces its own distortions (especially when it is based on a measure of costs, since this is likely to lead to gold-plating).

Sophisticated pricing is something many of us are used to in a multitude of areas of life, there is no reason to presume that eventually roads may well be treated the same way.

Litan is optimistic:

A new private industry, one centered around the ownership of roads, bridges, airports, and other formerly publicly owned facilities is thus waiting to be born, if policy makers at all levels of government will do everything they can to birth it with carefully designed experiments in selected cities, as a precursor to making this national policy.

Vote No on Initiative 1125 if you support better road pricing

I don't have a particular personal interest in the State of Washington, since I've never actually been there.  However, I do have an interest in good public policy on road pricing.  Initiative 1125, which comes up for a vote on 8 November, is not an example of this.

It is being promoted by activist Tim Eyman, who frankly has taken stands on a number of issues that I would support, since I tend to be in favour of free market oriented solutions and prefer to err on the side of less government intervention over more.   However, as I have written before, I believe on balance, that while i understand his motives, on this occasion, he is wrong.

In September I said Initiative 1125 had good intentions.  I can understand not wanting money collected from road users to be spent on anything other than the roads themselves, but to clumsily only link tolls to the projects they are specifically on limits what can be done to replace fuel taxes over time.  Ultimately, I believe tolls of one form or another, will be applied to all major roads and perhaps all roads, as fuel tax becomes unsustainable.  This initiative would block that.  Similarly, the idea that a road is "paid off" and no longer needs to be paid for, doesn't really bear close scrutiny.

The key problem being that roads always need new capital put into them to be operational.  It is like building a house and assuming you never need to paint it, fix the roof, fix gutters, replace pilings or the like over time.   The setting of tolls should take into account recover of capital for long and short life assets, bearing in mind renewals will eventually be needed for major assets such as bridges.  It is a failure to consider roads like other assets that has seen so many bridges fall into disrepair.  

Beyond that is to consider congestion pricing, and what to do with surpluses from tolls.  The advantages of congestion pricing in terms of improving productivity, reducing delays and emissions are potentially enormous.  Initiative 1125 would stop this because the revenue wouldn't be spent on the roads subject to congestion pricing.  Even if you support using congestion pricing to engage in wider tax reform (e.g. replacing other taxes for money used to spend on road), it wouldn't be allowed.

He could have stuck to the first provision of the initiative (Prohibit state government from diverting gas taxes and toll revenues in the motor vehicle fund or other funds to the general fund or other funds and used for non-transportation purposes”), and I would not have found it problematic, but the rest makes it unacceptable.

The Olympian reports:

This is a typical Eyman initiative that overreaches and attempts to tackle multiple issues with a single initiative. By cluttering I-1125 with multiple requirements, Eyman has torpedoed his own effort. Toll rates should be set as close to the users as possible, not by lawmakers trading political favors in Olympia.

The Yes campaign website says tolls should only be used for "capital costs", presuming capital costs cease to exist at some point.  It seems to suggest congestion pricing is "politically correct social engineering designed to raise the congestion misery index high enough to force you out of your car."  Nothing is more politically correct than running roads in the traditional Soviet style manner of taxing users on an equivalent basis.   However, while I have some sympathy for those who question spending large amounts of money raised from road users on politically driven, financially unsustainable and economically inefficient public transport projects (and road projects), this initiative not only doesn't deliver for supporters of more market oriented approaches to roads, but is positively contrary to it.  Some of what the yes campaign says I agree with, but the ends do not justify the means, and the means are contrary to the philosophy driving the ends.

So while the No campaign looks like primarily a campaign from labor unions, Democrats and environmental groups, it should also be supported by those who believe in more economically rational pricing of roads and indeed may even interfere with privately owned toll roads if they were to be built.

So although I have some reservations about opposing the initiative, I believe those who DO support better pricing of roads, who think fuel tax is a poor way of pricing for road use and think tolls, HOT lanes, congestion pricing and ultimately network wide pricing are worthy tools for the future, should reject Initiative 1125.  Boeing and Microsoft already are opposing it.

Initiative 1125 is being returned by postal ballot by 8 November, it is one of several other ballots on the day.

LA considers removing green car exemption from HOV and HOT lanes

For some years electric and certain alternative fueled vehicles have been allowed to use HOV lanes in LA with only one occupant. The obvious reason was to promote more environmentally friendly vehicles. However, the LA Times reports of plans that two of the busiest HOV lanes are to remove this exemption once they get converted to HOT lanes. The HOT lanes will only be untolled for buses and high occupancy vehicles. Low emission vehicles will have to pay the toll, like any other single occupancy vehicles.

I wrote some months ago (including a map) of the LA HOT lane trial, which could be the first step towards a city wide network of such lanes.

The report states that Stephanie Wiggins of the Metropolitan Transportation Authority said: that on the southbound 110 during afternoon rush hour, hybrids and natural gas vehicles accounted for almost 1 in 5 vehicles in the carpool lane.

In other words, 20% of lane use is "green" vehicles.  If the lanes are meant to be free flowing and to encourage car sharing, they can't also support incentives to own green vehicles.  Too many objectives can end up with conflicts.

Obviously, this will upset owners of such vehicles.  However, their cause is not helped by what was reportedly said by John Boesel, chief executive of Calstart, "a clean-transportation technology trade group in Pasadena".  He claimed, oddly, that:

In London, which has pioneered such "congestion pricing" efforts, drivers of clean-fuel vehicles pay nothing or deeply discounted rates to use carpool lanes, and that is driving the purchase of electric and other clean fuel vehicles in that city,

Firstly, London is not the pioneer, it was Singapore.  Secondly, London has no carpool lanes.  Thirdly, the congestion charge does have a 100% exemption for the lowest emission vehicles, but this no longer includes older-generation hybrids.  It would be incorrect to claim this drives the purchase of such vehicles, as the other incentives include zero vehicle excise duty, free parking and the very high price of fuel in the UK.   Such measures may be worthy of consideration in California.

Stockholm by contrast, is phasing out exemptions for "green vehicles" from its congestion charge.

The interest in promoting environmentally friendly vehicles is understandable, and such vehicles already have a major gain by not paying fuel taxes.  It is conceivable that such vehicles could have discounts on HOT lanes, but it makes sense to not have three classes of vehicles that gain access - HOVs, those who pay tolls and those that are "environmentally friendly".  It makes enforcement expensive and complex, and so HOT lanes should be developed with the intention of relieving congestion, and let policies be developed separately to incentivise environmentally friendly vehicles.  

Puerto Rico success in converting to electronic free flow tolling

I've written before about the privatisation of Puerto Rico's toll roads with Goldman Sachs and Abertis, and the plans to transform the territory's toll roads through improved maintenance and service standards.  The two roads involved are Highways 5 and 22. 

Businesswire writes about the success so far in introducing electronic free flow technology to two publicly owned highways.  PR-52 and PR-53.  The Puerto Rico Highway and Transportation Authority contracted Transcore as system supplier.

The PR-52 north to south arterial highway linking San Juan with Ponce, which includes five toll plazas, and PR-53 linking the south and east coasts of the island, with three toll plazas, were part of phase I of the project and were the first to transition. Previously rush hour wait times at high traffic toll plazas ranged from 15 to 20 minutes or more. Now motorists can pass through those same toll plazas at highway speeds, reducing some commute times by up to 45 minutes.

An obvious benefit of removing manual tolls.  Although the report indicated not only that cash lanes were converted to electronic free flow but new lanes were added for free flow - which honestly seems a little odd - true electronic free flow at highway speeds need no more lanes than the road has itself.

The project for conversion cost US$26 million and is branded AutoEspreso, starting with ETC lanes in 2004, and is expected to be completed by mid 2012.  Current ETC market share is 70% across all toll roads.

A key issue, much neglected, is how to deal with the "unbanked" population - people without bank accounts.  45% of the population of Puerto Rico is without a bank account, so 55% of motorists top up their toll accounts with cash over the counter.   Not the traditional direct debit/credit card model elsewhere, demonstrating the need for cash payment to be addressed.   Another innovation is ILR (In Lane Replenishment) allowing motorists to set up accounts on the spot with cash or credit/debit cards, or to top up their accounts (this might explain the "extra lanes" which are not exactly free flow, but provide essentially a retail outlet at the gantry).

The report indicates operational cost savings of US$2-US$3 million p.a. (presumably by eliminating manual toll collection) and reduced "leakage" (people getting free passage by toll booth collectors and thieving from toll takings) of US$10-US$20 million p.a..  I'm astonished that rather simple steps to address this are not being taken already.

Good on Puerto Rico for moving ahead on free flow technologies, especially at congested sites.  The scope for more such conversions is considerable, but the great lessons learned about Puerto Rico are around understanding the local market.  However, it's important to bear in mind the report was largely based on a press release from TransCore, it will be interesting to see any reports based on experiences of the public in Puerto Rico and perceptions of how they see service standards.

Think Tank proposes HOT lanes for Vancouver, Calgary and Montreal

The Vancouver Sun reports on a report by the C.D. Howe Institute by Benjamin Dachis that calls for the 74km of existing and planned HOV lanes in Vancouver to be converted into HOT lanes, to help reduce congestion.  He also writes about doing the same for Calgary and Montreal.

The report claims congestion in Vancouver cost C$927 million per annum (US$935 million) which comes to C$466 per capita (US$470).   It looked at allowing vehicles to use the network by paying a toll akin to C$0.23 (US$0.23) per km at peak times and half that at the off peak - to match the Toronto 407 toll road rates.  

That would generate C$81 million (US$82 million) per annum in revenue.  The report notes that existing motoring taxes in Vancouver are too low, saying that taxes on fuel and ownership only cover 53% of road infrastructure costs - quite the opposite of such taxes in Europe.  

The Vancouver Sun article is quite complimentary of HOT lanes because:

- HOT lanes preserve untolled options;

- HOT lanes improve travel times for buses as well as cars;

- HOT lanes ensure better utilisation of HOV lanes;

- Lower income drivers often value the time savings greater than middle income ones, contrary to the much abused "Lexus lanes" label (in part this is due to a greater need to get to work on time or having a busier schedule with multiple jobs);

- The primary use of HOT lanes is for urgent trips, which is typically irregular (e.g. attending appointments or to meet flights).

The report does not explain the potential congestion reduction benefits, but assuming the lanes are underutilised, there would clearly be some benefits.   One issue not yet adequately addressed is quite why HOT lanes should simply not be toll lanes.  After all, if a car carries two or three people that is two or three people who can pay for the scarce road space.  I strongly advocate HOT being HOV for 3+ occupancy, with a long term intent to phase out the HO component over time.  

However, for now HOT lanes make a lot of sense for cities with extensive HOV networks.  They can improve utilisation of networks, introduce road pricing in a painless way, with a parallel unpriced option, and offer the real benefit of express lanes that are appreciated by motorists undertaking trips with a high value of time.  I would argue they should also be available to trucks, as freight has similar challenges of meeting time. 

I hope Canadian policy makers can start to think of how they might take lessons learned from US HOT lanes to replicate the successes seen there in Canada.

Fear that tolling Columbia River Crossing will result in excessive diversion

CRC in blue adjacent to I-5, I-205 is upstream on the right

The news of the 50% reduction in traffic expected on SR 520 in Seattle from tolls has caused concerns in Oregon that the proposed tolled Columbia River Crossing project (which will replace the current over 95 year old "bridge lift" equipped bridge that forms Interstate 5 connecting Oregon with Washington) will suffer a major diversion of traffic to Interstate 205's Glenn L. Jackson Memorial Bridge some 6 miles upstream. 

The Columbian reports some concerns that estimates of toll revenue (neither route is currently tolled) are excessive and cites the expected 50% diversion in Seattle as likely for Oregon.   It claims the 2009 toll study only predicted diversion of less than 10% by 2030.

The bridge is estimated to cost between US$3.1 and $3.5 billion (including a light rail extension), with about a third coming from tolls, a third from the Federal Government and the rest from both Washington and Oregon State Governments.

Tolls are to be electronic free flow using DSRC and ANPR, with peak congestion based charges.  Curiously it has a break down of revenue and expenditure (although toll rates are not defined yet) of:

91% revenue from tolls, 9% from surcharges on ANPR based transactions.

69% of expenditure is to be available to service debt on the bridge, 23% pays for toll collection costs and systems maintenance, 5% are "uncollectable tolls" (written off), 3% paying credit card fees and 1% for operations and maintenance of the bridge.

It appears to be a very high cost of collection, something that ought to be seriously reduced over time. I'd hope that 26% toll collection costs should easily be half that within 3-5 years.

However, it will be fair to assume that there will be substantial diversion in the initial years.   What it will take to minimise this is for tolls to be at lower prices initially whilst accounts are opened up and people get used to free flow tolling when neither state has much experience of it (and people in Portland are to be expected to become familiar with it).  The effort taken on the customer service end for the first year will be well worthwhile.