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.

News shorts: Vancouver, Washington State

Vancouver debates a sales tax to pay for transport

Although evidence and professional opinions would suggest that road pricing is the best way forward for Vancouver, it is instead going to hold a referendum on a sales tax that will be hypothecated to pay (primarily) for more public transport.  The tax will be 0.5% on all sales.  The North Shore news reports  that the tax will raise C$250m (US$201m) per annum, at a cost of between C$125 and C$250 per household, depending on which side of the argument you believe.  Of course that includes households that wont use any of the proposed transport projects and those who will use it everyday.  Equity and economic efficiency are thrown out of the door in the quest to raise tax revenue.

Hypothecated general taxes for transport are no more intelligent than such a tax for health or for subsidising farms.  However, it is a question of what can be done politically and legislatively, versus economic rationale.

A better approach would be at least some increase in taxes on owning and operating vehicles, a more rational appraisal of where benefits lie with some of the projects (and then charging accordingly) and looking at expanding tolling.  It is always unclear quite why everyone should pay regardless of their use of the transport network or the benefits they obtain (whether they be users, property owners or businesses).

Ballots will be sent out March 16, and votes must be in by May 29, 2015.  It's none of my business, but I'm hoping for a no.  Sales taxes are very poor ways of raising money for specific purposes, and it is telling that advocates of it clearly don't think they could convince the users of the new infrastructure to contribute much of the capital cost.

Washington state consulting on higher HOV thresholds for HOT lanes

According to the Bothell/Kenmore Reporter, the Washington State Transportation Commission in consulting on tightening up the eligibility for vehicles to use the I-405 HOT lanes that are currently under construction.  The idea being that high-occupancy vehicles (HOVs) will need three occupants to use the new lanes untolled.  This is inconsistent with the current approach to such lanes in the state, whereby two occupants are sufficient. 

I wrote about these lanes before, questioning their financial viability, but now it seems like this move is designed to partially address this.  However, the report indicates that having a three occupant HOV threshold is needed to cover operating costs, re-emphasising my point that new capacity HOT lanes invariably are a form of subsidised new capacity.  Those paying to use the lanes are not paying the capital costs of the capacity, but paying as a market mechanism to manage demand.  That's positive in terms of ensuring a high quality of service (and bearing in mind that users of parallel untolled lanes benefit from the transfer of traffic onto the new lanes), but it is not a solution for funding new capacity.  It appears that the key goal is meet the federal and state guidelines of maintaining a 45mph average speed, and it is more fair to target the HOV users, rather than hiking the tolls.

In terms of pricing the report says:

The recommended average toll for the express lanes will be between 75 cents and $4 at the start of the tolling system. More congested days would fall between $4 and $10, the latter being the maximum and expected only 10 percent of travel days. Seventy-seven percent of trips are expected to be below $1, according to the WSDOT.

As I've said before, I see value in converting underutilised HOV lanes to HOT lanes, and even in considering whether new lanes should be toll lanes.  However, as HOT lanes you leave some users benefiting whilst paying nothing more for vastly improved levels of service.  It is more equitable and financially prudent to simply build them as toll lanes.

Will Dallas have the world's largest HOT lane network?

Dallas News reports on plans from the North Texas Tollway Authority, North Central Texas Council of Governments and Texas DoT to embark on a major expansion of tolling in the city.  This includes not only including tolls on all major new projects, but retrofitting HOT lanes on existing highways and converting HOV lanes to HOT lanes where feasible.

The report includes a map depicting an extensive network of future toll lanes (which I suspect means HOT lanes) which will mean the city will possibly have the largest such network of any such city in the world.

DallasNews map of current and proposed tolling network

The article cites the existing toll lane network as including:

- LBJ Freeway (map here)

- DFW Connector

Planned toll lanes:

- IH 35E through Denton County

- IH 30W of downtown Dallas

- SH114

- SH183

HOV lanes replaced with HOT lanes:

- Central Expressway

- I-30 east of downtown

- I-35E south of downtown

- US highway 67

The lanes are expected to enable traffic to be managed during major sporting events or catastrophes, as they can serve as emergency vehicle lanes in such conditions.  

 Michael Morris, transportation director for the North Central Texas Council of Governments talked of the problems with a 1985 air crash at DFW “In that case, it was difficult for all of the ambulances and firetrucks to get where they needed to go”.

Opposition comes from politicians in Collin County, which opposes converting HOV lanes to HOT lanes, largely because of a belief that there are enough tolled routes in the county.

What's telling about this report is how pervasive and extensive the proposed network will be.  It will mean that for perhaps the majority of Dallas motorists, the option of paying to use a lane will be the norm for their trips.  

My views on HOT lanes are based on considering the total economic and financial costs and benefits:

- Converting an underutilised HOV lane to a HOT lane increases utility, raises revenue, significantly reduces congestion for its users, and marginally reduces congestion for non-HOT lane users, so it is likely to be beneficial.

- Building a new HOT lane is almost always never going to be financially viable, because the capital costs of the additional lane are unlikely to be recovered from the peak users. A pure toll lane may be marginally more likely to be viable, but again it will only be where congestion is chronically bad that sufficient users will be prepared to pay enough to pay for the extra capacity.

- Toll lanes are likely to be more beneficial than HOV lanes, as HOV lanes tend to provide free benefits to couples travelling together as much as incentivising car pooling.  Far better to ration by price than rewarding chance.

- In the longer term, their value is in demonstrating what pricing can deliver, but if they are not financially viable it means a better solution is to price the whole network, appropriately, which includes looking at the role of fuel taxes.

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

Do Washington State's proposed I-405 HOT lanes make sense?

The Herald Net reports that the State of Washington is planning to have HOT lanes either way on the entire length of I-405 between Lynnwood and the I-5, effectively meaning that Seattle's major western bypass will have an express lane capability.  All the details are in this report on the WSDOT website.

The northern portion is already under construction from Lynnwood to Bellevue, with US$334 million being spent converting existing "car pool" lanes (HOV lanes) into HOT lanes, with that project expected to be completed in 2015.  However, funding is yet to be approved from Bellevue to SR-167 (which already has dynamically priced HOT lanes), as this would require new lanes and would cost US$1.1 billion.

I-405 Washington HOT lanes

In the map image above, green depicts the lanes already under construction between Lynnwood and Bellevue, blue being the proposed new lanes, and yellow the SR-167 lanes.

There are several interesting dimensions to the report.  It recommends that the conventional two-person HOV requirement only entitle motorists to free access during off peak times, with a minimum three-person HOV during peaks.  That's an interesting, albeit complex for enforcement, way of rationing road space for the HOV component of users.

Pricing will be dependent on how many sectors are used, with an initial price of US$0.50 for each sector (Lynnwood to Bellevue being one, Bellevue to Renton being the next, followed by Renton-Pacific.  The expectation is that dynamic pricing would be introduced as well.

The automatic question is surely, why can't the lanes pay for themselves?  The report claims that only US$215 million of the US$1.1 billion capital cost can come from tolls, with the rest sought from the "gas tax".   

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.

Houston prefers HOVs to toll payers

Impact News reports on how Houston Metro (Metropolitan Transit Authority of Harris County) is raising toll rates on several HOT lanes to reduce peak congestion on the lanes, but paradoxically also increasing the hours during which HOVs can use the lanes.

Typically HOT lanes have evolved in the US as HOV lanes were often undertutilised, and transport authorities wished to get better use by charging other motorists to use the valuable capacity.  Houston has taken quite a different approach, because it appears that its HOV capacity is not  underutilised at peak times.   

As such, its HOT lanes are HOV only at the peak, the economic assumption being that high-occupancy vehicles are a more valuable use of the road space than anyone willing to pay a toll. 

So in response to growing peak congestion, it is increasing the period of exclusive HOV usage and increasing tolls at the either side of that period.

Now the policy position at Houston is that the lanes exist for HOVs first and foremost, which is all very well, except that it isn’t sustainable.  Ultimately, if demand continues to grow to use these lanes, like others, then they will be congested, and either more capacity will be needed, or the lanes will have to be priced – for all users.

I’ve never been convinced that HOV lanes are a good response to the demand/capacity problem of highways, if only because they are predicated on vehicles with multiple occupants having a higher value of time than those with one and on incentivising more efficient use of road space, by making car-sharing more attractive.  However, one survey from the State of Washington indicates that by far the most prevalent car sharing is that of household members, indicating that in many cases use of such lanes is fortuitous rather than planned.   A California PATH Research Report undertaken by the University of California, Berkeley,  indicated that HOV lane systems don’t actually add capacity compared to conventional lanes claiming that “A system with one HOV lane and three general purpose lanes carries the same number of persons per hour as a system with four general purpose lanes”.   That may counter-intuitive, but it reflects actual behaviour rather than the wishful thinking of some policy makers.  

Surely a better approach would be to charge all users. The price per user would be spread across multiple individuals for HOVs, which would give a more equitable indication of the value of the scarce resource (road space) for those using it.  It would also provide a revenue stream that may eventually be leveraged to provide more capacity if pricing gets particularly high.  Meanwhile, raising the HOV threshold to three or more occupants and then four, may be an interim measure, but leaves the question of excluding a wider group of users from the lanes at the time they most want to use them.

Those motorists unhappy about paying have always got a choice, they can use the untolled lanes that everyone else uses, including freight (which almost never is offered similar opportunities to save time and avoid congestion, even though the costs of delay for trucks can be significantly higher than that for car users).

Houston’s approach appears to be “buying time”, but I think the next obvious step is to start charging for HOV use at peak times.   The case for pure HOV lanes is not clear, and the Houston policy will need to be revisited sooner or later.  Bear in mind that Houston Metro is a transit authority, which means it is driven by promoting use of public transport in the city.  Whether that necessarily fits in best with maximising the efficient use of the existing highway network is not clear.  

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"

HOT lanes open in LA and Virginia

In the world of road pricing, HOT lanes are a peculiarly US answer to the problem of poor pricing of highways.  With the exception of Israel, you wont find HOT lanes anywhere else, largely because the case for HOT lanes is usually based on getting better utilisation of existing HOV lanes by tolling single occupancy vehicles.  Rare is the case that it is economically efficient or financially viable to charge for new lanes, because outside peak times few people will use them, and so the assets remain barely used and not generating much net revenue.  As a result, they tend to be cross-subsidised to reflect the fact that new HOT lanes benefit the users of untolled lanes, by merely shifting demand over to those lanes.  The LA pilot that has been launched is funded by a $210 million federal transportation grant and $80 million from LA Metropolitan Transportation Authority.  

HOT lanes are appealing to politicians because they retain a measure of choice, motorists can pay to bypass congestion or can remain in congestion.  The retention of the poorly targeted HOV component (whereby vehicle occupancy is somehow seen as a blunt measure of better use of road space) is a political sop that does little besides reward families, couples and the handful of people who may work together and live in sufficient proximity to make it worthwhile.  In all those cases I take the view that if 2 or more people value an uncongested trip, they can split the cost of the toll.

Los Angeles

I've written before about the Los Angeles project, with a description here as it comprises two sets of dedicated lanes on major corridors to the south and east of downtown LA.  It is essentially a piloting of HOT lanes for the city, launched whilst the city region is on the cusp of selecting a contractor to undertake a study for a far more extensive network of "express lanes" (Peter Samuel describes why the term Express Lanes is a misnomer).

The key dimensions are:

- Two lanes each way acting as express lanes with specified access and egress points;

- All users, whether HOV or single occupancy vehicles must have a DSRC transponder, and declare how many people are in the vehicle.  Transponders require a $40 deposit, which becomes a credit to toll accounts;

- Tolls are dynamic, with prices rising and falling according to real time conditions on the HOT lanes.  Users pay the price declared at variable messaging signs located at access points.

- Prices are based on per mile usage of the HOT lanes, with a cap of $1.40 per mile being the maximum charged.  If the toll is at that price and the lanes operate at below 45 mph average for longer than 10 minutes, the lanes will be closed to new single occupancy tolled customers.  HOV users will retain free access;

- A low income assistance programme is included, offering transponders for free for selected users, but offering no discount on the toll (as use of the lanes remains optional);

- It is a one year pilot only.  What happens after one year is unclear, but presumably if it generates surplus revenue after operating costs, it may continue.

There have been extensive reports about the LA HOT lanes, which claim it will be a "culture shock" in a city that has had no tolled routes at all until now.

According to NBC Los Angeles, the Los Angeles County Metropolitan Transportation Authority is hoping the HOT lanes encourage commuters to think about their trips:

"We hope it changes commuter behavior in terms of getting people to really plan their trip before they start out," said Rick Jager, a spokesman for the Los Angeles County Metropolitan Transportation Authority.

Jager said the agency is encouraged that more than 30,000 drivers have already ordered transponders needed to enter the lanes, but he acknowledged that some motorists are resistant to the project.

The NBC report describes how motorists can open an account, it's worth noting that even HOV users must have a transponder, even though they need not pay.  They must simply flick a switch in the unit to "declare" it is a high occupancy vehicle, this is one way to deter casual usage:

Solo drivers may use the lanes but will have to pay a toll – from 25 cents to $1.40 per mile, with motorists paying more when traffic is heavier.

Carpoolers and motorcyclists can use the lanes for free, but all drivers must get a new switchable FasTrak transponder, ..., to use the lanes.

When traffic speeds fall below 45 mph for more than 10 minutes in the ExpressLanes, overhead signs will state "HOV Only," alerting solo drivers not to enter the restricted lanes, according Metro's The Source blog.

To obtain a transponder, drivers have to pay a $40 deposit that will go toward future tolls. They'll be billed a $3 monthly fee plus the cost of their tolls. Lower-income drivers can qualify for an "equity plan" that requires a $15 deposit and waives monthly fees.

There are several ways to open an account:

•  call 511 and say "ExpressLanes";
• go online at Metro's ExpressLanes website;
• go to Metro's storefront at 500 W. 190th Street in Gardena;
• go to Metro's customer service center at the new El Monte Station, 3501 Santa Anita Ave. in El Monte.

Violators who are caught in lanes wihtout a transponder by the California Highway Patrol could be issued a $341 ticket, Jager said. Cameras will take pictures of vehicle license plates for cars that don't have transponders, and the owner will be sent a bill, which could result in fines if not paid.

The transponder can be switched to signify one, two, or three or more occupants in the vehicle. It transmits a signal to an antenna above lanes, and the car is then tracked. Accounts are billed for miles driven.

More details on how it works can be obtained at the Metro Express Lanes website

That means that the transponder effectively means that in the longer term, the occupancy level may be raised to three, as one means of managing demand instead of simply raising tolls or in extreme cases banning non-HOV users.   In addition to the lanes, bus services on the corridors have been improved and all net revenues are to be invested in the corridors themselves by state law - although one would have thought the priority ought to be returning the money spend on the lanes in the first place.

The LA Times says:

Stephanie Wiggins, Metro's executive in charge of the program, said gross revenue from the 10 and 110 freeway toll lanes should total $18 million to $20 million a year. Program costs are not expected to exceed $10 million, and any extra revenue will be reinvested in transit or carpool improvements in the 110 and 10 freeway corridors.

Yet the costs are actually $290 million, which is being treated as a sunk cost of capital.  If HOT lanes are going to be promoted as a way of paying for new road capacity, not just a test of congestion pricing, then there needs to be some honesty about such costs.  It is, in fact, the primary reason such ideas get little traction outside the US.

The LA Times quotes Donald Shoup,  a professor of urban planning at UCLA, as saying that it is "about time", given the severity of congestion in LA.  The rest of the report tends to focus on existing users of the lanes who are upset they need to pay $40 deposit for a transponder to keep using them.   Yet it also reports opposition to the lanes for being "undemocratic", presumably the world would be more democratic if you didn't need to pay for what you use.

A New York Times article quotes Robert Poole of the Reason Foundation, who doesn't think it is a big deal:

"I'm not too optimistic about major, big results for the Los Angeles project... I hope I'm wrong. But I suspect that most of the users will be freebies. They won't collect very much revenue. And if only a small percentage of people are paying the charge, the impact on congestion is going to be small."

KCET TV has a TV news article describing the LA HOT lanes.

My view is that it is positive to expose users to pricing, particularly dynamic pricing based on maintaining minimum standards of service, but there needs to be a more hard-headed approach to wider implementation of such lanes.  The chief concerns of transport policy regarding highways in the US are lack of revenue to maintain and develop networks, and congestion.  This tool will help with the latter, but will not help with the former if it cannot generate net revenue over the capital costs of implementation.   In other words, there needs to be some business case honesty.  Hopefully the wider Los Angeles Express Value Choices study will deliver this.

Virginia

The I-495 express lanes have opened in Virginia, with the Washington Times describing how this large project is a major public-private partnership:

The 495 Express Lanes project cost $1.9 billion. Virginia paid $409 million, according to Mr. Titunik. The two companies in partnership with the state, Transurban — a company that develops toll roads with offices in Australia and New York — and Fluor — a Texas-based engineering and construction company with an office in Arlington — funded $349 million in private equity and also backed $1.2 billion in loans and bonds.The state paid $260 million for the replacement of aging infrastructure, including more than 50 bridges and overpasses, pedestrian walkways, arterial roads, soundwalls and ramps.

The two private companies will get the revenues from the tolls, but if the lanes are successful, the state will receive a cut. Mr. Titunik said that the money will be invested in maintenance.

So in short, the state has part paid for the project, and TransUrban is providing significantly equity.  A contrast to the government funded LA project, which is admittedly much smaller in scale and only a pilot.

I-495 express lanes have a HOV threshold of three occupants, and comprise 14 miles of dual carriageway express lanes along the corridor.   Tolls have no cap so can be raised as high as is necessary to maintain a minimum level of service of average speeds of 45mph, hardly surprising when you have to convince private investors to risk money.  Prices are expected to range between $1 and $6 depending on traffic volumes.

However, the introduction has been reported as being rather bumpy, as some people entered the lanes accidentally then tried to reverse to avoid paying the toll.   What's astonishing is clearly how little attention people pay to road signs.

TollRoadsNews has an excellent article (with a map) about the project including the teething troubles, with Peter Samuel saying:

The 495 Express Lanes are a first not in the dynamic pricing as such, but for using such pricing in a very ambitious and complicated format with so many entries and exits. Nowhere else is there a tollway-within-a-freeway like the 495 Express Lanes equipped entirely with dedicated on- and off-ramps, and a lot of them catering to shorter trips as well as longer. Most others force users to enter and exit via the free lanes, weaving across the traffic. Or else they are long 'pipes' catering only to long trips, so shorter distance travelers can't make use of them. Many others, also are not much more than conversion and upgrade of existing HOV lanes. 

Not so the NoVA Beltway Lanes. Nearly a billion dollars of investors' money has been put into a complete rebuild of this section of the Beltway expanding it from eight lanes to twelve. And it has new direct entries and exits completely separate from the free Beltway lanes around Tysons Corner. 

It's going to be a boon to commuters in northern Virginia but it remains to be seen if they can make enough money to justify the investors' investment.

I wholeheartedly agree.

WJLA also has a video news article about the project.

News briefs - Australia, Florida, Indiana, Ireland, New Zealand, Philippines, South Africa, Virginia

Australia - Sydney to pursue three new toll funded highways

The Australian Daily Telegraph (via the Herald Sun) reports that the New South Wales State Government’s 20 year infrastructure strategy includes three new major highways in Sydney which are proposed to be funded through tolls, including reforms of existing tolls toward distance based pricing.  Let’s be clear this does not mean a change in technology or full network based charging, but by setting the tolls on toll roads at rates to reflect the distance between tolled points on the network.  The price is estimated to be A$10 billion, although it is thought the price could be lowered by private sector innovation and cut and cover construction techniques. 

The New South Wales Government has been studying options for reforming tolls in the Sydney metropolitan area, to normalise what vehicles pay across the tolled network to reflect distance.  The logic seems simple, but the difficulties are around addressing the costs of different concessionaires, as the motorways that have been built had different construction costs (e.g. tunnels are far more expensive than more rural highways).

Florida - Customers paying in high denomination banknotes can be detained at booth

According to the Newspaper.com, in the case of Chandler vs. Florida Department of Transportation, the US Court of Appeals has found that "Motorists can be held indefinitely at toll booths if they pay with large denomination bills".

The report says: "Under FDOT policies in place at the time, motorists who paid with $50 bills, and occasionally even $5 bills, were not given permission to proceed until the toll collector filled out a "Bill Detection Report" with data about the motorist's vehicle and details from his driver's license".

The court decision, responding to a claim that it was a constitutional violation to stop the vehicle from proceeding is as follows:

"In Florida, a person's right and liberty to use a highway is not absolute; it may be regulated in the public interest through reasonable and reasonably executed regulations."

The judges found it was reasonable for Fanueil to set regulations for use of the road -- including the types of acceptable payment. The court decided that drivers implicitly agreed to those conditions by choosing to use the toll road.

Florida - State Road 408 collects 43% of all toll revenue of the Orlando Orange County Expressway Authority.

The Orlando Sentinel reports that the 22 mile long SR408 toll road generated $108 million in 2011, or 41% of the Orlando Orange County Expressway Authority's total revenue.  It carried over 126 million toll transactions in that year and its revenue effectively cross subsidises the rest of the Expressway Authority's network.

Indiana - toll road privatisation touted as success

According to the Newark Advocate, Michael Cline, Indiana Department of Transportation commissioner, has been touting the successes of the privatisation of the Indiana toll road.

He said that the lease paid off old debt and provided "millions" of dollars to counties the road passes through to complete major projects including the extension of Interstate 69 from Evansville to Bloomington and Indianapolis and the reconstruction of U.S. 24 between Fort Wayne and Toledo "dubbed the highway of death for its high number of fatal crashes".

He claimed it "made sense for Ohio to study a similar plan for its section of the toll road".

The report said:  

The Ohio Department of Transportation is conducting a $3.4 million study with Texas-based KPMG Corporate Finance LLC to examine the ways to maximize the financial benefit of the toll road for the state. Jerry Wray, ODOT director, said the study will be completed by mid-November and he hopes to have a recommendation to the state legislature by Jan. 1.

During Cline’s presentation, he tried to eliminate some myths about the Indiana Toll Road lease, including that toll rates have doubled since 2006. Although the cost to drive the entire stretch across Indiana has risen from $4.65 in 2006 to $9.40 this year for drivers paying cash, tolls have remained frozen for drivers using electronic toll pass technology. Those rates can’t increase until 2016.

Tolls for many Ohio drivers have risen at higher than the cost of inflation during the past two decades. The turnpike operates entirely on its own revenue. It had $11 million in profits last year, and turnpike officials previously stated that more can be found through savings.

It is helpful to have this sort of information, because it is easy for privatisation advocates and opponents to both use slogans and cliches to justify their positions.  The best thing for Ohio will be to weigh up the evidence of what went right and wrong in Indiana, but it seems like a balanced approach has been taken that suits the needs of that state.

Ireland - Sacyr looking to offload debt ridden toll roads

The Independent (Ireland) reports that Spanish owned toll road concessionaire Sacyr is looking to sell its toll road concessions in Ireland.  Infrastructure fund Globalvia is said to be interested in these assets.  The concessions in Ireland are:
- N6 (56km motorway/dual carriageway between Galway and Ballinasloe, with a 7km connection to the Loughrea bypass);
- M50 Dublin (operation and maintenance contract for the 41km of Dublin's part-ring motorway);

New Zealand - unprofitable toll road gets revenue boost but still not enough

According to the Bay of Plenty Times, the Route K toll road has seen a 37% increase in revenues following a 50% increase in the toll for cars.  However, it still remains insufficient to cover the interest costs on the debt of the local authority financed road.

Philippines - Two new toll roads to be pursued in 2013 and Metro Pacific to expand Northern Luzon Expressway

Rappler reports that:

The CALAX project, which will connect the Manila-Cavite Expressway (CAVITEx) and South Luzon Expressway (SLEx), will be among the two projects under the Public Private Partnership (PPP) scheme the Department of Public Works and Highways (DPWH) will pursue in 2013. The PPP section is the 36.01 km length of the expressway from Kawit, Cavite to Sta. Rosa, Laguna. The ODA section is the remaining 11.01 km part of the road from Sta. Rosa, Laguna to SLEx at Mamplasan Exit in Laguna.

"The private proponent shall be responsible for the financing, designing and constructing of the PPP section, and the subsequent operations and maintenance (O&M) of the entire CALAX," the PPP Center explained.

The project is estimated to cost US$1.01 billion.

Meanwhile, Rappler also reports that Metro Pacific Investments Corp  is allocating P2.5 billion (US$61 million) in 2013 to expand and repave parts of the Northern Luzon Expressway.  This includes a P1.6 billion-worth (US$39 million) toll road that will link NLEx Cloverleaf and McArthur Highway near the Valenzuela City Hall with a 2.1-kilometer, 4-lane highway. Depending on how fast the government is in securing right-of-way, construction for Segment 9 will likely start by November or December and will be completed in 2013

South Africa - Gauteng e-tolling allowed, Moody's approves

According to Business Day Live (South Africa), the decision by the Constitutional Court of South Africa to allow the implementation of electronic free flow tolling as part of the Gauteng Freeway Improvement Project, will make a substantial difference to SANRAL's financial position.  Tolling on the project was due to be implemented in April 2012, but was stopped due to a court injunction.  The tolling has been opposed in South Africa on various grounds, but which largely appear to be about the injustice seen in tolling existing as well as new roads, because the existing roads have been upgraded, and because of fears of corruption in the contracts with the foreign suppliers of equipment and tolling services (which have not been substantiated).  The delay has cost SANRAL US$309 million since April.

The report outlines how taxpayers have been providing bridging finance to SANRAL to cover the gap:


Government responded by providing the roads agency with R5.8bn in funds to compensate for the lack of e-toll revenue and to defray operating costs, including debt service payments on the GFIP debt, a large proportion of which government guarantees.

Moody’s said the GFIP was mainly responsible for the rapid surge in Sanral’s debt, which rose to R37.5bn or five times its 2012 annual revenue as of August this year, from R6.2bn in March 2007.

Moody’s downgraded Sanral’s rating to Baa2 from Baa1 in May due to negative pressure on the roads agency’s liquidity.

The rating agency noted that at the end of June, Sanral’s cash reserves and government’s funds totalling R7.1bn were sufficient to cover operating expenditures and short-term obligations, including debt service, over the next 16 months.

Moneyweb reports further on SANRAL's financial position.

Virginia - I-95 HOT lane contract criticised, but doesn't tell the full story and I-495 express lanes about to open

The Newspaper has published an article critical of the PPP contract between the State of Virginia and TransUrban for the I-95 HOT lane project.

The reasons it cites are:

- It is a 73 year contract offering revenue to the concessionaire with no new lanes being added; 

- Casual carpooling will be dissuaded, as all carpoolers (only HOV 3 – meaning at least three people must be in the vehicle to be eligible) must use an EZ Pass tag to “declare” their presence. Those without will be fined; 

- If more than 35% of lane users are HOV (i.e. not paying tolls), the state must pay for each additional HOV vehicle an equivalent to 70% of the tolls that would have applied The state must pay an amount equal to 70% of the toll that would apply TransUrban if more than 35% of lane users are HOV (i.e. not toll paying); 

- If the State wants additional lanes, it must first negotiate an addition with Transurban. If it decides not to adopt an approach including Transurban, it must compensate the firm. The same applies to additional capacity on specific parallel routes. 

- Two-thirds of the project's financing is backed by taxpayers. Virginia is providing US$71 million in grants and US$242 million in revenue bonds. US$300 million comes from the Federal Government with a TIFIA loan.

Certainly it appears like Transurban has a good deal, although it doesn't look that good if traffic levels are flat, and there is a low volume of users with less than 35% of road users being HOV not toll payers.  That's the risk Transurban carries.  If car pooling takes off (which the article suggests is less likely because of the inconvenience of getting an EZ Pass tag), then it will be positive for the state (and users of the existing lanes), and will be because Transurban has encouraged it.   However, it is also understandable that Transurban gets first right of refusal to build new capacity, and that if taxpayers pay for new capacity elsewhere, Transurban gets compensated.  Such is the environment of privately owned lanes vs. government owned lanes. 

Furthermore, the article is plain wrong in asserting no new lanes are being provided.  In fact there will be some new lanes, and some extensions to existing lanes.  The press release announcing Transurban has won the extension specified these, and after all, it does not cost $940 million to do a HOV-HOT lane conversion.  There is a lot of new construction to make these lanes a more complete corridor congestion bypass system.   If you were paying for such improvements, you wouldn't want the state to be suddenly paying for parallel ones to enable motorists to bypass your improvements (and the tolls you need to recoup the costs).

Meanwhile, WAMU reports that the I-495 express lanes are due to open on November 17th.  The report says:


The two new lanes in each direction spanning 14 miles between the Springfield interchange and the Dulles Toll Road will be E-ZPass only.

Everybody needs an E-ZPass to use the express lanes. Carpools need the E-ZFlex for the toll-free trip. So far the Virginia Department of Transportation says signups for E-Z Pass are going well in the local area.

Stewart Schwartz, the executive director of the Coalition for Smarter Growth, criticises the project claiming that it will result in induced demand, filling up the space from vehicles shifting to the express lanes.  This has long been a criticism of any projects involving building new highway capacity, but in an environment where traffic growth has stabilised and there may be a long term trend of flat traffic, does this hypothesis still apply?  If so, does it matter if the new capacity is being charged to ensure it remains efficiently used?