Australia quietly runs the National Heavy Vehicle Charging Pilot - manual option

The Australian Commonwealth Government has been undertaking a programme of trialling distance and weight based road user charging (RUC) for heavy vehicles.  It ran a small-scale trial in 2019-2020 using existing telematics equipment, which was evaluated here.  Now the large-scale trial, manual technology component, was launched quietly by the Department of Infrastructure, Transport, Regional Development, Communications and the Arts (DITRDCA) in July 2022 and will run until the middle of the year.  It uses hubodometers, installed on powered units and trailers, with prepaid permits. It has parallels to New Zealand's long established Road User Charge system that has applied to heavy vehicles (over 3.5 tonnes) and light diesel vehicles. since 1978.  The graphic below depicts how the manual pilot works.

Australia's National Heavy Vehicle RUC pilot manual permit based system

Participants "buy" a permit (no real money is exchanged) for distance travelled, enabling participants to compare what they pay to stay up to date with distance permits, compared to what they pay in fuel tax and registration fees under the current system.

The video below includes segments from some of the trial participants.

This is not the only part of the trial, as a telematics based trial is due to start later this year, using a mix of new and existing on-board telematics systems on a range of trucks and buses.

The purpose of the trial is to gather data about various types of operators, obtain feedback on their experiences of the technological option and what operators think of paying by distance rather than tax on fuel and the high Australian registration fees for heavy vehicles.

The findings will be interesting and should inform decisions about whether to proceed with reforms to replace the fuel tax and registration based system (known as PAYGO or fuel based RUC), with a distance, weight and configuration based road user charge.

Disclosure: Milestone Pacific Pty Ltd (a subsidiary of CDM Smith) has been a technical advisor to DITRDCA on the National Heavy Vehicle Charging Pilot since 2019.  I have been leading that advice.

US Federal Government looks to fund more state pilots and a Federal RUC pilot : Part Two - A National RUC pilot for the USA

Following on from proposed additional funding for state led RUC pilots is the proposal for what is called the National Motor Vehicle Per-Mile User Fee Pilot (NMVPMUFP!). It is always intriguing how Americans can generate new terms for what could just be called a National Road Usage Charge Pilot (although I’ve also heard that officials in one state didn’t like the acronym RUC because it rhymed with a well-known pejorative). 

Objectives

The Infrastructure Investment and Jobs Act would establish a pilot program to demonstrate a national RUC system. The objectives of RUC are stated as being:

· To restore and maintain the long-term solvency of the Highway Trust Fund; and

· To improve and maintain the surface transportation system.

This is all very well, but there is no way it can restore the solvency of the Highway Trust Fund without setting fees that are substantially higher than what is paid now with the Federal Gas Tax, because it hasn’t been increased since 1993. To make the Highway Trust Fund solvent, it will need to be increased by more than inflation over the next decade or so. It seems unlikely there is much political will for that. To improve and maintain the surface transportation system is laudable, and presumably means raising enough funds to spend on the network. However, it could also improve it by subtly using tools around pricing, particularly around heavy vehicles and configurations, by encouraging more road-friendly configurations. It seems highly unlikely that location and time of day pricing would be explored (which would really make a difference).

The objectives of the national pilot are stated as:

(A) to test the design, acceptance, implementation and financial sustainability of a national motor vehicle per-mile user fee;

(B) to address the need for additional revenue for surface transportation infrastructure and a national motor vehicle per-mile user fee; and

(C) to provide recommendations relating to the adoption and implementation of a national motor vehicle per-mile user fee.

Elements

This largely parallels other programmes, which is fine, although the second objective is somewhat tautological. Other interesting elements of the proposal are:

· Multiple methods of measuring miles travelled will be tested.

· Volunteer participants will be sought from ALL states and DC, and even Puerto Rico;

· The distribution of participants will be an equitable geographic distribution (although it is unclear how this will factor in population size);

· Both “commercial vehicles” and “passenger motor vehicles” will be included, so not just light vehicles, but also trucks and potentially buses.

· The pilot will co-ordinate with states pursuing pilots, to consider using the components of their systems or pilots.

All of this seems largely sensible, although one unanswered question is the scale of the proposed pilot program, which seems likely to be in the thousands of vehicles.

It’s unclear whether the pilot will collect money (either from those that pay no gas tax or by crediting gas tax paid), or will just generate mock invoices, but the Bill states that the Secretary of Transportation will set rates for the pilot and the amounts may vary between vehicle types and weight classes (which is dead right for heavy vehicles) to reflect estimated impacts on infrastructure, safety, congestion, the environment, or other related social impacts.

Infrastructure is obvious, but safety seems odd, as nowhere charges differentially based on safety ratings of vehicles. Congestion is only possible if there is location and time of day measurement as well as distance, which limits technical solutions (but is likely to generate huge benefits if feasible). Environment could be reflected in different rates for levels of emissions. Related social impacts is unclear but would need to be explored further. Let’s be clear though, the gas tax does none of this well.

Technology

Tools for measuring distance are mentioned in the Bill, specifically:

· Third-party OBD-II devices (plug-in devices, suitable for most light vehicles up to a certain age);

· Smart phone applications;

· Automaker installed telematics;

· Data collected by car insurance companies;

· Data from States that have piloted RUC under the FAST Act;

· Data obtained from fuelling stations; and

· Any other method considered appropriate by the Secretary.

Interestingly this does NOT include commercial vehicle telematics, widely used for truck fleet management. It also doesn’t include more manual options, but of course there is scope to include these obviously. 

A Federal System Funding Advisory Board will be set up to develop recommendations related to the structure, scope and methodology for developing and implementing the pilot programme, carrying out the public awareness campaign and developing a report to Congress. That report will be on whether the pilot has achieved its objectives, how protections for participants were complied with and some estimate of administrative costs and equity impacts.

Members of the advisory board will include representatives of:

• State Departments of Transportation
• Entities that led pilots under the FAST Act
• Representatives of the trucking industry (note, these have been vehemently opposed to RUC for many years)
• Data security experts with expertise in personal privacy (though I would have thought it needed legal expertise as well)
• Academic experts on surface transportation systems
• Consumer advocates, including privacy experts
• Advocacy groups focused on equity
• Owners of motor vehicle fleets
• Owners and operators of toll facilities
• Tribal groups or representatives
• Anyone else deemed appropriate by the Secretary

This is potentially recipe for an utter mess, but is demonstrative of the US approach to public policy, which is to consult with whatever interests are seen to be relevant (interestingly it doesn't include railroads, doesn't include automotive manufacturers, doesn't include telematics system suppliers, doesn't include customers of transportation systems, doesn't include bus or coach operators, doesn't include agriculture or business).  

Conclusion

This is potentially a BIG deal, and has the potential to be quite some success, but also the potential to fail spectacularly due to complexity, scale and overlapping objectives. It seems likely to be much more appropriate to first undertake a desktop study of options for RUC and to then consider why a pilot is a good idea. There are really only two main reasons in this case, given pilots are underway at the state level:

• To build public acceptability by demonstrating that RUC would be unobtrusive and not cost more than the Federal gas tax;
• To test how a Federal system might interact with State ones.

US$10 million per annum is being proposed to fund this pilot, which is a great deal of money, but likely to be necessary.  However it begs a lot of questions particularly around scale, duration and how a wide range of participation will be enabled and ensured. What matters most of all is ensuring that a national pilot can avoid being dominated by negative publicity and negative narratives, which requires a lot of work to be done around communicating objectives to a public that is highly sceptical.

The US needs more rational debate and discussion about how roads are paid for and are managed, and this ought to help. It just needs to be done with a great deal of thought and care, because the world is littered with countries that have tried to advance road user charging on a wide scale (see the Netherlands, UK and Finland) and have failed, due to public backlash.

Australia : Requests for Expressions of Interests: National Heavy Vehicle Charging Pilot (UPDATED)

CLOSING DATE EXTENDED

The Australian Commonwealth Government Department of Infrastructure, Transport, Regional Development and Communications (DITRDC) has published on the Austenders website three Requests for Expressions of Interest in supplying services to support the Large Scale On-Road Trial which is part of the National Heavy Vehicle Charging Pilot.

The closing date is 17 August 2020 at 1400 (Australian Eastern Standard Time).

There are three Requests for Expressions of Interest, namely:

• for the provision of a telematics-based solution for collecting road use data to support a trial of direct heavy vehicle road user fees;
• for the provision of manual solutions for collecting road use data to support a trial of direct heavy vehicle road user fees; and
• for the provision of third party invoicing solutions for collecting and analysing road use data to support a trial of direct heavy vehicle road user fees.

You need an Austenders account (free to set up) to access the documents.  If you have one, they are available through the links for each of them as listed above.

There was a question and answer process following industry briefings for the trials, for which the answer document is here (PDF).

As can be seen by the titles, these are requests for expressions of interest to supply the services and equipment needed to deliver the Large Scale On-Road Trial, which is expected to have around 100 participant operators with around 1000 vehicles.  It will be a mock-billing trial, with participants receiving mock invoices (or purchasing mock permits) to simulate distance-based road user charging for heavy vehicles.

(Disclaimer: Milestone Pacific is technical advisor to the Department of Infrastructure, Transport, Regional Development and Communications on this project)

Australia: Industry briefing of National Heavy Vehicle Charging Pilot Large Scale On-Road Trial Procurement

The Australian (Federal) Government's Department of Infrastructure, Transport, Regional Development and Communications has published a Notification of Industry Briefing, for its National Heavy Vehicle Charging Pilot.  The industry briefing will be held THIS FRIDAY 1 May from 0815-1030 Australian Eastern Standard Time (2215-0030 UTC/GMT 30 April-1 May) and then 1715-1930 the same day (0715-0930 UTC/GMT 1 May).  The first session is timed for Australian, New Zealand and North/South American interest, and the second one for Asian, European/African interest.

The text below is a verbatim extract directly from the notice:

The purpose of this industry brief is to provide information to, and obtain information from, potential tenderers for three planned solutions procurements for the National Heavy Vehicle Charging Pilot’s Large Scale On-Road Trial.

    Provision of telematics devices and services

    Provision of third-party invoicing services

    Provision of manual collection devices and reporting services

This briefing is not a procurement and does not form part of any Commonwealth procurement process. The Commonwealth will not select or exclude (from future participation in above procurements) any companies based on their attendance or non-attendance at the Industry Brief.

Following the Industry Briefing sessions, there will be a period in which the department will accept feedback submissions from industry on the proposed technical approaches to gathering data and generating invoices and mock permits.

The National Heavy Vehicle Charging Pilot (National Pilot) is an innovative industry partnership testing potential direct road user charging options for heavy vehicles. The Large Scale On-Road trial is anticipated to involve up to 100 participants providing more than 1000 vehicles across diverse industries and fleet sizes.  

Trial Participants will test several operational models for collecting and reporting distance travelled. Existing and charging-specific telematics systems will be tested, as well as non-telematics distance measurement technology (hubodometers).

No money will be collected from trial participants. Instead, the data collected will be used to generate mock invoices. The mock invoice will be used to calculate and compare alternate mass-distance and location-based charges with an estimation of annual registration and fuel-based road user charges (current PAYGO model) collected for each participant. 

END

Further details on the National Heavy Vehicle Charging Pilot are found on the Department's website. 

Disclaimer: D'Artagnan Pacific is technical advisor to the Department of Infrastructure, Transport, Regional Development and Communications

Washington State Road Usage Charge Pilot Program - documentary

The US State of Washington recently concluded a pilot of light vehicle distance based road usage charging, testing an option to replace fuel tax.

Public television broadcaster TVW recently broadcast a documentary on the Washington Road Usage Charge Pilot Project which I have linked to below.  It includes:

• Comments from two pilot participants; and an
• Extensive interview with Reema Griffith, Executive Director, Washington State Transportation Commission.

It's around 24 minutes long, and is worth watching as it addresses issues such as comparing charges between the gas tax and paying by distance, privacy protection and use of data, as well as policy options going forward.  A full transcript is also available on the website for the documentary.

(Disclaimer: D'Artagnan Consulting advises and has been delivery partner for the Washington State Transport Commission on the Washington Road Usage Charge Pilot Project)

Australia's National Heavy Vehicle Charging Pilot : Small-scale on-road trial of heavy vehicle charging is launched

Last Thursday (25 July 2019), Australia's Deputy Prime Minister and Minister for Transport, Infrastructure and Regional Development, The Hon. Michael McCormack along with The Hon Scott Buchholz MP, Assistant Minister for Road Safety and Freight Transport formally launched Australia's first nationwide on-road trial of heavy vehicle road user charging.

The press release is here, with more details on the Department of Infrastructure, Transport, Cities and Regional Development ("the Department") website here.

In short, it involves:

• Up to eleven heavy vehicle operators (truck and bus) using on-board telematics systems that they were already using in their vehicles (commercial telematic systems used for fleet management purposes);
• Up to 111 vehicles will be included (so an average of a maximum of ten vehicles per fleet);
• A trial of six months duration;
• Operators to use existing systems to report vehicle configuration;
• Each operator will receive mock invoices generated by measurement of road use using the telematics systems on each participating vehicle, which will enable comparison of hypothetical charges with current charges

The trial will assess the experience of heavy vehicle users in receiving mock invoices to compare what they might pay under distance/mass/configuration based charging compared to the current mix of annual registration fees and fuel tax.  The idea being that charging by distance could replace such charges.  The diagram below from the Department indicates its plan to follow the small-scale trial with a large-scale trial next year on a much bigger scale and complexity. 

Australia's heavy vehicle charging trial programme

The small scale trial will use only one technology - existing telematics systems (which by necessity are all GNSS based On-Board Units (OBUs). The large scale trial could also include manual options to report distance, and an option to report actual mass.  However, further details of the large scale trial will be developed in the coming months, and is likely to be informed by the progress and evaluation of the small scale trial, and engagement with stakeholders (including heavy vehicle user representative organisations).

The operators participating in the small-scale trial are:

• Bridgestone Australia Ltd  
• Buslines Group Pty Ltd 
• Conroy Removals Pty Ltd 
• Coolibah Quarries 
• De Bruyn's Transport 
• John West Logistics Pty Ltd 
• J R Bulk Liquid Transport (Blu Logistics) 
• Nuline Charter Pty Ltd
• Simon National Carriers 
• D & S Smith Haulage Pty Ltd
• Toll Group 

This is quite a range including local and national operators, with operators based in several states.  Telematics providers supporting the trial (providing the systems used by those operators) are:

• EROAD (well known for providing heavy vehicle RUC services in New Zealand and Oregon)
• Volvo Buses (telematics)
• Volvo Trucks (telematics)

The trials are part of a wider programme of reform of the provision of roads for heavy vehicles in Australia called Heavy Vehicle Road Reform.  The first phase of this is set out here, and involves improving transparency about spending, asset management and the levels of service provided to heavy vehicle road users. 

Other reforms as part of this include consideration of independent price regulation of the setting of heavy vehicle charges (including existing registration fees and the fuel-based charge), and measures to more closely link revenue collected from heavy vehicles to road managers for investment in their networks.

It is clear that it is early days and no decision has been made by the Australian Government to change how heavy vehicles are charged in Australia, and any decision to do so is likely to be some years away. 

It will be interesting to watch the small scale trial with interest, particularly what the responses of participants are and the lessons that the Department will learn from the trial to develop the larger scale trial and inform wider reforms. 

Disclosure:  D'Artagnan has been providing technical advice to the Department of Infrastructure, Transport, Cities and Regional Development on heavy vehicle charging trials.

Australia's National Heavy Vehicle Charging Pilot: The National Pilot Program Stage Two

The Stage One report of the National Pilot should essentially be a set of three groups of work:

1. Strategic, technical design and implementation advice on progressing with on-road pilots of heavy vehicle road charging.
2. Results of desktop simulation modelling, which should indicate the financial impacts on different groups of heavy vehicle users, based on a series of charging structure scenarios.  This will provide an indication of the distributional effects (excluding behaviour change) of existing heavy vehicle road users changing how they pay for roads, and so help to inform possible transitional and longer term pricing scenarios for pilots and implementation of heavy vehicle charging.
3. Input from the heavy vehicle road user sector, but also road managers and other relevant government and private sector stakeholders of their views and understanding of heavy vehicle charging.

Stage Two will be the delivery of an on-road heavy vehicle road charging pilot, with actual road users "paying" a simulated road user charge with their own accounts, and invoicing, as a demonstration of what heavy vehicle road charging could mean for the day-to-day operations of heavy vehicle users, state/territory and local road managers, federal, state/territory treasuries and the providers of road charging services.   It should not primarily be about technology, but about how services are delivered, with the possibility of testing a range of solutions for identifying, measuring and reporting distance travelled (GNSS based ones, application of existing telematics systems both built into vehicles and commercial sservices, and the use of odometers and hubodometers), and options for different elements of charging to be included in both pricing and charging products available to users.   In practice, all participants in the pilot will continue to pay registration and fuel excise through the current PAYGO system (as well as tolls where relevant), but it will show what it would mean to have road charging operating in real life.

Part of the Stage Two pilot will be about testing policy and operational options for proceeding further, with issues such as the treatment of mass and location, the complexity of vehicle configurations (for charging purposes) and exploring the identification of fraud and evasion issues.  One of the biggest benefits of this pilot will be feedback from road users about their user experiences including what information is of use to them.  It changes road user charging from being theory (and occasional discussion of what happens overseas) to being what it might look like in practice.  Furthermore, it also presents an opportunity for the often ignored issue of what charging means from a government perspective to be explored.

It ought to mean establishment of notional hypothecated road fund accounts (although the question of how many there any, whether by geography or jurisdiction is a moot point), and the management of the data that is collected to enable sufficient assurance to be carried out about individual vehicles having valid accounts that are paid.  

The Stage Two pilot should be designed to test the critical elements that would allow for road charging to be able to replace the PAYGO system. Careshould be taken as to how much complexity will be mandated for the Stage Two pilot, bearing in mind that it wont be actually collecting revenue, and the key dimension iy must test is sufficient assurance to enable the Stage Three pilot to proceed (which actually does collect revenue, and offset this with refunds or supplementary payments to offset road charges).

Most of the pilots that have operated in the United States to date have been simulated charging pilots, so there should not be difficulty in developing a pilot for heavy vehicles, across Australia, that replicates the best elements of those, but also tests policy and governance elements that are relevant to Heavy Vehicle Road Reform.

Assuming Stage Two can be successful, then the programme can move onto Stage Three - a real money pilot, where heavy vehicle users can opt into paying by road charging instead of the PAYGO system.  That is when the real leap forward will happen.

Australia's National Heavy Vehicle Charging Pilot: Part Two - The National Pilot Program Stage One

The announcement of a National Heavy Vehicle Charging Pilot by the Australian Minister of Urban Infrastructure and Cities in December 2017 was designed to break what has been some years of inertia in progressing heavy vehicle road user charging in Australia.

As I have written before, there is no shortage of reports or studies about the merits  and possible approaches to transitioning from fuel tax and registration fees to direct road user charging for heavy vehicles in Australia, but there have been a series of key issues that have hindered progress, which in part reflect the constitutional and governance arrangements for roads and charging of road use in Australia.

The previous project, (which lasted seven years) called the Heavy Vehicle Charging and Investment project, floundered for a host of reasons.  It was too focused on charging, and not the funding or supply of roads.  Although many reports were prepared on a host of elements of charging policy, insufficient attention was paid to issues around transition.  How to get from the current charging system to feasible and user acceptable steps to direct user charges wasn't adequately addressed.  As such, the proposals focused on the costs of implementing heavy vehicle charging, in the context of a single or limited competition for supplying such systems, which raised questions as to the costs and economic viability of charging. It did not sufficiently engage with Treasuries at Commonwealth and state/territory levels, furthermore its complexity was such that it was difficult to get political traction and with that stakeholder support for the project.  It wasn't helped by a complex project governance structure that saw it lose momentum.

Given it is clearly possible to reform the supply side of roads, without reforming charging, and that reforming the supply side can help address key issues that arise in charging (especially how to set charge rates and convincing road users that revenue collected is spent wisely and in their interests), it made sense to adopt the Heavy Vehicle Road Reform approach. 

What makes road charging complicated in Australia?

1.  Registration fees are charged at the state/territory level (and motor vehicle registers are state managed, except for one for interstate heavy vehicles), but fuel tax is charged at the federal level as it is an excise duty.  This adds a complication in terms of co-ordination, but also institutional responsibility for refunds.  A state/territory level road user charge could not refund fuel duty, without a specific arrangement with the Commonwealth.  If a state/territory applied road user charging on its own roads, without fuel duty refunds, then it is only likely that its own heavy vehicles would pay road user charges, as out of state heavy vehicles would still be paying registration and fuel duty (so could not be expected to pay a state level road user charge on top). 

2. All road managers are at the state/territory or local level of government, but a significant proportion (23%) of spending on roads come from the federal (Commonwealth) level of government.  However, two thirds of revenue raised from heavy vehicles come from fuel tax (levied at the federal level).  The Commonwealth government doesn't manage any roads, but it does manage the primary means of charging for road use.

3. With a couple of exceptions, none of the revenue collected from heavy vehicles is hypothecated into funds for road capital or maintenance spending purposes.  All funding is allocated through politically led processes at Commonwealth, state/territory and ultimately local levels, on an annual basis.

4. Heavy vehicle configurations in Australia are complex, and some of the largest heavy vehicles allowed on public roads anywhere in the world. 

In essence, because the Commonwealth is not a road manager, is not the primary funder of roads and doesn't register or maintain registers of motor vehicles (with one exception), there was always some sense in encouraging states and territories to take the initiative on road user charging.  It seemed appropriate for the Commonwealth to have oversight and guidance, to ensure interoperability between road charging systems and to address interstate/cross border issues of charging, as well as being the regulator for price setting to deter the setting of "monopoly" charge levels and discriminatory behaviour with charging.  Ultimately, the ideal of land transport market reform that turns the provision of roads for heavy vehicles into an economic service, would see the providers of that service (road managers) leading the setting of road charging rates, and managing the provision of road charging services for their customers (albeit that such services may be operated at the state/territory level rather than the local).

However, it has appeared that there are two main risks with leaving it all to states and territories. Firstly, states and territories that seek "first mover advantage" could risk adopting practices in rate setting, governance and scheme design that are sub-optimal for other states and territories.  They might suit the policy objectives at the state/territory level, but not at the wider Commonwealth level. One example could be adopting a rate setting approach that lowers costs for heavy vehicles on the roads in that state, which may be appropriate for recovering the costs of those roads, but which implies that lower costs would apply on similar roads in other states.

Secondly, there is a risk that states and territories adopt approaches that do not work, and so undermine the chances of success elsewhere.  At worst, if a state or territory introducing heavy vehicle charging in a way that proves unpopular with road users, it could create opposition elsewhere in Australia, putting at risk wider deployment of heavy vehicle charging, potentially for some years.  

Finally, states and territories may simply do nothing without leadership from the Commonwealth. Without access to money from fuel duty, it may simply be seen as too difficult for states and territories to progress road user charging.   Although they can refund registration fees for vehicles in their state, they can't refund fuel duty.  This adds a complication for out of state heavy vehicles, which would all be paying under the current system, but either would have to be exempt from a state level road user charge, or effectively pay twice.  For heavy vehicles paying the road user charge in their own state or territory, when they enter another state or territory they would not pay the road user charge.

Stages of the National Heavy Vehicle Charging Pilot

Stage 1 of the Pilot is intended to start mid June 2018 and will effectively conclude in November 2018 (although some elements may run till  June 2019).  It has three major strands of work:

• Development of design, and planning on the implementation and evaluation of on-road heavy vehicle trials for future stages of the National Pilot.
• Modelling of the spatial and distributional impacts of direct user charging scenarios  that could replace current charges under reform  
• Market research and surveys to obtain baseline information on the views of industry, supply chains, road managers and the wider community on direct user charging for heavy vehicles.

The first workstream will focus on the preparation for Stages 2-4 of the National Pilot, including project planning, design of concepts of operation and development of an appropriate evaluation framework for all three stages.

The second workstream is effectively the first pilot, as it will seek to model the impacts of charging scenarios on different groups of heavy vehicle users.  Datasets on different types of heavy vehicle users (by geography, type of haulage, fleet size, vehicle size, routes and trip patterns, freight and passenger services) will be used to model how much such users would pay under four different road user charging rate scenarios. All these scenarios presume revenue neutrality (although it is unclear if that means neutrality after taking into account the costs of collecting revenue).

Those scenarios are:

1. A flat national mass-distance charge, applicable to all routes. This could be seen as akin to both the Oregon and New Zealand heavy vehicle charging schemes (albeit with mass as a static measure of average loading.

2. Mass-distance charge that varies by state/territory: Similar to Scenario 1, but with charges that vary by state/territory, presumably to reflect average spending (or forward looking costs) attributable to heavy vehicles by each state/territory.  Interstate trips would change in price at the state/territory borders. This would appear to be a relatively simple variation on Scenario 1, although it would expose cross-subsidies between states and territories.

3. Mass-distance charge that varies by road type, based on marginal cost: Prices would vary by road type, nationally, based on the marginal costs heavy vehicles impose, by mass. This assumes a road type classification that reflects differential costs. However, it does raise a question as to how fixed costs are recovered (still with registration fees, or charged at a flat rate by distance).<

4. Mass-distance charge that varies by road type, based on level of service: As in 3, with national charges by road type, but varying on a defined "level of service". This could range from multi-lane grade separated roads, to unsealed tracks.  This is contrary to Scenario 3, as it implies paying more for a higher level of service, but this typically means lower marginal costs. 

The third workstream appears to be strategic engagement with road users, road managers and other interested stakeholders about their views on road charging, and will presumably be the foundation for further engagement with such stakeholders through Stages 2 to 4.

The final report of Stage 1 will be submitted to the Transport and Infrastructure Council (TIC) (Transport Ministers under the Council of Australian Governments, covering both the Commonwealth and State/Territory Ministers) in November 2018.  The expectation and hope is that the TIC will approve moving to Stage 2, an on-road pilot of heavy vehicles "paying" a simulated road user charge.

Australia's National Heavy Vehicle Charging Pilot: Part One - Location-based trials

Australia's (Federal) Minister for Urban Infrastructure and Cities announced in his speech to the Roads Australia Annual Luncheon on 15 December 2017 that Australia will be launching a National Heavy Vehicle Charging Pilot.

The main part of the pilot is a program to investigate and design an on-road pilot for heavy vehicles across Australia, to trial replacing the existing registration/fuel tax based system of charging heavy vehicles for road use.  It has distinct stages starting with a desktop modelling simulation through to a phased transition away from the current charging system.

More on that in a later post.  An Information Sheet about the principles and objectives for Heavy Vehicle Charging Trials (PDF) explains more.

In parallel, the Minister also announced funding for a business case program for location based trials (the so-called "Business Case Program"). Under this program, state and territory governments will be eligible to apply for Commonwealth Government funding support to develop business cases to undertake their own trials of heavy vehicle charging, to generate additional revenue for infrastructure improvements that specifically benefit heavy vehicle users.

The Department of Infrastructure, Regional Development and the Cities released this Information Sheet about the Business Case Program (PDF)

The focus is on:

- Trials for heavy vehicle charging in specific locations, to pay (on a per kilometre basis) additionally to support road improvements that could deliver productivity benefits to heavy vehicle users;

- The additional revenue that it could raise would be specifically for such road improvements, and would not be about replacing the current registration/fuel tax based charging system;

- Funding support would be to support business case development not the trials themselves (it is presumably thought that the trials, being revenue generators, should be able to self-fund, although I am not sure that this support would necessarily be seen as sufficient incentive for interest from states and territories).

The Minister said in his speech:

The benefit might be using high productivity vehicles on routes where they cannot presently be used. Or the benefit might be a targeted program of investments to upgrade roads in a particular area which is of benefit to heavy vehicle operators—for example, livestock or grain transporters in a particular rural area.

Whatever the benefit—be it improved access, faster travel times or more flexible operating arrangements—it would clearly need to outweigh the costs of the additional charge so that heavy vehicle operators would find it worth their while to participate.

These trials could allow us to test such matters as particular technologies to record distance and location travelled; or the willingness to pay of operators; or the development of service level standards.

Again, we will be keen to work with the heavy vehicle industry—as well as state and territory governments—to see if we can work up such trials in different locations around the country. Through funding the development of business cases for trials we hope to catalyse a number of such trials over the next few years.

It should be possible for states and territories to identify gaps in their freight corridors that could be supported, over a forward-looking lifecycle cost basis, by infrastructure improvements paid for by the vehicles that benefit from them.  

Additionally, actual on-road trials could complement the proposed National pilot, by having trucks actually paying for road use, on a distance, location (and presumably some vehicle configuration and mass basis).  It also encourages road managers to take a more commercial, user-oriented approach to infrastructure development for heavy vehicles.

Which states and territories might be interested?

California launches Road Charge pilot

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

California Road Charge pilot logo

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

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

Target Demographic of California Road Charge participation

Charging options

Participants have five different options to choose:

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

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

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

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

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

The process for participation is outlined below.

California Road Charge pilot volunteer process

Privacy matters

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

Competition

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

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

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

Purpose

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

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

The Bill states as follows:

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

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

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

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

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

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

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

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

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

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

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

Electric vehicles in the US by state

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

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

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

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

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

More details at the pilot project website.

California Road Charge brochure download here

California Road Charge Pilot Technical Advisory Committee meeting details here 

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