United States Department of Transportation - Federal Highway Administration FHWA Home Feedback

VALUE PRICING NOTES

No. 6, Spring 2000

Federal Highway Administration

Value Pricing Notes (VPNotes) is prepared by the Highway Pricing and System Analysis Team of the Federal Highway Administration's (FHWA) Office of Transportation Policy Studies, with the objective of providing periodic updates on the FHWA Value Pricing Pilot Program and summarizing recent news of interest to the value pricing community. This issue of the newsletter features:

For more information about any of the articles published in this issue, or for general information about the Pilot Program, please see the Value and Congestion Pricing Homepage at:
http://ops.fhwa.dot.gov/tolling_pricing/value_pricing/, or contact the FHWA pricing team at:

400 Seventh Street, S.W., Room 3324
Washington, D.C., 20590
(202) 366-0570
Patrick.DeCorla-Souza@fhwa.dot.gov

VALUE PRICING PROJECT TYPES

The Value Pricing Pilot Program, authorized by the Transportation Equity Act for the 21st Century (TEA-21) is supporting operating pricing projects and pre-project studies and is actively seeking new projects. Current U.S. pricing projects and feasibility studies, including those being carried out with support from the Pilot Program and those being carried out independently, fall into four broad categories: Higher peak period tolls on existing toll facilities; Conversions of HOV lanes to High-Occupancy Toll (HOT) lanes; Variable pricing of new capacity, including new HOT lanes; and Projects involving pricing of parking or conversion of fixed costs of driving to variable costs.

Higher Peak Fees on Existing Toll Facilities

Conversion of HOV lanes to HOT lanes

Tolling on New Capacity, including HOT lanes

Other Transportation Pricing Applications

Other Projects and Feasibility Study Proposals Under Review

Over the past several weeks, FHWA’s Value Pricing Team has received over twenty proposals from 14 states for new implementation projects or feasibility studies. The proposals include:

These proposals are currently under review by the Federal Interagency Review Group. The total requested funding in these proposals is over $30.0 million, which far exceeds the funds available in this fiscal year. The final decision about selection and funding is expected in the next few weeks.

In addition to the projects and studies listed above, areas either conducting or planning studies designed to examine a variety of potential pricing locations and types include Minneapolis-St. Paul, Minnesota and Dallas, Texas.

NEWS FROM PILOT PROJECT SITES

Final Report on San Diego’s Priced Express Lanes

The San Diego Association of Governments (Sandag) has just released the Year 3 evaluation report on its innovative Priced Express Lanes pilot project on I-15. The report presents both Phase I (Express Pass) and Phase II (FasTrak) results, incorporating findings from separate reports on Sandag’s marketing efforts, an attitudinal panel survey, and a cost of delay study. As described in VPNotes, No. 5, the project passed its 3-year milestone for Federal funding and is continuing, without Federal funding support, as a fully self-sufficient pricing project under authority of the Federal Pilot Program and recently-enacted state legislation.

The evaluation report shows that the goals of the project, to make better use of the existing capacity on I-15, maintain free-flow traffic conditions on the HOV lanes through the use of dynamic pricing, and generate revenues to support transit service in the corridor, have been successfully met.

The project is now generating $1.2 million in annual revenues to support transit service in the corridor, daily traffic volumes averaged 15,800 in February 2000, an increase of 4,100 daily vehicles since the FasTrak program began. An off-peak toll reduction had the desired effect of shifting some traffic out of the peak into the off-peak periods.

Successful implementation of dynamic pricing has demonstrated the feasibility of the concept and has gained acceptance among users. Dynamic pricing, where prices vary directly with traffic levels, was shown to be more effective in spreading traffic over the peak period, than were fixed monthly price schedules. One of the chief initial concerns about this project is that it would harm carpooling, but this has proven not to be the case. In fact, carpooling has increased, possibly due to enhanced enforcement and lower HOV violations, or because the availability of the priced lanes allows more flexible carpooling arrangements. The project has proven to be a successful way of providing new travel options, funding transportation alternatives, and financing increases in enforcement activities. Equity and fairness did not emerge as important issues for the project.

Lee County, Florida Elasticity Results

Analysis of Lee County’s off-peak toll discount policy on two county bridges has shown that bridge travelers are responding to variable pricing as predicted, shifting their travel times from peak to off-peak (discount) periods. Recent research conducted at the University of South Florida has provided estimates of the responsiveness of traffic to toll price changes. As shown in Table 1, demand elasticities calculated across different discount periods varied considerably.

Table 1

Price Elasticity Estimates
Calculated Elasticities
Discount Period Midpoint Bridge Cape Coral Bridge
Pre-a.m. Peak
-0.36
-0.20
Post-a.m. Peak
-0.11
-0.11
Pre-p.m. Peak
-0.11
-0.11
Post-p.m. Peak
-0.05
-0.03

The greatest relative shifts in traffic occur during the pre-morning peak, with the elasticity estimate at the Midpoint Bridge being in the upper range of demand elasticities found in the literature. The elasticity estimates for other time periods are generally much lower. The researchers postulate that these relatively low elasticities represent the demand response to travel cost changes only, since there is little travel time advantage gained from traveling in the off-peak period. Survey respondents support this conclusion by indicating that their primary reason for traveling during the off-peak was the monetary gain, which for most eligible users is only $0.25.

Minnesota Survey Shows Support for "Congestion Fees," Interest in Tolling Resurfaces

A survey taken last year of 1000 commuters at various workplaces, government buildings and shopping malls in the metro area of Minneapolis-St. Paul shows that 47% of commuters strongly or somewhat favored the idea of a fee charged on congested freeways, while 46 percent were strongly or somewhat opposed. Forty-nine percent approved congestion fees if they accompanied removal of entrance ramp meters, compared with 34 percent who were opposed. According to Adeel Lari, Director of the Minnesota DOT’s Office of Alternative Transportation Financing, "what people are saying is that if you can remove that delay, I’m ready to pay for that."

On another front, the release of the annual Texas Transportation Institute (TTI) survey of congestion in major U.S. cities brought pricing back into the news in the Twin Cities. The TTI survey showed the Minneapolis-St. Paul metropolitan area as ranking second in the nation in terms of growth in traffic congestion. Coupled with a recent suggestion by a State Senator to open the I-394 HOV lanes to all traffic as part of a study, the TTI news made congestion, and what to do about it, " "hot" media topic. After interviewing staff of the Humphrey Institute and FHWA’s Team Leader for pricing, a local reporter wrote a column suggesting that the State Senator’s idea be coupled with an experiment with road pricing.

SPECIAL FEATURE: FINAL REPORT ON SR91 EVALUATION STUDY

A new study report on the operation of the State Route 91(SR91) Express Lanes in Orange County, California yields a wealth of data describing the operations and effects of this closely-watched private sector initiative in highway investment and operation. The December 2000 report tracks the operation of the Express Lanes through late-1999.

A number of important developments occurred since completion of an earlier (May 1998) study of the Express Lanes, including:

--the constant toll levied during the 4-hour peak traffic period was changed, beginning in September 1997, to a toll that varies hour-by-hour over the 4 hours.

--in January 1998, the toll levied on high occupancy vehicles changed from the free passage which prevailed from the time the lanes were opened, to a toll set at 50% of the toll published for other vehicles.

--in October 1998, the Eastern Toll Road, a fixed-toll highway which competes directly with the Express Lanes for commuters to Irvine and vicinity, opened to traffic.

--the California Private Transportation Company, the private developer and operator of the Express Lanes, announced an interest in selling the business to a non-for-profit entity.

The influence of these developments, and the accumulation of two more years of observations on the operation of SR91 make this study of considerable interest to the value pricing community. The following paragraphs highlight key findings.

Traffic Conditions

Characteristics of Users and Use

Responses to Toll Changes and Traffic Conditions

Public Opinion

The SR91 project is providing an excellent "test case" for variable tolling on a major U.S. metropolitan highway route. The data generated by this study are available on-line and have been incorporated into a number of independent analyses of pricing policies.

WORKSHOPS AND FORUMS

FHWA’s value pricing outreach program has been expanded in 2000, with local issues workshops now joining the regional workshop and project partners’ forum series. A local issues workshop was held in Minneapolis in November 2000, and a forum on value pricing was hosted by the Eno Foundation in March 2001. Plans are underway for local issues workshops in New York and Atlanta and a regional workshop is planned for Denver in the near future.

Local Workshop Held in Minneapolis

A local issues value pricing workshop, "Congestion in the Twin Cities: Who’s Paying the Price," was held on November 28-29, 2000, in Minneapolis. The workshop was hosted by FHWA and the Humphrey Institute and co-sponsored by the Minnesota Department of Transportation, the Center for Transportation Studies at the University of Minnesota, and the Metropolitan Council of the Twin Cities. Workshop participants included representatives of Federal, State, and local transportation agencies, academic institutions, citizens groups, private transportation agencies, transportation consultants, an insurance company, and State and local elected officials.

The workshop opened with basic descriptions of value pricing, its potential role in Minnesota, and the preconditions for its implementation. Panel sessions featured presentations by elected officials and others focusing on Minnesota’s experience in attempting to implement value pricing; discussions of successful value pricing projects in San Diego, Houston, Orange County, California, and Lee County, Florida; and descriptions of other market-based approaches to reducing congestion, including pay-as-you-drive insurance, parking pricing, and mileage-based leasing and taxation charges. Presentations in a session on "Value Pricing from the Elected Official’s Perspective" featured some important lessons for those concerned with implementing value pricing, including the need to bring business interests into the project development process. The final session featured experts’ perspectives on recent pricing research, including pricing alternatives on state and local roads, the use of global positioning satellites for levying road user charges, and Minnesota’s value pricing study.

Eno Foundation Forum

The Eno Foundation hosted a March, 2001 workshop on "The Future Role of Value Pricing in Metropolitan areas." Topics covered included definitions of pricing on existing and new capacity, locations where value pricing has been implemented, future possibilities for pricing, political and institutional barriers to pricing, and policies to overcome existing barriers. Transportation experts in attendance envisioned long-term scenario involving radical changes in current funding and institutional arrangements in highway transportation. Suggestions for future policy directions included:

Project Partners to Gather in Vail, Colorado

A two-day project partners’ forum will be held in Vail, Colorado on July 17-18, 2001, just before the TRB Joint Summer Meeting in Vail on July 19-21. The forum will provide an opportunity for partners in the value pricing program to talk with experts on various aspects of developing and implementing pricing projects, to exchange ideas with peers, and to hear about current and proposed projects around the country. A key feature of the forum will offer the partners the opportunity to engage in discussions about the future of the Federal pricing program. Marit Enerson of the Humphrey Institute is once again doing her superb job of handling the arrangements. She can be reached at (612) 625-8575 or menerson@hhh.umn.edu

TRB Pricing Subcommittee Forms Value Pricing Outreach Task Force

As many of the readers of this newsletter are aware, the Value Pricing Subcommittee of TRB, at its January, 2001 meeting, decided to establish a task force to develop a broad outreach and marketing strategy to support value pricing concepts. The subcommittee members felt that a more coordinated and robust approach was needed to reach a larger and more varied audience of decision-makers, affected parties, and the general public. As a first step in this effort, four working groups were established to address key issues in four outreach-related areas: Value pricing terms, questions and responses; Public outreach strategies; Outreach ideas aimed at organizations; and Ideas and strategies for reaching out to political leaders.

Each working group has been developing specific action plans. It is expected that initial ideas will be presented and discussed during the Vail Project Partners’ Forum in July.

Local Workshop on FAIR Lanes Planned for New York City

A local issues workshop featuring FAIR lanes and pricing for freight management is planned for New York on September 6, 2001. FAIR lanes, short for Fast and Intertwined Regular lanes, involve separating congested highway lanes into two sections, Fast lanes and Regular lanes. In the electronically controlled Fast lanes, tolls are set to limit traffic to the maximum that can be accommodated without slowing the traffic flow down significantly. In the Regular lanes, no tolls would be present and congestion would be allowed to continue. Drivers would then have the choice of using the express Fast lanes, or the congested Regular lanes. Drivers who choose to use the congested lanes would receive credits that could be used as toll payments on days they prefer to use the express lanes. Workshop presentations will describe local experiences with value pricing and define FAIR lanes in the New York context. Roundtable discussions will focus on reactions to a FAIR lanes example, political and institutional challenges related to implementing FAIR lanes, and possible solutions. A professional facilitator will guide the roundtable discussions. Workshop participants will include a wide range of interests in the New York Metropolitan area, including representatives of the trucking industry, automobile interests, local transportation interest groups and planning organizations, and leaders of transportation authorities in the region.

Local Workshop To Be Held in Atlanta

A two-day local value pricing workshop is scheduled for Atlanta in late October 2001. The workshop will focus on a general introduction to value pricing concepts and the Value Pricing Pilot Program, experience with value pricing in other locations, key value pricing issues and prospects for implementation. The second day will turn to discussion of possible value pricing applications in the local area and preliminary strategies for moving toward value pricing implementation in the greater Atlanta region.

International Pricing Symposium Planned for Florida

FHWA’s Value Pricing Program is working with the Florida DOT, the Transportation Research Board and the Organization for Economic Cooperation and Development (OECD) to arrange an international symposium on road pricing strategies in different governmental and socio-economic settings. The tentative date for the symposium is November 2002.

The symposium will feature case studies from the U.S., Europe, and Asia. Participants will discuss the rationale and motivations for implementing value pricing, the political and public opinion aspects of project development, the potential uses of pricing revenues, and outcomes from project implementation efforts. A conference committee will draw on papers, presentations and symposium discussions to develop a "state of practice" document, including proposed future directions and opportunities, research and information needs.

INTERNATIONAL ROAD PRICING NEWS

London Poll Shows Approval for Congestion Charging Plan

The mayor of London’s ambitious plan for using pricing to combat congestion in central London received approval from 51% of 1000 Londoners polled, with 35% expressing opposition to the plan. Mayor Ken Livingstone’s plan would entail a standard per day charge for vehicles traveling within a zone bounded by an inner ring road. The charge would be in effect from 7am to 7pm, with a 90% discount available to residents within the charging area. Estimates show the plan reducing traffic by 10-15% inside the charging area, significantly improving travel times and reliability and providing environmental benefits. Complementary measures to improve public transport and other alternatives to the car would be introduced along with the charging system. Money raised by the tolls, estimated at ,190m, would by law be spent to improve transport in London.

Support for the plan was found in all parts of London, with strongest support (56% in favor, 31% against) in the central area where the congestion charge would apply. There is also support for the plan in outer London (48% in favor, 36% against) and even in the area just outside the proposed boundary, the area where foes of the plan said there would be great opposition, the plan was favored by 47% and opposed by 43% of those polled. Fifty-four percent of those polled were drivers, 25% were non-white and 20% were lower income. The poll showed that 90% of those questioned believe reducing congestion is either very or fairly important. High public awareness of the charging plan was reflected in the polling results.

The Mayor’s office is now analyzing the results of a public consultation on his draft Transport Strategy, which includes the congestion charging plan. A final draft of the Transport Strategy will be published at the end of June. For further information check the mayor’s website at: http://www.london.gov.uk/publication/mayors-transport-strategy

Road User Charging - The European Solution?

The opening issue of a new European Transport Pricing Initiative (ETPI) Newsletter raises this provocative question as it sets itself up as a forum for the latest research, debating and consensus building activities related to urban transport pricing in Europe. Funded by the European Commission, the principal focus of the newsletter will be on the European PRoGRESS project and the associated CUPID project.

The ETPI website is at http://www.transport-pricing.net

How Variable Should Road Prices Be?

This is a question raised in an exchange of letters published recently in the Singapore newspaper, The StraitsTimes, a highway user in Singapore complained that some drivers were speeding up or slowing down to avoid higher charges down during the times ERP (Electronic Road Pricing) rates are being changed. He suggests that rates should be varied gradually to avoid the safety problems associated with this behavior. The following is excerpted from a response by Han Liang Yuan, manager of media relations for the Land Transport Authority, the agency responsible for administering the ERP program:

So, fine tuning continues as Singapore works to improve the most sophisticated electronic road pricing system in the world. Mr. Tay’s question is a question that has been raised elsewhere, including in the United States. The success of San Diego’s I-15 project in employing electronic road pricing with rates that can vary as often as every six minutes may provide a useful example for transport managers in Singapore and the rest of the world.

line

FHWA Home | Policy Home | HPTS Home | Feedback

FHWA

United States Department of Transportation - Federal Highway Administration