VARIABLE PRICING:Will toll roads do it?

Barber thinks different toll rates by time of day are unlikely to occur on most existing facilities, at least until they make the radical move to full offsite or automated tolling like 407-ETR. On completely new toll facilities, it is quite doable, he says, if people want to do it.

It is not impossible to have varied toll rates with manual collection and automatic coin, but “very close to impossible,” says Barber. “I just don’t think it is managable to have a toll rate change within sight of a toll collector or an ACM at a conventional plaza. You’ll have people hanging back if they think the toll rate’s about to go down, or speeding up, or getting very mad at you, if they are in a queue and they see the toll rate go up. I’m sure people will get very angry and difficult for the toll plaza to handle if they’re watching the clock and watching toll rates change.”

Regan of WSA agrees that there are difficult issues to tackle, a lot of obstacles: “There are audit issues to be addressed, and certainly many issues of operations. It will be awkward, but it can be done.”

Any toll facilility which is keen to maximize its revenue should look at variable pricing. Regan says the study WSA did for Fed Highways (TRnl#26 Apr 98 p6) showed that toll agencies could both increase revenues and efficiency: “The optimum toll rate point will often be different at different times of the day. There’s no doubt about that.”

The major inhibition, says Regan, is the traditional public service ethic, which is at odds with profit maximization.

“The traditional idea is that the toll agency’s job is to set tolls at the lowest possible level needed to pay the bills. And that public service consists of serving as many people as possible. If that is the object then of course the last thing in the world you would want to do is to charge a higher toll than you have to. And you wouldn’t want to upset your best customers, the peak hour travelers”

Public toll agencies chiefs are usually appointed by politicians and hence responsive to their wishes. Any scheme of variable pricing is likely to put tolls up in the peak hours. Though that should have the benefit for peak hour customers of decongesting their trip, they often won’t see that beforehand, and will complain volubly about the higher toll.

Tony Barber recalls how back in the early 80s when he was in the toll division of the NY Port Authority they looked quite seriously at a peak hour toll. The idea was to reduce congestion by moving a few patrons out of the peak onto the shoulders, the classic pricing argument.

“There was a political firestorm when it came out. It didn’t have a chance. I think we ended up doing the reverse of pricing and after the exercise we were giving even deeper discounts to high volume users (who are concentrated in the peak traffic) than before.”

But both Barber and Regan agree that changing attitudes and technology make it worthwhile to keep studying when and where differential toll rates can be helpful. If a toll outfit is strapped for funds and has to increase toll rates somehow or another to generate more revenue, then one option is to raise them in the peak hours and leave them alone are out of peak. Looks like that’s where several tollsters are at! (Contact WSA 203 865 2191, Tony Barber HNTB 973 227 6460)