E-ZPass:New exec-director sought

Eric Christianson from the New York State Thruway is an interim CEO of IAG since Barta has left, but he won’t be seeking the permanent job.

Lew Thurston has just stepped down as chairman of the Inter Agency Group (IAG) group which runs the program. Thurston was replaced by John Platt of the New York State Thruway at a recent meeting. (Former chairmen have been Michael Ascher MTAB&T and Ed Gross NJ Tpk.)

Thurston reflected on the future of the IAG in a recent meeting at the New Brunswick offices of the NJHA. Issues for the IAG as he sees it: Will it continue to accept new members indefinitely or is it large enough now? Should it incorporate and employ its own staff. Should it employ a centralized clearinghouse or continue to clear accounts on a one-on-one basis? How far should it go looking for non-toll revenues. And how does it go about approaching next-generation technologies.

Thurston who is CEO of the New Jersey Highway Authority (NJHA) says he thinks the IAG needs to incorporate at some point, but it is for the group to decide. The unincorporated ‘club’ structure has become cumbersome, he says. As an unincorporated grouping it cannot employ anyone or enter into any contracts on its own behalf. Everything it does has to be channeled through one of its members agencies. So the most senior IAG officer chief exec Rena Barta was legally an employee of the Triborough Auth (MTA B&T) and other officers are with the NJ Turnpike, NYS Thruway Auth etc. The IAG cannot rent office space. It is housed in the Triborough offices. It doesn’t even have a bank account. Each agency has to account for employees’ time and contracts undertaken for the IAG and bill the others their share.

The IAG runs on a budget of about $500k/year and has an adequate bank balance, Thurston says. The joining fee is $250k with annual membership $25k and a reduced fee for smaller agencies or affiliates.

“In the very near future we need to revisit the mission, the organization stucture and our staffing needs,” Thurston told us. “Two years ago we defined our aims at a conference in Baltimore. Our main priority then was getting E-ZPass up and running in the various toll agencies. And getting reciprocal arrangements in place. We’ve achieved that now. We can move on.”

The group has to decide whether to continue its open-to-all policy or to set a limit on its membership, Thurston says. IAG now has 18 member tollsters. The Burlington County Bridge Commssion (PA-NJ) is the latest. Thurston expects the Maine Turnpike to join within a year or two. Illinois’ Tollway and Chicago’s Skyway, Oklahoma, Indiana and Ohio could at some point be interested.

Thurston sees arguments both ways. The open approach is the more friendly, more accomodating. On the other hand each additional member makes the organization more cumbersome and it is unclear whether the benefits of reciprocity extend over an indefinite distance. Thurston is probably wondering, for example, whether there would be much value in having Maine and Oklahoma swap white lists of good accounts every day.

The IAG has to decide at some point whether it should depart from the multilateral model where each agency or consortium swaps lists and does clearances one-on-one with each other agency or consortium in the group. It could transition to a hub and spoke arrangement with a clearinghouse at the center to which each agency would send its lists and daily accounts of ‘foreign’ transactions.

A clearinghouse isn’t going to happen any time soon, Thurston says, because many agencies have service contracts in place. The Regional Consortium of NJ and DE for example has Chase Manhattan doing its accounts and customer service for another 8 years. The New York agencies and Maryland have contracts with Lockheed. Massachusetts has TransCore. These contracts could in theory be renegotiated, but Thurston thinks it more likely they will be allowed to run their course, so long as they are working alright. Only toward the end of major contracts will alternative arrangements be seriously considered. And since they expire different times, there is no easy path to a new model.

Another issue for E-ZPass is how far it wants to get into non-toll services: “We have got a great brand here. E-ZPass is very well known now around the region. Can we use that outside tolling? How far do we go and how do we structure it?”

Thurston is discussing the use of E-ZPass at the Meadowlands Sports Complex in Northern NJ. It is the home of the Giants and the Jets football teams and basketball and hockey. There are 30k parking spaces there and it is located close to both the Turnpike and the Parkway. Accommodating E-ZPass at the pay plaza there, and at airports, is something of a no-brainer, he suggests. Albany and Buffalo airports are about to take E-ZPass. There is discussion about the New York City area airports. And at service plazas there may be more opportunities to use E-ZPass, but beyond that, what?

“We don’t want to pass up good opportunities where we can provide our customers with extra convenience. Non-toll revenues are also most important to us all. We need to keep looking at opportunities and tackle the business and technology issues.”

Battery life of transponders and the next generation equipment is another issue the IAG is sponsoring shared work on, Thurston says. Some of the oldest tags are starting to fail: “We’ll all need to devise plans to replace equipment. We are very pleased with what we have but we have to look at improved equipment at some point.”

Thurston says he is recommending to his successor John Platt that the IAG raise its public profile. It needs its own brochures, a website and perhaps a spokesman.

“I feel very good about the success of E-ZPass. It is a product that has been readily embraced by millions of people quite quickly. The great majority love the system, so we haven’t had to tell the story too aggressively. Not with David Letterman (an unpaid pitchman.) Of course you won’t get everything right. And when you are dealing with these huge numbers of transactions one or two percent going wrong can be a lot of people, so we have to keep working at fixing problems. But overall it is heartening how well it works and what glowing letters and comments we get. We really have managed to improve the daily lives of people with this technology, and we can do a lot more with it. It’s very exciting.” (tel 732 442 8600x1x6551)