North Carolina study suggests tollroads should be all-electronic - cashless

Toll booth manufacturers: the trend looks grim. Another toll agency looks like going cashless. North Carolina Turnpike Authority is rethinking conceptual designs providing the modern US standard toll format of open road electronic tolling down the middle and cash toll booths at the sides (mainline plazas) with separate coin machine and cash lanes at the ramp toll points. But they are now wondering whether they should collect cash at all - and go all electronic.

Their first tollroad the Triangle Expressway project - in the western part of the Raleigh area - is within months of going into detailed design.

The Turnpike's executive director David Joyner says they have to make a firm cash/no cash decision in the next 60 to 90 days.

Meanwhile the preliminary conclusion of the Turnpike's consultant team - PBS&J, Wilbur Smith and HNTB - is in the words of a powerpoint presentation to the Turnpike's board of directors this week:

"There is no scenario that indicates NCTA should build cash-collection facilities."

The presentation does go on to qualify that endorsement of AET by stating certain risks of AET have to be addressed with vigor, suggesting it will only be successful with:

- high transponder usage
- planned marketing
- effective legislative support
- simple and enforced business rules
- excellent system performance and reporting

Joyner says the study is "very encouraging news" because it suggests the Turnpike can save $60m in capital spending. But he says they need to go over all the assumptions very carefully to test whether they are realistic before they commit to all-electronic tolling.

The presentation to the board was the third iteration. Previous in-house presentations were modified after staff raised questions.

One important assumption is that the toll system and equipment has a life of five years and should be fully amortized over that period.

Joyner said: "With the speed of change we figure that whatever we put in is likely to be replaced in about five years. That's about the industry experience, we're told."

First study of its kind

It is the first study we know of that attempts to bring to a bottom line both capital and operating costs and revenue effects of all-electronic tolling (transponder+video) versus ET+cash.

[NOTE: Fig 1 is not well labeled we are told. It covers only operations costs and contrary to the label 5-year Capex and Opex Comparison it only includes Opex.]

Estimates are that toll revenue will be lower with AET than with cash - a higher "leakage" - 2.2% lower in year 1, the difference narrowing to 1.2% lower in year 5.

But combined capital and operating expenses will be lower too - by 3.16% in year 1 declining to 2.6% less in year 5.

Clearly the results are sensitive to whether motorists will be deterred from using the facility by the lack of a cash option. The comparison assumes the same number of transactions regardless of cash or no-cash.

Separate bar charts for capital costs (Fig 2) and operating costs (Fig 3) show a large overall capital advantage for all-electronic tolling (AET) which they call ORT, and an operating cost advantage as well, although smaller.

Only 42 toll lanes are needed under AET versus 57 toll lanes with cash plus open road electronic tolling. And each lane is much cheaper since it is lighter gantries and in-pavement loops versus all the paraphernalia of a classic toll plaza - canopies, signs, barrier, bullnoses, booths, money handling room, breakroom, service tunnel underneath and no belly-outs or belly-ins of pavement.

On the Triangle Expressway project civil capital (toll plaza pavement, booths, operations buildings, barrier, canopy) is put at about $73m for ORT+cash versus $21m for gantries and special in-pavement classification of the all-electronic (AET). Along with lower system (software) costs for all-electronic $7m vs $12m for ET+cash the overall capital costs are about $85m for open road electronic plus cash vs $28m for AET. (We are scaling off the barcharts here and may amend these numbers if we can get better ones Monday.)

The presentation says the capital cost differential is "about $60m" for the Triangle Expressway project.

Amortized over 5 years that's $11m or $12m a year difference in favor of AET.

Operations costs are closer. The AET model involves a larger customer service staff, greater video image and accounts costs, extra license plate lookup costs and credit card fees, and generally larger violations costs. On the other hand it saves on all the toll collectors and cash handlers.

2011 operating costs are estimated at about $6.3m with cash and about $5.2m for all-electronic. (Fig 3)

It seems to us from Fig 2 and 3 that 2011 amortised-capital and operating costs should be:
- with cash 17 (85/5) + 6.3 = $23.3m
- all electronic 5.6 (28/5) + 5.2 = $10.8m

That would make all-electronic a slam-dunk but NCTA officials say they need to do more work to refine their numbers.  They are working on a 4th iteration of their model. They will run this by several rating agencies because they expressed skepticism about all electronic tolling a year or so ago.

The full report based on the final iteration of the work will be written up by the HNTB-PBSJ-WSA team around November.

7% cost saving potential

The Triangle Expressway project cost is put at around $850m. A $60m capital cost savings on all electronic tolling represents 7% of project cost. Also given the $250m "gap" in conventional financing for the project it represents close to 24% of the gap filled. 

Safety will also be improved since stop-to-pay toll plazas are a major accident area on tollroads. 

Here is the Powerpoint presented to the NCTA board.

BACKGROUND: The Triangle Expressway is the consolidation into one project of northwest and western segments of a beltway around Raleigh designed either I-540 or NC540 plus a spur to the north called the Triangle parkway. In total it is 30km (18.8 miles) of mostly 3+3 lane expressway

see http://www.ncturnpike.org/projects/Triangle_Expressway/

TERMINOLOGY: We use the term Open Road Tolling (ORT) to indicate any situation where there is highway speed electronic tolling over multiple lanes of normal highway, regardless of whether there is or isn't a cash payment option off to the side. We use the term All Electronic Tolling to describe situations in which there is only ORT. NCTA's consultants use the term ORT differently to describe a no-cash setup.

TOLLROADSnews 2007-09-21 AMENDED 2007-09-22 16:00