Wednesday, July 01, 2009

"Electronic tolling results in rates that are 20% to 40% higher than they otherwise would be."

Electronic Tolls Trump Cash on the Highways


The Wall Street Journal
Copyright 2009

This weekend may mark the beginning of the end for toll-booth operators and plastic coin baskets, two institutions long associated with holiday traffic and highway congestion.

On Saturday, an authority that runs the E-470 toll road near Denver is ditching its coin handlers and going entirely cashless. Drivers will no longer be able to dig through piles of loose change in their dashboard trays to come up with toll money. Instead, they will have to equip their vehicles with transponders that deduct tolls automatically, or face the prospect of paying heftier fees when a bill arrives in the mail.
The Denver switchover follows a similar move on Wednesday by the North Texas Tollway Authority, which turned the 32-mile President George Bush Turnpike outside Dallas into an entirely cashless facility. Together, transportation experts say, these conversions mark the first time in the U.S. that existing toll roads have abandoned their pay-with-cash lanes and gone entirely electronic.

In an era where gas-tax revenue isn't generating enough to pay for the nation's transportation-infrastructure needs, the transition to electronic-only tolling hints at a cashless future where American cars come with devices that charge them fees for every mile they drive.

More immediately, cashless tolling is lauded as a way to prevent the dangerous and inefficient jockeying that goes on at toll plazas as motorists hunt for quarters and switch lanes. In an all-electronic system, traffic flows without stopping under gantries where cameras detect transponders and scan license plates.
Many drivers who regularly use toll roads will be ready for the change. But others, such as out-of-state travelers or rental-car drivers, could face confusion and greater expense. Invariably, motorists who don't have the proper transponder will pay higher toll rates than electronically savvy drivers.
Vehicles equipped with the right transponder will pay $3.15 to travel the length of the Bush turnpike outside Dallas. But drivers without the transponder will get a bill in the mail for $5. Unpaid bills incur an additional $2.50 charge after 30 days and overdue transactions get slapped with a $25 charge after 45 days, according to the agency. Rental-car companies and third-party processors may impose separate fees.

It is unclear whether cashless toll roads will have higher toll rates than ones offering a pay-with-cash option, but some theorists say higher rates are likely. Amy Finkelstein, an economics professor at the Massachusetts Institute of Technology, has analyzed 50 years of data for 123 toll roads. In a paper to be published in the August edition of the Quarterly Journal of Economics, Prof. Finkelstein suggests electronic tolling results in rates that are 20% to 40% higher than they otherwise would be. "When tolls become less visible, it's easier to raise the tolls," she said in an interview.

Until recently, the trend toward electronic, or "open road tolling" unfolded gradually, and motorists almost always had the option of paying with cash. Drivers approaching toll plazas typically encountered a bifurcated system with electronic-only lanes on one side and cash or coin lanes on the other.

Recognizing the opportunity to save time, an increasing number of motorists signed up for electronic systems and stuck a transponder, such as the E-ZPass unit common in the Northeast and Mid-Atlantic states, on the top of their windshield. The E-470 Public Highway Authority near Denver says about 75% of drivers on this toll road are using the electronic option, up from 30% when it was first introduced in 1991.

"People hate to have to stop" and pay tolls, said James Tuton, chief executive of American Traffic Solutions Inc., an Arizona-based firm that provides technology and services for transportation authorities, including the E-470.

Toll-road operators have increasingly embraced electronic tolling because it reduces accidents, vehicle emissions and congestion on busy highways. A growing number of highways like State Route 91 in Southern California offer express toll lanes -- with cashless payment models -- next to free lanes. A couple of new highways in Texas have opened with electronic-only pay plans.

In Florida, the Miami-Dade Expressway Authority is in the process of converting its five major highways into cashless toll roads. In Maryland, the $2.5 billion Intercounty Connector linking Prince George's and Montgomery counties is scheduled to open next year on a cashless model.

Toll-road operators can also save money through heightened productivity and the potential of lower labor costs.

The E-470 authority in Denver says it will save $2 million a year thanks to its transition to electronic tolling. The North Texas agency on Wednesday laid off 25 employees. About 170 others received job training and were transferred to other jobs.

Write to Christopher Conkey at

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