Premium Pricing Coming to California HOV Lane for Non-Carpoolers
By Dennis Haak
San Francisco Bay Area transportation officials have approved a plan to allow solo drivers in regular (non-hybrid) vehicles to use high-occupancy vehicle (HOV) lanes on 12 highways by paying a per-mile premium via an electronic in-car transponder.
The project would cost about $3.7 billion to implement and take decades to implement. Eventually, it would cover about two-thirds of the Bay Area’s 1,200 miles of freeway lanes. Officials expect that the project will eventually generate $6 billion in revenue by 2035, which would of course pay for itself as well as other transit initiatives. Of course, the backers of this plan are forgetting about the time value of money – investing $3.7 billion in 2010 at a modest 3.5% interest rate would be worth $8.8 billion in 2035. Increase the interest rate assumption to 4.0%, and the future value is $10.0 billion.
So, the economics of the plan may not be sound at face value, but of course it could have other benefits. Transportation officials feel that the carpool lanes are underutilized currently, and that people who were truly in a hurry to get to their destination once in a while would be willing to pay a premium of a few cents per mile to travel about 15 miles per hour faster (officials estimate that the carpool lanes will average 54 miles per hour and the non-carpool lanes will average 39 miles per hour by 2035). The plan is to introduce the pay-per-use tolls on the carpool lanes starting in the 2010-2011 timeframe with an initial cost of 20 to 60 cents per mile. By 2030, officials expect the per-mile charge to increase to $1 or more. Because the tolls would be collected electronically via an in-car transponder, it will be possible to charge different prices at different times of day. Charges would be higher, of course, during peak periods, but could theoretically be reset each minute depending on the road’s current conditions.
We’ve learned as a nation that building more highways, and even more lanes, rarely fixes traffic congestion. As soon as more capacity is added to popular routes, drivers who had been avoiding those routes to avoid congestion flock back to them, quickly clogging them up again.
Critics of this plan have called the carpool lanes “Lexus Lanes,” as they fear that the only people who will use them will be the rich (the folks driving Lexuses, although car-savvy readers of this site know that most Lexus models are not necessarily the vehicle that the filthy rich aspire to own). However, proponents of the plan point to studies that state that in toll lanes in Southern California, people of all income levels used the lanes, generally when they needed to get somewhere quickly. (Click here for a link to a PowerPoint summary of one study’s findings).
To me, the concept behind HOV/carpool lanes is a sound one; you’re rewarding people for sharing their car with another commuter with a faster commute. Many local and state governments also decided a few years ago to reward buyers of hybrid cars with access to the HOV lanes; encouraging hybrid sales is also an admirable goal in terms of environmental friendliness and reducing fuel consumption. Now, Northern California bureaucrats and politicians have decided to encourage further utilization of the unused capacity in the HOV lanes – to raise revenue (a favorite pasttime of many politicians) and to theoretically lower traffic volume on the non-“premium” section of the highway, and reducing wasted fuel from idling in traffic.
To give some perspective on how the proposed per-mile tolls stack up, the Pennsylvania Turnpike charges about 6.4 cents per mile, and the New Jersey Turnpike charges about 5.7 cents per mile during peak periods, and 4.3 cents per mile during off-peak periods. When we travel to visit family about once a month, we could take “free” roads that are a bit more direct to our destination, but include traffic lights and slower speed limits, or we could take the Pennsylvania Turnpike, and we often choose the turnpike, particularly if our young children are napping in the car, as the smooth, steady drive keeps them sleeping for longer periods of time, so the concept of paying a premium for a better experience isn’t foreign to those of us in the Northeast US accustomed to toll roads. However, the proposed rates for the Bay Area HOV lane access start between 5 and 12 times more than I’m paying for access to the Turnpike, and eventually will be 20 times more expensive. Even if I “drove a Lexus,” I’d be hesitant to pay, say, $25 each way on a 25-mile trip into the city for work, plus all of the other expenses associated with car ownership such as insurance, registration, maintenance, city parking, gasoline, repairs, etc.
It will be interesting to see studies over the next several years on the reasons that certain solo motorists chose to pay a fairly hefty premium per mile for the privilege of driving past congestion.
For more information about this initiative, click here to visit the Metropolitan Transportation Commission (MTC) website’s page on it.
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