I commute into Maryland on I-495 almost daily, leaving very early, well before peak traffic, and travel I-495 to the south on Sunday mid-morning or early evening to visit family. When the tolls first started, the base rate was $1.85 end-to-end. After a few months, it rose to $2.25. Sunday, I was astonished to see $3.25 posted when traffic was not heavy and few cars were in the express lanes. What’s going on here?
My suspicion is that the lanes haven’t produced the revenue that the builders expected and the gouging has begun.
— Bob Garrett, Annandale
The HOT lanes opened two years ago this month along 14 miles of the Beltway, but many drivers remain uncomfortable with the concept — or, I should say, concepts. The operation links several ideas: public-private partnerships to build them and dynamic tolling to manage the traffic on them. Where the two concepts mingle, travelers see trouble.
This isn’t the first time a driver has written to me about price gouging. But let’s consider the definition. Gouging doesn’t occur just because the price is high. You can walk away from a high price. Gouging occurs where you have no alternative but to pay the high price because you have no other way to obtain the goods or services.
A driver approaching the express lanes sees the price and knows there’s an alternative. It’s not just a lower price alternative. It’s free.
There’s also some transparency in this transaction. To see how the competition is doing, drivers need do no more than look to their left or right to see the other set of lanes.
Transurban, the company that operates the express lanes, is betting its service is going to be so much more desirable than the free alternative that drivers will be willing to pay a sometimes hefty toll to use it.
Here’s what I mean by hefty: At 8:30 a.m. Tuesday, the rate for the full trip from the entry point at Springfield to the exit north of Tysons Corner was $12.10.
Transurban’s revenue from the toll lanes has been increasing since they opened. The company’s quarterly report for July-September announced that average workday toll revenue for the quarter grew 74.1 percent to $116,673, compared with the same quarter a year earlier. The average number of workday trips was 43,170, a 14.9 percent increase over the same quarter a year earlier. The average toll for the quarter was $2.89, and the maximum toll was $13.15.
Drivers write in and say they see such toll prices, but they don’t see congestion in the lanes, so they’re suspicious of the company’s motives. This, I think, is where the concepts behind the project get mingled. The public-private partnership was designed by Virginia to obtain a big private investment in the construction of additional lanes that the commonwealth would not have been able to afford if it relied only on taxpayer money. So Virginia got four new lanes for 14 miles.
But the company needed to get something back for its investment. It got the right to collect tolls for most of the rest of this century.
So is the company trying to make money off the toll-paying drivers? Absolutely.
But then there’s that other concept involving the toll system: traffic management. The toll rises and falls with the volume of traffic in the express lanes. The pricing is used to suppress the traffic volume. Raising the toll suppresses the number of drivers willing to pay for access to the lanes.
There is no limit to how high the toll can go to accomplish this traffic management mission. As more drivers choose the express lanes, the tolls are likely to go higher.
So what many drivers see is a private company charging higher and higher tolls, which they associate with profiteering. And what they don’t see is traffic congestion, so they ask what traffic management has got to do with the tolls.
I was driving south in the express lanes at the time on Tuesday morning that some of those northbound drivers were paying $12.10 for the full-length ride. As I passed through Tysons Corner, I could see that the northbound lanes were well-used, though they weren’t congested. Did that mean the drivers who paid $12.10 weren’t getting their money’s worth?
No, what they paid for was a steady trip at about the 65 mph speed limit. And that’s what they were getting. They weren’t paying to get stuck in congestion and then have the toll shoot up to reduce the traffic flow. They were paying not to get stuck in congestion in the first place.
So while Transurban would certainly like to have more revenue — like any other company — the fact that the tolls have risen as more drivers choose the express lanes isn’t a sign of trouble. It’s a sign that the lanes are working the way the public and private planners intended.
Case closed? Hardly. Whether this system of expanding adding highway capacity and managing traffic is the best in the long-run remains unproven. The next big debate will be whether the same approach works for drivers on I-95 in Virginia when the 95 Express Lanes open next month. And we’ll talk about whether I-66 outside the Beltway is an appropriate location for the next expansion of the HOT lanes network.