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share of foreign drivers on toll payments in 2011

Customs Administration between 2007 and 2011

Five Years of Electronic Toll Collection in the Czech Republic

overall amount of fines inflicted by the Czech

41 %

EUR 6.12 m (CZK 150 m)

EUR 507 ths (CZK 12.43 m)

average yearly yield of one kilometer of the Prague ring road, which is the highest yielding road in the Czech Republic

6 months

3,77 m

number of trucks and buses that crossed the Czech - German border on tolled roads in both directions in 2011

payback on investment into the delivery of the system for Phase 1 in 2007

share of environmentally friendly Euro 5 vehicles on all vehicles registered in the system by the end of 2011

share of the toll revenues on the 2012 budgeted income of the State Fund

18 %

for Transport Infrastructure

30 %

the lowest monthly revenue in 2008, impacted heavily by the economic crisis

EUR 243 ths (CZK 5.97 m) average yield of one toll road kilometer in 2011

EUR 15.9 m (CZK 389.9 m)

share of the D1 highway on the overall revenue in 2011

1358 km

length of the tolled highways, motorways and national roads by the end of 2011

36 %

23,6 %

growth of the yearly toll collection between 2010 and 2011

3380

average number of incidents

solved by the Czech Customs Administration in October (2007–2011) when the most fines

for toll related offences are inflicted

2011Marchin

revenuemonthlyrecordthe

m)725.6(CZKm29.6EUR

supplierGeneral

thetopaidcosts

ofdeductionafter

systemtollingtheofprofitgross

bn)22.5(CZKbn0.92EUR

143 %

growth of the direct payments

for use of the infrastructure the

in 2007 when the tolling

onbusesandtruckspaid onkilometerperaverage

2011inroadstolledthe

was introduced

4.03)(CZKCents16.4

2011and2007betweencollectedtoll

bn)31.3(CZKbn1.28EUR

2011inroadstolledthe was introduced 4.03)(CZK Cents16.4 2011and2007betweencollectedtoll bn)31.3(CZKbn1.28EUR
Five Years of Electronic Toll Collection in the Czech Republic Ondřej Zaoral Tereza Mlynářová Zdeněk

Five Years of Electronic Toll Collection in the Czech Republic

Ondřej Zaoral Tereza Mlynářová Zdeněk Lokaj

Acknowledgements

Authors would like to thank the Road and Motorway Directorate of the Czech Republic for granting of the permission for use of the data from the nationwide truck tolling system. This analysis could not have been created without this data.

1

Content Czech Tolling System at the Age of Five 5 1 | System Concept and

Content

Czech Tolling System at the Age of Five

5

1 | System Concept and Procurement Model

11

2 | Operational Model

17

3 | Economics of the System

23

4 | Importance of Toll Collection for Infrastructure Financing

29

5 | Telematic Features of the Tolling System

39

6 | Development of Toll Collection Systems in Central Europe and European Union

49

7 | Outlook for the Close Future of Toll Collection

57

3

4

4

Czech Tolling System at the Age of Five The Czech nationwide truck tolling system celebrated

Czech Tolling System at the Age of Five

The Czech nationwide truck tolling system celebrated its fifth birthday at the end of December 2011. Dur- ing the first five year period of operation, the system collected EUR 1.28 bn (CZK 31.3 bn) tolling revenue for the Czech republic and the number of trucks & buses registered in the system rose to 595 thousand. The length of the tolled road network has progressively risen as well, reaching 1358 km of highways, mo- torways and national roads by the end of 2011. Czech tolled roads are every day used by 40 to 60 thou- sand tolled vehicles, lower number of 14 to 19 thousand unique vehicles is registered in the system on weekends.

The costs of the tolling system‘s technical provider (consortium Kapsch) reached EUR 0.43 bn (CZK 10.5 bn) without VAT, in other words 33 % of tolling revenues. The cost/income percentage value does not, how- ever, represent an useful and comparable basis for cost evaluation, as it is heavily influenced not only by the actual amount of costs, but by the tolling rates and other factors as well. The cost/income ration of 29.3 % in 2009 would decrease with an additional tolling revenue of EUR 41 m (CZK 1 bn) by approxi- mately 3 percentage points.

The system coverage was extended from highways and motorways to national roads during the first five years. New telematic features were implemented, as well as an interface for satellite on board units.

History of the distance based electronic tolling system starts a few years before launching the system on January 1 st , 2007. Completion of feasibility studies was followed by the public tendering process that started in 2005. Bids were submitted for establishment and five years operation of the tolling system, including an option for another five years extension of the service provisioning contract. Contract with the winning bidder – consortium Kapsch – was signed in March 2006. The system was implemented during the same year and the actual toll collection from trucks and buses with gross weight exceeding 12 t on highways and motorways started on January 1 st , 2007. The system was subsequently extended to selected national roads (2008) and the toll has been collected from light trucks and buses with gross weight more than 3.5 t since 2010. The new open interface for telematic applications has been available since 2008 and the system has also been prepared for the “hybrid” operation collecting data from DSRC as well as GNSS on board units.

The Czech system uses the microwave DSRC technology that is one of the two technologies permitted for use in electronic tolling system in the European Union. Every vehicle that is subject to the tolling duty must be equipped with an on board unit (OBU) that provides an unique identification of the vehicle in the system. Drivers can pick up the units at distribution points located in a close vicinity of tolled roads or at contact points in major Czech cities. Call center and self-service web portal for registered users are available at all times.

5

The tolling system is fully owned by the Czech state. While the supply and operations

The tolling system is fully owned by the Czech state. While the supply and operations of the system is governed by two separate contracts, the project can be characterized as a public private partnership mainly due to the extent of the risk transfer to the private supplier.

Procurement of the system and its operation was fully funded by tolling cash flow generated by the system. Payback on the investment into the Phase 1 (highways and motorways, vehicles 12 t+) was just 6 months. The system remains fully in the ownership of the Czech republic when the service contract with consortium Kapsch expires at the end of 2016. The build-up cost invested into the system can, therefore, generate revenue for an even longer period of time than during the initial 10 years contracting period.

Importance of the tolling income for the infrastructure financing has been grow- ing, reaching 18 % of the budgeted income of the State fund for transport infra- structure in 2012.

The yearly tolling revenue has grown from EUR 227 m (CZK 5.56 bn) in 2007 to EUR 332 m (CZK 8.13 bn) in 2011. Even faster grows the share on tolling income on the overall revenues of the State fund for trans- port infrastructure – from 9 % to 18 %. Yearly revenue is influenced mainly by the tolling rates and traf- fic intensity on tolled roads. The average toll collection per one kilometer of the tolled road is important mainly for infrastructure financing considerations. Average yield is the highest on the Prague ring road (almost EUR 0.51 m per kilometer in 2011) and on the highway D5 (Prague to München / Nürnberg). How- ever, the differences in the average revenue are sizable. Yearly income of the least profitable segment of the national road I/47 (close to city of Hulín) accounts only for 2 % of yearly income generated by the most profitable segment in the Czech republic, found on the highway D1 close to Modletice.

Average revenue on one kilometer of tolled national road reaches due to lower rates and traffic intensi- ties only 21 % of average revenue generated by one kilometer of highway.

Electronic toll collection that is dependent on wear and tear of the road allows for an effective taxa- tion of foreign road users. Foreign transport companies accounted for 78 % of vehicles registered in the Czech tolling system at the end of 2011 and paid 42% of the toll revenue. Share of revenue from foreign users over the five year period 2006 – 2011 is 41 %. Share of Czech users is decreasing. While the Czech drivers paid 61.3 % toll in 2007, their share slipped to 57.8 % in 2011.

Electronic tolling is the largest telematic system in the Czech republic with a pri- mary role in fee collection. Tolling systems may, however, increasingly take on the regulatory and environmental functions.

Intelligent transportation systems (telematics) can contribute to higher safety, travel comfort, more ef- ficient use of the infrastructure as well as to lower environmental impact of road transportation. The tolling system generates valuable data describing in detail the intensity and composition of the traffic stream including its speed characteristics. Collected data can be used either for immediate actions or for analysis of long term trends and set-up of traffic models. The ability of the tolling systems to alter eco- nomic motivations of road users through variable tolling rates opens new possibilities for use of tolling systems for traffic regulatory purposes. Differentiated pricing can motivate the use of environmentally friendly vehicles, prefer public transport and displace unnecessary journeys to off-peak times.

6

Czech Tolling System at the Age of Five Preference of environmentally friendly vehicles has become

Czech Tolling System at the Age of Five

Preference of environmentally friendly vehicles has become a standard measure across Europe. Higher toll rates for Euro 0–2 vehicles (and progressively Euro 3–4 as well) motivate the transport companies to replace old vehicles and improves payback on investment into new Euro 5 (or higher) vehicles. Share of environmentally friendly Euro 5 vehicles rose in the Czech system from 11 % in 2007 to 30 % in 2011. The Czech system has been regulating Friday’s afternoon traffic since 2010, using 50% increase in toll rate during the weekend peak time. Decrease of truck traffic by only 15 % (measured by travelled distance on tolled roads) shows, however, a very low price sensitivity of demand.

Use of the existing tolling systems for regulatory interventions apart from their original financial func- tions creates new strategic challenges. The financial and regulatory functions are in conflict and op- timization of the system for maximization of only one of these functions must prevail. An example is the preference of bus traffic in the Czech republic since September 2011. Lower rates resulted in direct financial loss of more than EUR 1.63 m (CZK 40 m) in the last four months of 2011 only. Search for balance between the regulatory and financial goals will always enforce compromises.

Electronic toll collection is an European topic. Close future will bring standardiza- tion of systems and focus on telematic, environmental and regulatory functions of systems.

Tolling systems are being established all over Europe in order to secure at least part of the necessary funds for infrastructure investment and maintenance. Tolling is a source for financing PPP projects in majority of the western European countries. The role of tolling income is indispensable not only in pro- jects with demand risk transferred to the private operator, but also in projects with the availability based payment scheme. Private operators do not build proprietary systems in countries with nationwide toll- ing systems (such as Austria or Germany), they rather join the nationwide system as one of the revenue recipients.

Czech tolling rates were raised twice by 25 % in January 2011 and 2012. The rates were the lowest in Cen- tral Europe before these two sizable hikes. Rates valid in 2012 are comparable to Germany and Slovakia. The most expensive country for trucks is still Austria where the rate for a 12 t+ truck with 4 axles is 32 % higher than in the Czech republic.

European tolling directives allow use of the microwave or satellite technology. Currently the microwave technology, which is suitable especially for highways with high traffic intensities, prevails in Europe. In- teroperability of nowadays isolated national systems has become a priority of the European Union. The vision of one universal on board unit for Europe shall become reality in the coming years.

Environmental impact and the internalization of negative externalities caused by the trucks is another focus area. The new directive 2011/76/EC therefore introduces an option to include valuation of the nega- tive externalities into the tolling rates. Consequently, trucks may pay for pollution up to 16 Eurocents per kilometer and 2 Eurocents for noise.

7

Strategic discussion on future of the tolling systems is focused on extension of the distance

Strategic discussion on future of the tolling systems is focused on extension of the distance based model to non-highway roads and passenger cars. Should the Czech republic keep its current level of tolling revenues, the rate structure will have to be overhauled.

European directives currently require fee collection on highways and allow for extension of the tolling duty to non-highway roads in case the road network in the country is underdeveloped and motorways or national roads replace highways in certain sections. The decisive parameter for economics of any toll ex- tension to national roads is the average income from one kilometer of such a road. Average revenues on the national roads are significantly lower than on highways. Average revenue per kilometer of national road in 2011 amounted only for EUR 68 thousand (CZK 1.66 m), while the average kilometer of highway and motorway generated EUR 324 thousand (CZK 7.94 m) revenue. We expect the French Ecotaxe project to show the direction for future introduction of distance based tolling on lower class roads. The pilot operation shall start in Alsace in July 2013.

The second possible extension of the tolling duty is the use of the existing infrastructure for passenger car fee collection. Replacement of the existing system of paper highway stickers through electronic OBUs has already been discussed in the Czech republic, however, the system has not been implemented. Plans for electronic fee collection from drivers of passenger cars have emerged even in Germany where pas- senger cars are not subject to any kind of toll (neither time nor distance based).

The current structure of tolling rates with an extensive preference of Euro 5 vehicles through low rates creates a risk for future tolling income of the Czech republic. The Euro 5 rate is just half of the rate paid by Euro 2 vehicles, even without any reflection of the new environmental EU directive. The effective av- erage tolling rate is, therefore, decreasing as the share of Euro 5 vehicles in the system is increasing (the share of newly registered Euro 5 vehicles was 41 % in 2011 while their share on registered vehicles in the system reached 30 %). The transparent solution is a new structure of the rate, comprising the actual fee for use of the infrastructure (reflecting the wear and tear without environmental considerations) and environmental surcharge derived from the emission class of the vehicle.

8

Czech Tolling System at the Age of Five Tolled roads in 2007 D8 R 63

Czech Tolling System at the Age of Five

Tolled roads in 2007 D8 R 63 R 35 30 R 10 D8 R 6
Tolled roads in 2007
D8
R 63
R 35
30
R 10
D8
R 6
R
7
R 6
D11
R
1
R
1
D5
D5
R 4
D1
R 35
D
3
R 56
R 48
R 35
11
R 46
D1
D1
R 55
R 52
Mýto - Dálnice a rychlostní silnice
D2
Úseky bez mýta
Tolled roads in 2011 Úseky bez poplatku Mýto - dálnice a rychlostní silnice Mýto -
Tolled roads in 2011
Úseky bez poplatku
Mýto - dálnice a rychlostní silnice
Mýto - silnice I. třídy

9

10

10

1 | System Concept and Procurement Model

The public tendering process for establishment of the tolling system and related service provision was started in 2005. Contract with the winning bidder – consortium Kapsch – was concluded in March 2006. Toll has been collected since January 1 st , 2007 from heavy trucks on highways and motorways. The system was subsequently extended to national roads and toll duty was imposed on light trucks with gross weight of more than 3.5 t.

One general contractor – consortium Kapsch – is responsible for system delivery and operations to- wards the customer (Ministry of Transportation) and system operator (Road and Highway Directorate of the Czech Republic). The tolling system is now fully owned by the Czech state. While the supply and operations of the system is governed by two separate contracts, the project can be characterized as a pub- lic private partnership mainly due to the extent of the risk transfer to the private supplier.

New open interface for telematic applications has been available since 2008 and the system has also been prepared for the “hybrid” operation, collecting data from DSRC as well as GNSS on board units.

< Czech Tolling System at the Age of Five

Operational

Model >

The European Directive 1999/62/ES on the charging of heavy goods vehicles for the use of

The European Directive 1999/62/ES on the charging of heavy goods vehicles for the use of certain infra- structures stipulates introduction of a tolling system on motorways for vehicles with gross weight more than 12 tons. The 1999 Directive clearly set rules for tolling systems and harmonization of “user charges” that allow the use of the infrastructure for a given time. The Directive set a minimum toll rates and maxi- mum user charges, limiting e.g. the price of yearly vignettes for heavy trucks. National electronic tolling systems started to emerge even in countries without any historical tradition of toll collection that relied solely on tax income for financing of their infrastructure.

The first Central European country preparing for launch of a tolling system already following the new European rules was Germany. Problems with the launch of the satellite based GPS/GSM system led to a delay and the German government has been demanding a compensation of the damage resulting from loss of toll income from a consortium of suppliers*.

The first neighbour of the Czech Republic starting electronic toll collection was due to the German delay Austria in January 2004. Launch of the German system followed in 2005 and the Czech government called the tolling tender in the same year, prepara- tory works started already in 2004. The motivations for introduc- tion of such a system were apart from the requirements of Euro- pean Directives mainly economical. With the maximum price of vignettes for HGVs limited by the Directives and toll collection

planned or launched in Austria and Germany, the risk of becom- ing a cheap transit alternative was high for the Czech Republic. Therefore, the government of the Czech Republic approved the time schedule for introduction of the nationwide electronic truck tolling in the Czech Republic on January 12 th , 2005.

Preparation for introduction of the nationwide electronic tolling system in the Czech Republic started already in 2004.

The tender itself was called on June 11 th , 2005. The tender documentation required delivery of the tolling system in two phases on 968 km of highways and motorways (Phase 1) and 2,580 km of selected national roads (Phase 2). Bidders were allowed to use either the microwave DSRC technology or satellite GPS/GSM technology. Launch of Phase 1 was set for January 1 st , 2007 and Phase 2 should have followed on January 1 st , 2008.

Four bids were submitted on September 16 th , 2005. Three bidders were later disqualified due to non- compliance with the tender specification. After the tender results were confirmed by the Czech Office for Protection of Competition, contract was signed with the winning Consortium Kapsch on March 29 th , 2006. The actual time for implementation of the system was, therefore, three months shorter than the one year period planned by the tender specification.

Procurement of the system was financed through a structure of deferred payments that allowed full funding of the system delivery and its operation by tolling cash flow generated by the system. While the supply and operations of the system is governed by two separate contracts, the project can be character- ized as a public private partnership mainly due to the extent of the risk transfer to the private supplier. Project can be characterized as the “Design – Build – Transfer – Operate” when the supplier designs and supplies the asset (in this case the tolling system) to the client and provides operations services for a pe- riod of time defined by the contract. Majority of the operational risks is transferred to the supplier that has to provide performance guarantees. Ownership rights to the system were transferred to the Czech state at the end of the system delivery. Contract for provision of services (operation of the system) was

System Concept and Procurement Model concluded for five years with an option for additional five

System Concept and Procurement Model

concluded for five years with an option for additional five years. This option called by the customer and the service contract with Consortium Kapsch runs out on December 31 st , 2016.

Concept and design philosophy of the system

The system delivered by Kapsch is built upon the microwave DSRC technology, using gantries for detec-

tion of vehicles. All vehicles that are subject to toll duty must be equipped by an On Board Unit (OBU) that identifies the vehicle in communication with the gan- try. The OBU is provided for free, but a deposit of EUR

63 (CZK 1,550) must be paid by the driver and will not be returned in case the OBU was damaged.

The Czech system uses microwave DSRC technology with a compulsory On Board Unit. Both pre-pay and post- pay mode is available.

Each gantry represents an autonomous subsystem capable of transaction generation, i.e. billing based on the vehicle category (truck/bus), emission class, day in a week, time

and number of axles. The main goal of the system is the collection of fees for use of the infrastructure. Therefore, tolling system is one of the largest payment systems in the country. Drivers can choose the payment modes (pre-pay, post-pay) and one of 24 means of payment, including all major credit cards and fleet

cards.

The pre-pay mode is the easiest way to use the Czech tolled roads. Constant ¾ of all registered drivers have been using pre-pay since the system was launched. The driver has just to stop on one of the distri- bution points (which are usually petrol stations), pick up an OBU and pre-pay credit similarly to pay-as-you-go mo-

bile phone. Toll payments are then charged when passing the gantries and deducted from the pre-paid balance of the unit. As soon as the balance decreases below EUR 24.5 (CZK 600) the driver is warned by the unit and can re- charge it at any distribution point.

The system was extended from the original 968 km of highways and motorways to 1358 km of highways, motorways and national roads.

The post-pay mode, which requires a more complicated

initial registration of vehicles in the system on contact points (located in major cities) or via fleet card issuers, is more efficient and convenient. As soon as the post-pay contract is concluded, the transport company receives units that do not have to be recharged with pre-paid credit. Spent toll is invoiced directly to the transport company and can be paid by credit card, fleet card, by standard interbank credit transfer or direct debit. The payment flow is fully electronic. Payment by fleet card or direct debit prevents mistakes caused by human error that can occur for example when retyping the payment data or handling cash.

13

Major milestones of the construction phase and the first five years of operation April 5

Major milestones of the construction phase and the first five years of operation

April 5 th , 2006: Commencement of works following the contract conclusion on March 29 th , 2006.

>

<

>

January 1 st , 2008: Extension of the tolled road network to selected national roads. The extent of the Phase 2 was significantly reduced. Only sections that replace high- ways to important border crossings or pre- vent highway bypassing were tolled. Toll

rates are lower than on highways and mo- torways.

February 1 st , 2010: Tolling system is used for traffic regulation on Fridays. Rates are doubled in the afternoon peak between 3pm and 9pm. Rates on other days in the week are slightly lowered as an compensa- tion.

 

<

>

September 1 st , 2011: Introduction of spe- cial rates for buses that are identical for all buses independently of emission class, weight and number of axles. Rates are dif- ferentiated only by the type of road (high- way + motorway / national road). >

 

<

 

<

January 1 st , 2012: Czech tolling system has been in operation for exactly five years. Rates are once again increased by 25 % for all vehicles except for those compliant with Euro 5 regulation.

>>

January 1 st , 2007: Phase 1 commercial launch and start of toll collection on 968 km of highways and motorways. Pre-registration of vehicles in December 2006 contributed to trouble free launch with minimum de- lays for drivers on distribution points.

January 1 st , 2010: Toll duty extension to light trucks with gross weight above 3.5t. Vignettes for trucks and buses cease to exist in the Czech republic and are further used only for passenger cars. Toll rates for heavy trucks, light trucks and buses are identical.

January 1 st , 2011: Increase of toll rates by 25 % for all vehicle categories except for environmentally friendly Euro 5 vehicles.

October 12 th ,2011: Government passes the proposal for toll discounts that may be awarded to frequent users. Actual rules and discount rates remain yet to be set.

The system was continuously extended to the newly built highways and the distribution network was adjusted to the actual needs.

14

System Concept and Procurement Model New open interface for telematic applications A new open telematic

System Concept and Procurement Model

New open interface for telematic applications

A new open telematic interface was implemented to the system in 2008. The interface allows external users to draw data on traffic flow generated by the tolling system.

New interface for collection of data from satellite on board units

While the Czech system was originally designed as a fully DSRC system, additional features allowing for use of satellite based OBU positioning were implemented in 2008 and subsequently tested. The result- ing “hybrid” central system is now able to receive transaction data from microwave gantries as well as from satellite GPS/GSM units that position the vehicle using satellite navigation and use cellular data to communicate the positioning and transactional information to the central system. The hybrid system is currently not used in commercial operation and may be used for distance toll extension on a wider net- work of national roads.

toll extension on a wider net - work of national roads. Basic block diagram of the
toll extension on a wider net - work of national roads. Basic block diagram of the
toll extension on a wider net - work of national roads. Basic block diagram of the
toll extension on a wider net - work of national roads. Basic block diagram of the

Basic block diagram of the hybrid tolling system that leverages one core central system for processing of data from two sources – satellite OBUs and microwave tolling gantries

15

2 | Operational Model

The truck tolling system is operated by the Road and Motorway Directorate of the Czech Republic. Technical operations of the system are contracted from the consortium Kapsch. However, the Czech state is responsible for the strategy and long-term development of the system. Mobile Enforcement is the responsibility of the Czech Customs Administration.

Every vehicle that is subject to the toll duty must be equipped with an electronic on board unit. The number of registered vehicles grew from 70 thousand at the system launch to almost 600 thousand in December 2011. Czech tolled roads are every day used by 40 to 60 thousand tolled vehicles, lower num- ber of 14 to 19 thousand unique vehicles is registered by the system on weekends.

Drivers can pick up the units at distribution points located in a close vicinity of tolled roads or at contact points in major Czech cities. Contact points offer a comprehensive range of services, including conclu- sion of post-pay contracts, while the main focus of distribution points is serving the pre-paid users. Call center and self-service web portal for registered users are available at all times.

< System Concept and Procurement Model

Economics of the System >

The Czech tolling system witnessed in its short five year history a significant growth that

The Czech tolling system witnessed in its short five year history a significant growth that surpassed expectations as well as assumptions made in the tender documentation. The forecasted number of 70 thousand On Board Units was almost reached during the pre-sales phase by the end of 2006. The overall number of units has been growing ever since.

The overall number of units has been growing ever since. Number of registered vehicles in the

The overall number of units has been growing ever since. Number of registered vehicles in the

The overall number of units has been growing ever since. Number of registered vehicles in the

The overall number of units has been growing ever since. Number of registered vehicles in the

Number of registered vehicles in the system (by the end of the year) between 2006 and 2011. Category “bus” was reported in one group with truck until 2010. Exempt vehicles are not included. Source: ESVZ ČR

Every registered vehicle does not use the Czech roads every day. Mainly foreign vehicles visit the Czech Republic only several days a month or irregularly. An average of 56 thousand vehicles a day was oper- ated on tolled roads in 2011. Weekends see a large drop to 17 thousand unique vehicles. The average

number of vehicles operated on workdays makes up to around 10 % of all vehicles registered in the sys- tem.

A total of 595 thousand vehicles were registered in the system by the end of 2011. An average of 56 thousand of them uses Czech tolled roads every working day.

The number of daily unique vehicles is one of the seasonal indicators of the tolling system activity. The development is similar to the overall toll collec- tion with peaks in the spring and autumn.

18

Operational Model
Operational Model
Average number of unique vehicles that use tolled roads in the Czech Republic on weekdays.
Average number of unique vehicles that use tolled roads in the Czech Republic on weekdays. Source: ESVZ ČR

Average number of unique vehicles that use tolled roads in the Czech Republic on weekends. Source: ESVZ ČR

19

While the size of the system can be indicated by the number of OBUs and
While the size of the system can be indicated by the number of OBUs and
While the size of the system can be indicated by the number of OBUs and length of the road network,
the seamless operation of the system is a result of many interconnected operational activities. Selected
key activities constitute the value chain of the tolling system.

All activities of the value chain are executed by entities of the Czech state, their private subcontractors, by the General supplier and Sub-suppliers.

Roles of the various entities in delivery and operation of the tolling system

Ministry of Transport (MD ČR)

Ministry of Transport is the ordering party and the client. Its main role is definition of the strategy and preparation of the necessary legislation. The Ministry also proposes the actual toll rates which are then set by the Government. The Ministry is also responsible for the EU relations, an agenda that gains its importance with the recent interoperability efforts.

Road and Highway Directorate of the Czech Republic (ŘSD ČR)

Road and Highway Directorate of the Czech Republic is subordinated to the Ministry of Transport. The Directorate is the operator of the system. The main task of the operator is the management of the sys- tem operation (which is outsourced to the General Supplier). As the system has been in ownership of the state since its delivery, the Directorate is also responsible for the asset administration and accounting. The Directorate is also the contractual partner of the toll payers – drivers or transport companies*.

State Fund for Transport Infrastructure (SFDI)

The final recipient of the collected toll is the State Fund for Transport Infrastructure. The collected toll amounts are transferred to accounts of the Fund without any allowed deductions. The Fund reimburses the operational costs of the system to the Road and Highway Directorate of the Czech Republic.

General Supplier (consortium Kapsch)

The Kapsch consortium is responsible for the delivery of the system (in phases since 2006) and technical operations of the system until 2016. The consortium has delivered to the client the infrastructure and software of the central system, toll gantries and their equipment, enforcement infrastructure including the mobile enforcement vehicles and infrastructure of the distribution network. Consortium is respon- sible for operation and maintenance of the infrastructure, system monitoring, provision of services to road users (e.g. OBU distribution) and operation of the payment scheme related to various kinds of toll related payments.

Operational Model Sub-suppliers of the General Supplier Sub-suppliers to the consortium deliver specialized components and

Operational Model

Sub-suppliers of the General Supplier

Sub-suppliers to the consortium deliver specialized components and services. The subcontracted services were frequently required by the tender documentation to be provided as a service, not as delivery (e.g. call center) or require special licenses (e.g. payments and banking services). The general supplier remains fully responsible for integration and the quality of the service.

The largest Sub-suppliers outside the Kapsch Group are Asseco Central Europe, a.s., AŽD Praha, s.r.o., Cross Zlín, a.s., Československá obchodní banka, a.s. and Telefónica O2 Czech Republic, a.s.

The Czech Customs Administration

The Czech Customs Administration is responsible for the mobile enforcement of the toll duty. The Ad- ministration operates a fleet of control vehicles and is allowed to stop vehicles and inflict fines. The Administration is also responsible for collection of fines that were not paid immediately by the drivers.

Project Manager

Main task of the Project Manager was provision of consultancy services to the client during the procure- ment phase, followed by management and coordination of the delivery phase, including management of testing and acceptance. Consortium of Deloitte and Bovis Lend&Lease acted as the project manager during the delivery phase.

Independent auditor

Auditor performs regular independent measurements of the toll system effectiveness, which is one of the key performance parameters defined by the operations contract. Independent auditor validates the number of vehicles registered by the tolling system in a given section with the real number of vehicles. The independent auditor is Logica CEE.

Services for road users and distribution

The most visible part of the tolling system are undoubtedly the tolling gantries. The second element is – at least for the drivers who pay toll – the distribution infrastructure that facilitates their contact with the system. Drivers and transport companies can use distribution and contact points, get information from non-stop call centre and on the web portal that facilitates payment of the unpaid due toll amounts as well. Registration to the system through issuers of fleet cards is important mainly for foreign users.

Contact points provide complex services, mainly the administratively demanding post-pay contracts. Fif- teen contact points are located in major cities in the Czech Republic as these are visited mainly by man- agers of transport companies. On the other hand, the distribution points are located usually at petrol stations, always in a close vicinity of the tolled roads. Each of 250 distribution points is no farther away than 12 km from the nearest highway exit. Services are limited to the operative activities, conclusion of post-pay contract is not possible on the distribution point. Distribution points are predominantly used by users with pre-paid units for recharging. Drivers with faulty units (pre-pay and post-pay) can exchange the OBU for a new one.

21

Enforcement
Enforcement

Enforcement is an integral and indispensable part of the toll collection system. Automated enforcement gantries check whether vehicles are equipped with OBUs and all parameters are set correctly (e.g. num- ber of axles). When the system identifies a vehicle that violates the toll duty, the information is forward- ed to the mobile enforcement units of the Czech Customs Administration. The automated enforcement highly increases effectiveness of the enforcement by concentrating the costly resources (mobile units) to vehicles identified as suspicious, instead of checking random vehicles on the road.

The mobile control unit can scan parked trucks and check for violations registered in the system, monitor vehicles directly on the road or stop vehicles based on leads from the automated enforcement.

Number of vehicles that are subject to toll duty, but not equipped with an OBU has been steadily de- creasing since the launch of the system. The most common violation is incorrect settings of the unit (wrongly set number of axles). The Czech Customs Administration processed almost 190 thousand viola- tions and collected more than EUR 6.12 m (CZK 150 m) fines from 2007 till the end of 2011.

EUR 6.12 m (CZK 150 m) fines from 2007 till the end of 2011. Amount of

Amount of fines imposed by the Czech Customs Administration and number of incidents Source: The Czech Customs Administration

22

3 | Economics of the System

Procurement of the system and its operation have been fully funded by tolling cash flow generated by the system. Payback on the investment into the Phase 1 (highways and motorways, vehicles 12 t+) was just 6 months.

The costs of the tolling system‘s technical provider (consortium Kapsch) reached EUR 0.43 bn (CZK 10.5 bn) without VAT, or 33 % of tolling revenues. The cost/income percentage value does not represent an useful and comparable basis for cost evaluation as it is heavily influenced not only by the actual amount of costs, but by the tolling rates and other factors as well. The cost/income ratio of 29.3 % in 2009 would decrease with an additional tolling revenue of EUR 41 m (CZK 1 bn) by approximately 3 percentage points.

The system remains in the ownership of the Czech republic when the service contract with consortium Kapsch expires at the end of 2016. The build-up cost invested into the system can generate revenue for an even longer period of time than during the initial 10 years contracting period.

< Operational Model

Importance of Toll Collection for Infrastructure Financing >

The tolling system – as any fee collection system or tax collection process – generates

The tolling system – as any fee collection system or tax collection process – generates apart from its revenues also costs. Costs of the Czech system can be split to (i) delivery of the system and (ii) provision of services necessary for the system operation. The distinction of delivery and operations is reflected in the procurement model as well – the system property rights were transferred to the Czech state after its completion and the General supplier provides operational services.

Delivery and operations of the system are broken down into four phases:

Phase 1 – delivery and operation of the system on highways and motorways

Phase 2 – delivery and operation of the system on selected national roads

Phase 3 – extension of the system to newly built sections of highways (for which the building permit will be issued on December 31 st , 2017 at the latest)

Phase 4 – extension of the system with additional 250,000 OBUs and introduction of the tolling for light trucks (3.5 t+)

Next two phases extended the system with technologies and services that do not generate any tolling revenue, which sets them apart from Phases 1 to 4:

Phase 5a – implementation of an open interface for telematic applications

Phase 5b – implementation of the traffic management solution on the D1 highway

Phase 6 – implementation of the interface for satellite based OBUs (the “hybrid” system)

The General supplier receives bonuses for system effectiveness exceeding 95 % and reimbursement of

fees paid to the issuers of credit cards and fleet cards as well. The effectiveness bonus equals to one half of the toll collection above the 95 % threshold. Should the effectiveness decrease below 95 %, the

General supplier is obliged to pay to the whole loss to the Czech state.

Total costs of the General supplier for delivery and operation of Phase 1–4 reached in the first five years of system operation a total of EUR 0.43 bn (CZK 10.5 bn).

The delivery of the system was financed through a scheme of deferred payments. This PPP style of payment scheme conditioned by performance in- dicators of the system did not require any state

funds exceeding the toll revenue at any time and allowed for use of toll revenue for system delivery payments. Payback on the delivery of the system for highways and motorways (total cost of EUR 0.11 bn/ CZK 2.67 bn) was just six months. Total costs of system delivery and operation payable to the General supplier until December 31 st , 2011 reached EUR 0.43 bn (CZK 10.5 bn) without VAT.*

Economics of the System Payments for delivery and operation of the system to the General

Economics of the System Payments for delivery and operation of the system to the General

Economics of the System

Payments for delivery and operation of the system to the General supplier for Phases 1
Payments for delivery and operation of the system to the General supplier for Phases 1 to 4 between 2007 and
2011. (EUR millions w/o VAT, CZK/EUR = 24.5). Source: Kapsch Telematic Services s.r.o.
Cost breakdown by Phases 1–4 and construction / operation between 2007 and 2011. (EUR millions w/o VAT, CZK/
EUR = 24.5). Source: Kapsch Telematic Services s.r.o.
25

Costs of implementation and pilot testing of the hybrid system and telematic interface are not

Costs of implementation and pilot testing of the hybrid system and telematic interface are not calculated to the above quoted costs as these do not generate any tolling revenues.

Economic effectiveness of the system: Cost / Income ratio

Average cost / income ratio of the system in the first five years reached 33 %. However, this indicator is biased and not suitable e.g. for international comparisons due to the following reasons:

1.

Cost / Income ratio is by definition influenced by the costs to the same extent as by the income. Toll rates were in the Czech Republic significantly lower than in other Central European countries dur- ing the 2007–2011 period. With prevailing fixed nature of the system costs, the lower revenue due to cheap rates pushes the cost / income ratio higher.

2.

Unbiased evaluation of cost effectiveness is not possible in a system that fulfills not only revenue de- fined goals, but strives for traffic regulation as well. Czech preference of buses in the system by lower rates (as introduced in September 2011) will result in a revenue gap of EUR 5–6 m (CZK 120–150 m) only in 2012. Cost effectiveness of the system decreases with each such revenue gap created by regulatory changes in rate cuts or discounts.

3.

Cost effectiveness calculated in terms of payable costs of the General supplier does not reflect the nature of the system as an asset owned by the state. The lifespan of some system components (such as gantries or the central system) is longer than the five years of operation we analyzed. Distributing the delivery costs over the 10 year contracting period cuts the cost/income ratio down from 33 % to 29.5 %.

4.

Cost effectiveness of the system decreases with introduction of tolling to roads with low yield – typi- cally national roads. While the costs are comparable or higher than on high yielding highways, the toll collection is significantly lower. Average collection per one kilometer of national road in the Czech Republic is only 21 % of average highway revenue.

Changing cost/income characteristics of the system, reflecting 2008–2009 peak in deferred payments for system delivery.
Changing cost/income characteristics of the system, reflecting 2008–2009 peak in deferred payments for system
delivery. Source: costs Kapsch Telematic Services s.r.o., toll revenues ESVZ ČR

Every tolling system must be optimized for revenue maximization or follow traffic regulation goals. Ad- ditional EUR 41 m (one billion CZK) collected by the system currently results in improvement of the cost

26

Economics of the system effectiveness by three percentage points. On the other hand, implementation of

Economics of the system

effectiveness by three percentage points. On the other hand, implementation of any measures that jeop- ardize revenues or increase costs without contribution to revenue generation push the cost/income ratio higher and make the system less cost efficient.

We have intentionally chosen not to compare the effectiveness of the Czech system with any other foreign countries. Different procurement models in various countries and their reflection into the financial and asset ownership relation-

ships between the suppliers and operators make any international comparison a very delicate task. A trustworthy comparison would have to adjust data by influence of road network length, price level of rates, traffic intensity as well as the already mentioned procurement model and accounting principles.

Cost / income of the system in 2011 was 24.4 % and another collected EUR 41 m (CZK 1 bn) would decrease the ratio by 3 percentage points.

Total profit characteristics of the system

Total gross income (toll collection – costs of the General supplier) of the tolling system between 2007 and 2011 amounted for EUR 0.92 bn (CZK 22.5 bn). The model of deferred payments and the financial crisis caused decrease of the gross income in 2008 and the record low of EUR 124 ths (CZK 3.04 bn) in 2009, when the payments for delivery of Phases 1 to 4 peaked. The combination of higher rates, economic recovery and very low payments for delivery (i.e. vast majority of the costs is created by the operational services) contributed to the highest yearly gross income of EUR 0.25 bn (CZK 6.14 bn).

 

 

 

 

of EUR 0.25 bn (CZK 6.14 bn).         Revenues (toll collection), costs of

of EUR 0.25 bn (CZK 6.14 bn).         Revenues (toll collection), costs of

of EUR 0.25 bn (CZK 6.14 bn).         Revenues (toll collection), costs of

Revenues (toll collection), costs of the General supplier (for delivery and operations) and gross income of the toll system in its first five years (CZK billions). Source: costs Kapsch Telematic Services s.r.o., toll collection ESVZ ČR

Part of the costs is not directly linked to the toll collection

Phases 5a, 5b and 6 implemented the open telematic interface, traffic management solution on the highway D1 and interface for collection of satellite positioning data from GPS/GNSS units. Cost of im- plementation (delivery), pilot testing and operation reached EUR 103.6 m (CZK 2.54 bn) without VAT between 2007 and 2011.

27

Costs of Phase 5 and 6 measured as amounts payable to the General supplier in
Costs of Phase 5 and 6 measured as amounts payable to the General supplier in

Costs of Phase 5 and 6 measured as amounts payable to the General supplier in
Costs of Phase 5 and 6 measured as amounts payable to the General supplier in

Costs of Phase 5 and 6 measured as amounts payable to the General supplier in

Costs of Phase 5 and 6 measured as amounts payable to the General supplier in

Costs of Phase 5 and 6 measured as amounts payable to the General supplier in respective years (CZK millions) Source: Kapsch Telematic Services s.r.o.

While the investment in Phases 1–4 were targeted at toll collection (i.e. direct revenue generation), the main objective of the Phase 5 is management of the traffic on the overloaded highway D1. According to the European Commission, congestions cost Europeans about 1 % of GDP. Aim of the traffic manage- ment system on D1 is to reduce these socio-economic costs. Investments into hybrid system may pay off in the future in case the hybrid (satellite) technology is used for introduction of tolling on national roads.

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pay off in the future in case the hybrid (satellite) technology is used for introduction of

4 | Importance of Toll Collection for Infrastructure Financing

Importance of the tolling income for the infrastructure financing has been growing, reaching 18 % of the budgeted income of the State fund for transport infrastructure in 2012.

Average yield is the highest on the Prague ring road (almost EUR 0.51 m / CZK 12.5 m in 2011) and on the highway D5 (Prague to München / Nürnberg). Average revenue of the national roads is only 21 % of the toll collected on highways and motorways.

Electronic toll collection that is dependent on wear and tear of the road allows for an effective taxation of foreign road users. Foreign transport companies paid 41 % of toll collected in the 2007–2011 period.

< Economics of the system

Telematic Features of the Tolling System >

As for a majority of tolling systems in Europe, the main goal of the Czech

As for a majority of tolling systems in Europe, the main goal of the Czech system is to collect payments from road users for the use of the infrastructure. The first five years‘ revenue amounted for a total of EUR 1.3 bn (CZK 31.9 bn). The revenue has been steadily growing on the year on year basis while gain- ing more importance in the revenue mix of the State Fund for Transport Infrastructure. The percentage share of the toll on the Fund‘s revenues has been growing even faster, mainly due to the fact that the historically main source for the Fund, the privatization revenue, has significantly decreased and has not been substituted yet. Therefore the main source of infrastructure financing in the Czech Republic are European funds drawn from the Operational Programme Transport 2007–2013. National co-financing is either provided from the state budget, or financed by European Investment Bank loans.

Changing shares of revenue sources in the financing mix of the State Fund for Transport
Changing shares of revenue sources in the financing mix of the State Fund for Transport Infrastructure (SFDI)
between 2006–2014 and total budget volume in EUR bn (CZK/EUR = 24.5). Source: SFDI Annual repors, SFDI 2012
budget and mid-term outlook 2013–2014
Toll revenue and vignettes generate a direct revenue for the infrastructure
Tolling income is directly correlated
with economic activity in the
country and in the region. It is not
redistributed as other tax incomes
and spent only on infrastructure
maintenance & development.
Only two revenue sources of the State Fund for
Transport Infrastructure come directly from the
road users, are closely linked to the use of the in-
frastructure and are not re-distributed by the state
budget: toll collected from trucks and busses & vi-
gnette purchases by drivers of passenger cars.
Vignettes were introduced in 1995 and their impor-
tance started to decline in 2007 with the replace-
ment of vignettes for heavy trucks and buses by
30

and their impor- tance started to decline in 2007 with the replace- ment of vignettes for

Importance of Toll Collection for Infrastructure Financing electronic toll collection. With the growing prices and

Importance of Toll Collection for Infrastructure Financing

electronic toll collection. With the growing prices and numbers of passenger cars on Czech highways, vignettes remain an important financial source. Mainly the price growth drives the revenue that in 2011 (only from passenger cars) almost reached the 2006 level when vignettes were obligatory for heavy and light trucks as well.

The most important turning point in the history of the Czech infrastructure financing remains year 2007 when the direct income of the State Fund for Transport Infrastructure grew by 143% thanks to the switch from vignettes to toll for heavy trucks. The direct payments for use of infrastructure than surpassed EUR 0.4 bn (CZK 10 bn) for the first time in 2011.

EUR 0.4 bn (CZK 10 bn) for the first time in 2011. Comparison of revenues from

Comparison of revenues from vignettes and toll between 2001 and 2011 (CZK billions). Source: SFDI Annual reports, ESVZ ČR

Tolling systems effectively collect fees from non-residents

The inability to efficiently tax non-residents who use infrastructure of the respective country has become a significant weakness of not only the Czech tax system. While the ownership of the vehicle can not be taxed outside the country of residence at all, the relation between the amount of the excise tax on fuel paid in the country and use of its infrastructure has become loose. Europe without borders has eliminat-

ed the historically reliable assumption of using the roads in the country where fuel is bought.

Foreign vehicles that represent

78

% registered vehicles generated

42

% revenues in 2011.

The tolling system collects fees from Czech and for-

eign road users equally on a strictly non-discrimina- tory basis as stipulated by the applicable European directives. Foreign transport companies paid a total of EUR 0.53 bn (CZK 13 bn) toll between 2007 and 2011, representing 41 % of the overall toll collection. The share of Czech users has been decreasing to only 57.8 % in 2011 compared with 61.3 % in 2007. The share of registered Czech vehicles in the system

remains stable between 22 % and 23 %.

31

                             
 

 

 

   

 

     
 

   

 

   

 

 

 

 

 

 

 

 

Shares of Czech and foreign users on OBU registrations (left) and toll revenue (right). Source: ESVZ ČR

The largest foreign share take traditionally vehicles registered in the Central European countries: in Slovakia,
The largest foreign share take traditionally vehicles registered in the Central European countries: in
Slovakia, Poland and in Hungary. The tolling system mirrors development of the transport market with
Polish and Romanian trucks gaining market share mainly from Slovak and German companies.

Toll revenue collected from foreign users broken down by country of origin. Source: ESVZ ČR

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Importance of Toll Collection for Infrastructure Financing Tolled road network and tolling income in the

Importance of Toll Collection for Infrastructure Financing

Tolled road network and tolling income in the regions of the Czech Republic

The overall toll collection in regions of the Czech Republic varies mainly due to the uneven coverage of the Czech Republic with highways and motorways. Differences are caused not only by different length of the tolled network and traffic intensity. The composition of the tolled network plays an important role as the rates for national roads are much lower than rates paid on highways and motorways. An ex- ample is the striking difference between the Vysočina region and the Moriavian-Silesian region. A mas- sive revenue is generated by the most important Czech highway D1 that passes through the Vysočina region, while almost no national roads are tolled in the region. The result is a 13.6 % share of the overall Czech toll income on just 7 % of the tolled network. On the other hand, the Moriavian-Silesian region generates only 5 % of revenue on 11 % of the tolled network due to the extensive national roads tolling (roads I/47, I/48 a I/58) and low traffic intensities on the only highway in the region that still misses a full collection to the Polish highway network.

misses a full collection to the Polish highway network. Shares of regions on the toll revenues

Shares of regions on the toll revenues and total length of the tolled road network in 2011 Source: ESVZ ČR

The structure of the tolled network and varying traffic intensities are reflected in the average toll col- lected on one kilometer of the tolled road in the region. Prague (A) and Vysočina region (J) are the clear outliers thanks to the high yielding Prague ring road and D1 highway. High traffic intensities on these two busy roads put them well above the national average of EUR 0.243 m (CZK 5.96 m) per kilometer. Well below the average are, on the other hand, regions where national roads prevail (Pardubice region, Hradec Králové region and others).

33

Average revenue from one kilometer of the tolled road in regions of the Czech Republic
Average revenue from one kilometer of the tolled road in regions of the Czech Republic
Average revenue from one kilometer of the tolled road in regions of the Czech Republic in 2012 (EUR thou-
sands, CZK/EUR 24.5). Source: ESVZ ČR

Tolling revenues are closely correlated with economic situation of the Czech Re- public and the region

The Czech tolling system has already witnessed a rapid economic growth, the financial crisis as well as the slow return to the modest growth after crisis. Situation in the transportation sector is a traditional indicator of economic cycles and data from the system allow for analysis of time series comprising of very accurate data available almost in real time every day in the year.

While the sample of twelve quarters from 2008 till 2011 is rather short, we can
While the sample of twelve quarters from 2008 till 2011 is rather short, we can illustrate the correlation
of the GDP and traffic performance measured by the tolling system. The following chart shows this cor-
relation by comparing quarterly year-on-year GDP changes and number of kilometers travelled by trucks
and buses on the tolled network*.

Comparison of quarterly year-on-year changes in toll revenue and Czech GDP (activity in the tolling system measured as kilometers traveled on the paid network, GDP figures are in real prices, not seasonally adjusted) Source: tolling data ESVZ ČR, GDP figures Czech statistical office as of March 9 th , 2012

Importance of Toll Collection for Infrastructure Financing Average toll revenue was impacted by the financial

Importance of Toll Collection for Infrastructure Financing

Average toll revenue was impacted by the financial crisis as well as extension of the system to national roads

The Czech oldest and longest highway D1 generates 36 % of toll revenues. The second place takes the D5 (connecting Prague and southern Germany) with 16.23 %. No other road surpasses share of 10 % on the overall toll revenues.

road surpasses share of 10 % on the overall toll revenues. Shares of road sections on

Shares of road sections on the total amount of toll collected in 2011. Source: ESVZ ČR

The leading positions of D1 and D5 come as no surprise as these roads are the two longest highways in the Czech Republic. Therefore, we will use the proportion of toll collected per one kilometer of the re- spective road for further comparison.

Average revenue of highways is almost three times higher than col- lection on national roads

Average revenue per kilometer in the Czech Republic was decreasing between 2007 and 2010. The 2011 average surpassed 2007 by just a very small margin. This development can be attributed to the financial crisis in Europe and changing structure of the Czech tolled road network. While the whole tolled network comprised only of high-

Just two highways (D1 and D5) combined collect more than a half of the toll. The oldest Czech highway D1 itself generated 36 % of the national revenue in 2011.

35

ways and motorways in 2007, the numbers for 2008 onward are influenced by introduction of

ways and motorways in 2007, the numbers for 2008 onward are influenced by introduction of tolling on national roads. Combination of lower rates on national roads and generally lower traffic intensities contributes to the decrease of the average collection on the whole network.

the decrease of the average collection on the whole network. Historical development of average revenue per

Historical development of average revenue per one kilometer of the tolled road (EUR thousands, CZK/EUR = 24.5, all highways, motorways and national roads combined). Source: ESVZ ČR

Prague ring road and highway D5 take the clear lead in average kilometer yield. D5 collects even more than the D1 due to the missing sections of D1 between Brno and Ostrava (the intensity on the eastern part of the highway is, therefore, very low). If we take into account D1 only between Prague and Brno (where the highway faces the highest traffic load), the average revenue per kilometer would surpass the D5 and, consequently, take the second place in the national comparison.

Average revenue of tolled roads in 2011 on road sections (EUR thousands per one kilometer,
Average revenue of tolled roads in 2011 on road sections (EUR
thousands per one kilometer, CZK/EUR 24.5). Source: ESVZ ČR
36
36

Importance of Toll Collection for Infrastructure Financing Revenue differences between individual tolling segments are

Importance of Toll Collection for Infrastructure Financing

Revenue differences between individual tolling segments are even higher than those of whole road sections. Yearly income of the least profitable segment of the national road I/47 (close to city of Hulín) accounts only for 2 % of yearly income generated by the most profitable segment in the Czech republic, found on the highway D1 close to Modletice. Among the TOP10 yielding tolling sections are only sections of the highway D1 and Prague ring road R1. On the other hand, the 10 lowest yielding sections are all on national roads I/47 and I/58.

37

38

38

5 | Telematic Features of the Tolling System

Intelligent traffic systems (telematics) can contribute to higher safety, travel comfort, more efficient use of the infrastructure as well as to lower environmental impact of road transportation.

The tolling system generates valuable data describing in detail the intensity and composition of the traf- fic stream including its speed characteristics. Collected data can be used either for immediate actions or for analysis of long term trends and set-up of traffic models.

The ability of the tolling systems to alter economic motivations of road users through variable tolling rates opens new possibilities for use of tolling systems for traffic regulatory purposes. Differentiated pric- ing can promote use of environmentally friendly vehicles, prefer public transport and displace unneces- sary journeys to off-peak times.

< Importance of Toll Collection for Infrastructure Financing

Development of Toll Collection Cystems in Central Europe and European Union >

Transport telematics is the key to the more efficient use of infrastructure Tolling system is

Transport telematics is the key to the more efficient use of infrastructure

Tolling system is an important element of the transport telematics ecosystem. Intelligent transport systems (ITS) combine information and communication technologies in order to increase capacity of existing infrastructure, improve security and lower environmental impact of the transport industry. ITS

is mainly focused on traffic management and regu- lation, development of intelligent vehicles, electronic fee collection, management of public transport and seamless door to door route planning.

Importance of ITS for Europe is increasing. The most commonly used telematic systems are the complex national toll collection systems. The original fee collection function is extended by new telematic features.

Importance of ITS will be growing for Europe as well as for the Czech Republic. Lack of investment funds for capacity increases will inevitably lead to search for ITS solutions that allow for more efficient utilization of the existing infrastructure. One of the key strategic

development streams of ITS is data collection and sub- sequent distribution of the data to drivers as well as usage of the data for immediate actions leading to traffic flow optimization. Future widespread cheap telecommunication networks can make the vision of vehicles communicating with infrastructure and among themselves a reality.

European Union strives for coordinated development of ITS across Europe. The Directive 2010/40/EU on the framework for the deployment of Intelligent Transport Systems in the field of road transport and for interfaces with other modes of transport sets out four priority areas:

• Optimal use of road, traffic and travel data,

• Continuity of traffic and freight management ITS services,

• ITS road safety and security applications,

• Linking the vehicle with the transport infrastructure.

Many key highways, city bypasses and ring roads in Europe are equipped with traffic management so- lutions. Electronic tolling however remains the most frequently used ITS technology. Tolling systems, originally conceived for the sole purpose of efficient automated fee collection, are being more closely integrated into national ITS platforms and their importance in the intelligent traffic landscape is grow- ing. Tolling systems generate valuable traffic data without any further investments or modifications. Secondly, the rate structure can be used as a regulatory tool as the price paid for the use of the infra- structure acts as one of the transport companies‘ economic motivators.

Traffic data

The Czech tolling system supplies data to the National transport information center that monitors traffic in the Czech Republic by collecting data from various resources. A dedicated interface was implemented for commercial distribution of the traffic data from the tolling system. Designed by the Faculty of Trans- portation Sciences at the Czech Technical University, the interface provides detailed data on composition of the traffic flow, average speed etc. Currently this interface serves only for research purposes and the expectations put on the commercial use have not been met yet.

40

Telematic Features of the Tolling System Using data for monitoring and immediate interventions Data generated

Telematic Features of the Tolling System

Using data for monitoring and immediate interventions

Data generated as toll transactions at the individual gantries can be in real time analysed to calculate intensity and average speed on the roads. Enforcement gantries are not only limited to monitoring of vehicles equipped with On Board Units. The video detection system used for enforcement purposes can monitor all vehicle types and provide basic anonymous statistical data.

This kind of data can be used for traffic management purposes as the input for models that evaluate situation on the road and subsequently try to influence behavior of drivers through distribution of in- formation or changes of the variable traffic signs.

of in - formation or changes of the variable traffic signs. Possible use of traffic data

Possible use of traffic data generated by tolling gantries. Source: illustration based on ESVZ ČR

The key parameter for success of this application is the latency between the detection of the traffic anomaly (e.g. growing intensity and decreasing speed indicating congestion). Decisive technical param- eters are, therefore, the speed of communication link between the gantry and the central system as well as time necessary for analysis of the gathered data and distribution of the information to drivers or regulatory systems on the road (such as electronic traffic signs).

Data can be used for statistical purposes, monitoring of regulatory interventions and long term trend analysis

Data generated by the tolling system is valu- able for long term traffic statistics as well. Very detailed data of exact activity of vehi- cles identified by the parameters registered by the system (type of vehicle, weight, emis- sion class, number of axles) is available on all tolled road segments. More complex traffic

Traffic data generated in the tolling system as a “by-product” of toll collection can be used for monitoring of the real time situation on the road as well as for compilation of various time series.

41

models can create a full model analysing routes of vehicles on the tolled network, identify

models can create a full model analysing routes of vehicles on the tolled network, identify export as well as import trips and other characteristics of movement of goods around the country.

The following few examples show basic types of analysis that can be performed with use of just very basic tools using the data from the system.

Traffic intensity at border crossings

Toll is due to the central position of the Czech Republic in Europe collected on all major roads connecting Czech inland with the neighbouring countries. Data from the system can be, therefore, used to charac- terize traffic on majority of the border crossings. This analysis of the tolled roads is somewhat limited mainly in the relationship of the Czech Republic and Austria as toll is collected only on one road (I/52 in Mikulov) and the other important border crossing at the I/38 in Znojmo is not tolled.

border crossing at the I/38 in Znojmo is not tolled. Number of tolled vehicles crossing border

Number of tolled vehicles crossing border of the Czech Republic and neighbouring countries. Source: ESVZ ČR

Traffic intensity of the D1 highway

D1 highway is the oldest and longest Czech highway. Whole 36% of the overall toll collection was gen- erated on this single highway in 2011. Analysis of other non-financial data reveals insights into the load factors that vary as the highway leaves Prague and steers eastward to Brno and Ostrava. The highest traffic intensity around Prague and Ostrava contrast with extremely low utilization of new sections near Kroměříž. As one of the key sections between Hulín and Lipník nad Bečvou is still to be built, drivers choose the route from Brno via Olomouc on the I/46 and I/35, connecting back to D1 in Lipník nad Bečvou where the intensity increases. Further increase of traffic is expected after the full connection of the D1 to the Polish highway network is finished (from Bohumín to the direction of Gliwice and A1 highway).

The D1 witnessed on March 20 th , 2008 the largest chain collision in the Czech Republic when more than 100 vehicles collided. Data from the tolling system revealed that the average speed of trucks just before the accident was despite the fog and bad weather between 86 and 89 km/h.

42

Telematic Features of the Tolling System
Telematic Features of the Tolling System

Traffic intensity of the tolled vehicles (trucks, buses) in millions of vehicles per year on D1 highway between Praha and Ostrava (in both directions, column width represents the length of the toll section). Source: ESVZ ČR

Prague ring road

The southern sections of the Prague ring road is one of the most recent additions to the Czech high- way network. Opening in Autumn 2010 significantly reduced the transit load on the inner city ring and the Barrandov bridge famous for causing severe delays for trucks transiting the Czech Republic in the east-west direction. The ring road generates the highest average revenue per kilometer (over EUR 0.49 m / CZK 12 m in 2011). More than 14 thousand trucks and buses use the ring road every working day. This center point of the Czech highway network reveals one key characteristics of the traffic flows in Central Europe, that has been observed since the launch of the tolling system in January 2007: trucks travel more eastward in the first days of the week, while the westward direction prevails on Thursday and Friday.

the westward direction prevails on Thursday and Friday. Traffic intensity on the Prague ring road (section

Traffic intensity on the Prague ring road (section Chrášťany–Ořech in the week starting October 11 th , 2011 ve- hicles eastward and westward). Source: ESVZ ČR

43

Distribution of traffic intensity within 24 hours (in thousands of vehicles as sum of all

Distribution of traffic intensity within 24 hours (in thousands of vehicles as sum of all days in the week starting October 11 th , 2010 on the ring road section with the highest intensity Chrášťany–Ořech). Source: ESVZ ČR

The south-eastern section of the ring road is yet to be built. Trucks travelling from highways D5 and D1 to highway D11 (direction Poland) and motorway R10 (direction Mladá Boleslav where the Škoda as- sembly plants are located) have to cross the Prague Spořilov residential area to use the inner city ring to connect to D11 and R10 at the eastern edge of Prague. In order to reduce the heavy traffic passing through the Spořilov residential area, trucks were allowed to use the entire inner city ring (which was closed for trucks immediately after completion the ring road) at night. Although the inner city ring is

shorter and trucks do not pay any toll for using it, drivers use it rarely. On the last day of the full closure, August 31 st , 2011, a total of 9.5 % of trucks and buses travelling in the west – east direction turned off from the ring road to the inner city ring (buses and trucks with special permissions to enter inner city, e.g. groceries distributors). The week after, on September 7 th , 2011, when the night use of the inner city ring was allowed for all vehicles, only three percentage points of tolled vehicles more turned off from the ring road. The low attractiveness of the inner city ring probably stems from speed limits in the city, many crossings and frequent stops and accelerations that increase fuel consumption. The ring road of- fers, on the other hand, a smooth journey with no stops and higher speeds. The share of ve-

hicles coming from the inner city ring to the ring road in the east – west direction has not changed at all in the two observed weeks.

Tolling system provides five years long time series describing traffic in the Czech Republic. Various characteristics of traffic flow and vehicles can be analysed apart from the financial data.

Further elaboration of analytical exercises simi- lar to those presented here is of course possi- ble, taking into account comparison of longer

time periods and working on a lower level of detail, e.g. distinguishing heavy trucks, light trucks and buses. Analysis of individual journeys (trip reconstruction based on sequences of toll transac- tions) would even allow for creation a model of truck trips in Prague area and prediction of future toll income on the yet to be built sections of the ring road (mainly in northern part of the city).

44

Telematic Features of the Tolling System Regulatory function of the Czech tolling system The second

Telematic Features of the Tolling System

Regulatory function of the Czech tolling system

The second telematic function of the Czech tolling system is the use of rate differentiation for traffic regulation. Toll is one of the components of the total costs of the trip. If there is a possibility to travel cheaper in a certain time of a day or week, part of the drivers may be willing to postpone the journey. The real impact will be dependent on the price elasticity of demand for travelling at the given time (we may talk about price elasticity of demand for infrastructure capacity in case of the tolling system to be more precise). Toll rate – as each and every price in the economy – can influence motivations of individu- als as well as companies.

Variable rates are widespread in urban tolling systems and in the United States. An unique example of traffic regulation on a highway through toll rate change is the Friday afternoon regulation in the Czech Republic. The clear goal of the regulatory intervention was to limit truck traffic in the Friday afternoon peak when people leave cities for the weekend.

The impact is depicted on the following chart, showing distribution of the distance (measured in kilom- eters) travelled on Friday before and after the regulatory intervention*. The graph clearly shows that part of the Friday afternoon journeys was moved from afternoon to morning hours. Drivers stop already before 3 pm when the higher rate zone starts and is valid until 9 pm. The number of kilometers travelled in the regulated time zone decreased by 15 % in the comparison of the two analysed days. 50 % increase of rate and only 15 % decrease in traffic show a low price elasticity of demand in the given context of time, day of the week and the length of the increased peak time rate from 3 pm to 9 pm.

length of the increased peak time rate from 3 pm to 9 pm. To keep the

To keep the weighted average toll rate on the same level as before the introduction of the regulation, rates valid on Monday – Thursday and during the unregulated times of Friday were slightly lowered. Regulatory functions of highway tolling systems in Europe are not fre- quently used as the financial revenue maximiza- tion remains the primary goal of the highway tolling systems. Comparable to the Czech Fri- day regulation is the night rate on the Brenner highway in Austria.

Impact of the higher rates on the distribution of the intensity within day: comparison of Friday May 18 th , 2007 (without regulation) and May 14 th , 2010 (regulated by higher tarrifs). Source: ESVZ ČR and own calculation

Preference of ecologically friendly vehicles

One much simpler regulatory measure is applied in European tolling systems. Higher rates for Euro 0–2 vehicles and increasingly even for Euro 3–4 vehicles motivates the transport companies to replace the older vehicles with new ones that are more environmentally friendly. Toll savings reduce the payback on investments into new vehicles. The data from the Czech system shows that new Euro 5 vehicles displace mainly Euro 3 vehicles while the share of very old Euro 0–2 vehicles remains permanently very low.

Changing shares of vehicles classified by emission classes between 2007 and 2011 (data by the

Changing shares of vehicles classified by emission classes between 2007 and 2011 (data by the end of December of the respective year). Source: ESVZ ČR

Regulatory functions of the system are in a direct conflict with revenue maximiza- tion

Tolling systems not only in the Czech Republic but in all neighbouring countries were conceived to gen- erate revenue and provide source of financing. A practical impact of such an optimization is a concept of “no other choice”. Drivers have no other (cheaper) way to bypass the tolled road and the system collects the maximum available revenue (given the traffic intensity and rates). As soon as the same system starts to carry out a regulatory function, the financial and regulatory functions inevitably end up in conflict.

Optimization of the tolling system for certain regulatory goals is more complicated than the rather straightforward financial optimization. Drivers must have a choice and an attainable alternative option must be available. For example to travel at another time, park the car and use public transport, avoid journey through the city centre etc. The conflict between the regulatory and financial functions can be traced back to the single tool that is available for the optimization of the system – the rate. While the financially optimized system strives to collect as much money to pay for the total cost of the infrastruc- ture, the main goal of the regulatory driven optimization is the change in people‘s behavior. Covering the costs of system operation and some additional profit are secondary. The rate must be, therefore, set on a level that alters behavior of sufficient number of people to reach the goals of the regulation (limit number of cars in the city centre etc.)

One real example of this conflict is the preference of the bus public transport in the Czech Republic, introduced on September 1 st , 2011. Buses initially paid the same rates as trucks, however, the newly intro- duced rates in September 2011 are 50 % to 85 % lower than the respective rates for trucks (depending on number of axles and emission class). The direct financial loss from this rate cut between September and December 2011 (4 months) was more than EUR 1.63 m (CZK 40 m)*.

While lower rates for buses are no exception in Europe, this example clearly shows the financial impact of regulatory interventions through lower rates. Preference of certain vehicles, travel in off-peak times or via preferred routes may have a similar impact. Designers of telematic regulatory measures should,

46

Telematic Features of the Tolling System therefore, always search for a balance between the regulatory

Telematic Features of the Tolling System

therefore, always search for a balance between the regulatory and financial functions, or strive for neu- tralization of the financial impact. The new Directive 2011/76/ES allows for higher rates in peak times. The higher rate shall not exceed the weighted average of rates by more than 175 % and shall not be applied for more than 5 hours a day if the regulatory goal is traffic management in peak time. Higher rates shall not lead to increased income. Therefore the changes must only alter the structure of rates resulting in the same weighted average.

48

48

6 | Development of Toll Collection Systems in Central Europe and European Union

Tolling systems are being established all over Europe in order to secure at least part of the necessary funds for infrastructure investment and maintenance. Tolling is a source for financing of PPP projects in majority of the western European countries. The role of tolling income is indispensable not only in projects with demand risk transferred to the private operator, but also in projects with the availability based payment scheme.

The Czech tolling rates were raised twice by 25 % in January 2011 and 2012. The rates were the lowest in Central Europe before these two sizable hikes. Rates valid in 2012 are comparable to Germany and Slo- vakia. The most expensive country for trucks is still Austria where the rate for a 12 t+ truck with 4 axles is 32 % higher than in the Czech republic.

European tolling directives allow for use of the microwave or satellite technology. Currently the micro- wave technology, which is suitable especially for highways with high traffic intensities, prevails in Europe.

< Telematic Features of the Tolling System

Outlook for the Close Future of Toll Collection >

Electronic tolling systems in Europe are being established on a basis of two technological platforms

Electronic tolling systems in Europe are being established on a basis of two technological platforms de- fined by the Directive 2004/52/ES that strives for standardization of the organically evolving electronic tolling landscape in Europe. While the European Electronic Tolling Service shall become reality in the coming years, the Directive 2004/52/ES defines the technological basics mandatory for all EU countries already now. All new systems launched after January 1 st , 2007 shall use the two technological solutions:

• combination of satellite positioning GNSS (nowadays GPS, GALILEO in the future) and mobile com- munication in GSM/GPRS networks,

• microwave DSRC communication in the 5.8 GHz band (according to CEN TC278).

Microwave technology currently prevails in Europe and is used mainly for toll collection on highways that concentrate the highest traffic intensity in Austria, Poland, France and the Czech Republic. Satellite based systems are operational only in Germany and in Slovakia, always in combination with optional manual toll payments without need for on board unit.

Evropa 0 300 km DSRC 0 300 mi GPS / GSM LSVA
Evropa
0
300 km
DSRC
0
300 mi
GPS / GSM
LSVA

Use of electronic technologies for tolling systems in Europe

50

France
France

Development of Toll Collection Systems in Central Europe and European Union

Development of the French highway network is closely tied to the concession model used since the 1950‘s. Private operators of highways used to collect toll in the traditional manual way on toll plazas, essentially in the same way known to tourist driving through France in their passenger cars. Availability of electronic technologies (mainly DSRC) paved way towards automation of toll collection. Local tolling systems started to emerge and national interoperability connected the isolated systems into one net- work that is available for use only with one universal on board unit. The interoperable system TIS-PL is operated by the association of highway companies (Les sociétés d‘autoroutes).

Austria

Austria became on January 1 st , 2004 the first country in Europe to launch a nationwide electronic toll col- lection system for all vehicles exceeding gross weight of 3.5 t. The microwave system is very similar to the solution implemented later in the Czech Republic and requires a compulsory On Board Unit named Go- Box. Toll rates are comparatively higher than in the Czech Republic. Special (higher) rates are collected on five selected roads crossing the Alps due to their higher investment and maintenance costs. Special surcharge is collected on the Brenner highway during the nighttime as well.

The system generated more than EUR 1 bn revenue in 2011, collecting toll on 2,175 km of highways. The operator of the system is the state owner infrastructure company Asfinag.

Germany

The first nationwide satellite based tolling system was launched in the middle of 2005 in Germany. The system combines GPS localisation of the vehicle with mobile data communication in GSM network to transmit the location and billing data to the central system. Use of the satellite OBU (which is more costly than the DSRC unit) is not compulsory, the drivers can pay toll for a pre-selected route manually on self-service kiosks. Toll

is being collected on more than 13,000 km of highways and in 2011 the revenue reached stunning EUR 4.48 bn. The system is operated in a PPP scheme by the private company Toll Collect.

European Directives on interoperability of tolling systems allow for use of only two technologies:

microwave DSRC and combination of satellite positioning and mobile data communication (e.g. GPS and GSM).

The German public private partnership “A-Model” is closely linked to the nationwide toll collection. Typically the private entity takes over an existing section of the road that is to be re- furbished and in some cases extended to 3+3 lanes. The private entity operates the section for 20–30 years and toll on the sec- tion is collected by the Toll Collect system (i.e. no new systems are built on the PPP sections).

The toll collection does not make the privately operated sec- tions self-sufficient. Consequently, the existing financing gap is closed using other (tax) resources of the Government. As the A-Model projects usually transfer the de- mand risk to the private sector, the decisive price element in the public procurement process is the extent of the to the toll revenues.

Typical A-Model projects are A1 Buchholz Kreuz (A1/A261) – Bremer Kreuz (A1/A27), A4 Hörselberge bypass, and A8 Bubesheim–Augsburg West. Other German PPP projects (A5 Baden-Baden–Offenburg, A8 Ulm–Augsburg, A9 Hermsdorf–Schleiz) do not transfer the demand risk to the private operating entity and are, therefore, procured and financed in the availability model of guaranteed payments inde- pendent from the actual toll collection.

51

Slovakia
Slovakia

Slovakia launched the satellite based tolling system in January 2010. Currently the system collects toll from all 3.5 t+ vehicles on 2387 km of highways, motorways and national roads, while the national roads make up to 70 % of the tolled network. Vehicles must be equipped with an On Board Unit with excep- tion of selected transit routes that can be paid manually (in a model similar to Germany). Number of these “transit corridors” decreased from 18 at the launch of the system to 4 in March 2012.

Toll collection in 2011 amounted for EUR 154 m. System was delivered and is now being operated in a 13 years operation agreement by a private company SkyToll.

Poland

Poland launched its tolling system in the middle of 2011 on 573 km of highways, motorways and national roads. The microwave solution requires the vehicles to be equipped with an On Board Unit named viaBOX. An exception on the Polish network is the A2 highway from Lodz where toll is still collected manually, however, ETC lanes were established to allow for seamless passage of trucks equipped with OBUs.

Operator of the system, private company viaToll, collected in the second half of 2011 a total of PLN 481 m (EUR 113 m).

Switzerland

The overall design of the Swiss tolling system differs significantly from other European systems designed to comply with the EU regulations. Every movement of a vehicle heavier than 3.5 t is in Switzerland subject to toll payment. Independent from type of the road. Vehicles are equipped with LSVA (Die Leistungsab- hängige Schwerverkehrsabgabe) unit that uses the digital tachograph to register distances travelled in Switzerland to a chip card. Foreign vehicles declare the distance travelled in Switzerland manually and

Toll collection is in a majority of western European countries closely tied to the procurement and operation of infrastructure in the public private partnership model.

have to pay the toll when leaving the country.

Spain

Spanish road network has been built and operated in a similar model as in France. Private concession- aires have built roads, operate them and collect toll from all vehicles using mainly the traditional manual

toll plaza model. Introduction of the interoperable electronic system VIA-T allowed for automatic toll payment. Use of the electronic payments provides discounts up to 55 % on some sections. Vehicles are

equipped with only one OBU valid for payment of toll to all members of the ASETA association.

Portugal

The highway network in Portugal has been built and operated in the PPP model as well. The largest concessionaire Brisa is responsible for operation of almost half of all highways. Interoperable electronic tolling system operated by Via Verde enables automatic payment on 2,209 km of highways all over Por- tugal. System processes payments in selected parkings and on petrol stations as well.

Italy

Italian electronic system Telepass operated by the largest highway concessionaire Autostrade per l’Italia S.p.A. automates the originally manual toll collection in Italy. One electronic unit is used for pay- ment of toll on 3,132 km of highways to all concessionaires.

52

Norway
Norway

Development of Toll Collection Systems in Central Europe and European Union

Highways in Norway are tolled for all vehicles that pay on toll plazas with special lanes for self-service payments and ETC. Electronic tolling system AutoPASS combines microwave technology with licence plate recognition. Microwave units are not compulsory and increase convenience of toll payment. Ve- hicles equipped with the electronic units can pass through toll plazas freely. Other vehicles pay on toll plazas in cash or by credit card. Internet based pre-payment is possible as well, with all payments associ- ated to the license plate, which is then recognized on the road by the video detection technology.

Ireland

Toll is collected from all vehicles on highways in Ireland. Only collection on the M50 is automated with fully electronic toll gantries while all other roads feature traditional toll plazas with ETC lanes for cars equipped with OBUs. Toll plazas accept cash or card for manual payments. Eight toll companies oper- ate in the country, some of them being highway concessionaires as well. All systems are, however, fully interoperable and one unit can be used to pay toll on all roads, bridges and in tunnels in Ireland.

Country

Network length

Technology

In operation

Tolled roads

Tolled vehicles

The Czech Republic

1,362 km

DSRC

1. 1. 2007

H+M+N

3.5

t+

France

8,700 km

DSRC

 

H

all vehicles

Germany

13,038 km

GNSS/CN

1. 1. 2005

H

12 t+

Poland

1,573 km

DSRC

1. 7. 2011

H+M+N

3.5

t+

Austria

2,175 km

DSRC

1. 1. 2004

H

3.5

t+

Slovakia

2,387 km

GNSS/CN

1. 1. 2010

H+M+N

3.5

t+

Switzerland

the whole network

LSVA

1. 1. 2001

all roads

3.5

t+

Spain

3,365 km*

DSRC

in phases since 2006

H

all vehicles

Italy

3,132 km

DSRC

 

H

all vehicles

Portugal

2,209 km

DSRC

 

H

all vehicles

Norway

N/A

DSRC, ANPR

 

H

all vehicles

Ireland

300 km*

DSRC

 

D

all vehicles

Source: operators of tolling systems, with exception to items marked *, where the source is www.asecap.com

Small closed systems still exist in Europe apart from the national systems. Toll collections are usually as- sociated with sections that were extremely costly to build, or are operated in a PPP scheme. A typical example is the Øresund bridge between Copenhagen and Malmö.

Tolling systems in cities, built mainly with the intention to regulate traffic, are still not widespread in Europe. London and Stockholm still remain pioneers of tolling in cities.

53

Revenues are directly influenced by the rates and traffic intensity Toll revenues remain a marginal

Revenues are directly influenced by the rates and traffic intensity

are directly influenced by the rates and traffic intensity Toll revenues remain a marginal source of

Toll revenues remain a marginal source of infrastructure revenue in the Central Eu- rope. Therefore, rates are not set to match the life cycle costs of the road, but remain largely a political decision. The Czech rates are set by the Government in the limits set by the Directive 1999/62/ES and 2006/38/ES.

The Czech rates were in comparison with Austria, Germany and later even with Slo- vakia very low since the launch in 2007 until the end of 2010. The average Austrian rates was 64% higher in 2010. Truck (12 t+, 4 or more axles, Euro 4 emission class) paid 92 % more in Austria than in the Czech Republic.

Comparison of rates valid in Central Europe for 2010 (in CZK, CZK/EUR = 24.5, calculated as an average of rates in all categories – such as weight and emission class – for trucks on highways. *) Average for the Czech Republic calculated as weighted average of rates valid during the week and on Friday afternoon, assuming 15 % weight for the traffic performance on Friday afternoon). Source: MYTOCZ, Asfinag, TollCollect, SkyToll

afternoon). Source: MYTOCZ, Asfinag, TollCollect, SkyToll The first rate rise by 25 % came only in

The first rate rise by 25 % came only in 2011 after four years of system operation. The second 25 % raise was effective on January 1 st , 2012. The Czech rates are comparable with Slovakia and Germany after this dou- ble rise. Austria remains the most expensive country in the region. Truck (12 t+ with 4 or more axles and Euro 4 emission class) pays per kilometer 32 % more than in the Czech Republic. The average rate is 28 % higher than in the Czech Republic.

Toll revenues are influenced mainly by the traffic intensity and the structure of the tolled network. Toll collection on many na- tional roads with lower rates and intensity

(70 % of the Slovak tolled network are na- tional roads) reflects in a low average yield.

Comparison of rates valid in Central Europe for 2012 (in CZK, CZK/EUR = 24.5, calculated as an average of rates in all categories – such as weight and emission class – for trucks on highways. *) Average for the Czech Republic calculated as weighted average of rates valid during the week and on Friday afternoon, assuming 15 % weight for the traffic performance on Friday afternoon). Source: MYTOCZ, Asfinag, TollCollect, SkyToll

54

Development of Toll Collection Systems in Central Europe and European Union The same effect can

Development of Toll Collection Systems in Central Europe and European Union

The same effect can be shown in the Czech Re- public even in a multi-year comparison. When the national roads were tolled in 2008 (with only highways and motorways being tolled in 2007), the average yield decreased by 12 %*. An opposite effect was observed in 2011 when part of traffic moved from national roads to newly opened highway sections and so yield increased by 22 %*.

The Czech rates are comparable with neighboring countries only after double rise by 25 % in 2011 and 2012. Austria remains the most expensive country in the region with rates higher almost by one third than in the Czech Republic.

rates higher almost by one third than in the Czech Republic. Average revenue per one kilometer

Average revenue per one kilometer of the tolled road in the Czech Republic, Slovakia, Austria and Germany in 2010 (EUR thousands, CZK/EUR = 24.5). Source: MYTOCZ, Asfinag TollCollect, SkyToll and own calculation

The graph below depicts the toll revenues in the Czech Republic, Austria and Germany. We quote these numbers just for completeness of the analysis as the total revenue is due to fundamental differences in road network length and structure virtually incomparable.

road network length and structure virtually incomparable. Total toll collection in the Czech Republic, Austria and

Total toll collection in the Czech Republic, Austria and Slovakia since commissioning of the Austrian system in 2004. (CZK billions, CZK/EUR = 24.5). Source: MYTOCZ, Asfinag, SkyToll

56

56

7 | Outlook for the Close Future of Toll Collection

European Commission strives for introduction of technical and contractual interoperability, allowing for toll payment using just one board unit. New directive also stresses environmental function of tolling systems through internalization of negative externalities of road transportation.

The Czech structure of toll rates poses a risk for revenue sustainability. Rates for Euro 5 vehicles are 50 % lower than those for Euro 2 trucks. As the share of Euro 5 vehicles grows, the effective average toll rate is decreasing.

Extension of the electronic fee collection systems to non-highways roads is being discussed in Europe as well as in the Czech republic.

< Development of Toll Collection systems in Central Europe and European Union

First concepts of national fully electronic tolling systems were created almost 10 years ago. Since

First concepts of national fully electronic tolling systems were created almost 10 years ago. Since than, focus has shifted from 12 t+ HGVs and core highway network to significant national roads and tolling for all vehicles with gross weight above 3.5 t. Toll fees are used to influence economic motivations of trans- port companies, mainly through lower rates for environmentally friendly vehicles. Tolling has simultane- ously become an important revenue of the infrastructure and has found a role in financing structure of Public Private Partnership projects.

Potential of the tolling systems is not by a long sight exhausted. Development in the coming years will be defined mainly by the extension of the distance based tolling model, by the European interoperability and the effort to internalize negative external costs of the road transportation.

Vision of just one on board unit for Europe

Introduction of the technical and contractual interoperability of individual national tolling systems in Europe has been a clear priority of the European Commission for several years. The current model of having one On Board Unit for each country is seen as a barrier on the internal market and source of inef- ficiencies. One universal unit for toll payments all over Europe would simplify operation of the national systems and save costs in transport companies that have to maintain multiple contracts and equipment for European operation.

multiple contracts and equipment for European operation. Current situation without any interoperability: need for
multiple contracts and equipment for European operation. Current situation without any interoperability: need for
multiple contracts and equipment for European operation. Current situation without any interoperability: need for
multiple contracts and equipment for European operation. Current situation without any interoperability: need for
multiple contracts and equipment for European operation. Current situation without any interoperability: need for
multiple contracts and equipment for European operation. Current situation without any interoperability: need for
multiple contracts and equipment for European operation. Current situation without any interoperability: need for
multiple contracts and equipment for European operation. Current situation without any interoperability: need for

Current situation without any interoperability: need for multiple on board units and individual contracts with local toll operators for each country

Interoperability of tolling systems is stipulated by the Directive 2004/52/ES and the related Commission Decision 2009/750/ES. Their main goal is to prevent deployment of incompatible tolling systems in Eu- rope. The Directive defines parameters of the European Electronic Tolling Service (EETS), allowing drivers payment of toll using one device (unit), one contract and one single payment.

European Electronic Tolling Service defines contractual rules for the ecosystem of EETS providers (OBU issuers), toll chargers (national system operators, i.e. payees), and payers (drivers, transport companies).

58

Outlook for the Close Future of Toll Collection The basic working principle of EETS is

Outlook for the Close Future of Toll Collection

The basic working principle of EETS is similar to a mobile phone roaming – use of mobile phone abroad while having a contract only with the “home” operator and paying a single bill.

only with the “home” operator and paying a single bill. Contractual and operational structure of EETS:
only with the “home” operator and paying a single bill. Contractual and operational structure of EETS:
only with the “home” operator and paying a single bill. Contractual and operational structure of EETS:

Contractual and operational structure of EETS: one unit and one contract, allowing access to multiple national tolling operators

While the European interoperability based on EETS has not been fully implemented yet, some exam-

ples of bilateral interoperability are already in place. Technical interoperability between Austria and Germany has been operational since September 2011. Although the systems

are very different (Austria uses DSRC microwave, Germany satellite system), the universal unit Toll2Go is equipped with both technologies. However, cus- tomers still need to conclude two con- tracts with both national toll opera- tors.

The vision of the European Electronic Tolling Service is the ability to pay toll in Europe using just one device, one contract and one single payment for fees accrued in all countries.

59

Toll2Go interoperability between Austria and Germany: integration of two technologies into one unit, requi -
Toll2Go interoperability between Austria and Germany: integration of two technologies into one unit, requi -
Toll2Go interoperability between Austria and Germany: integration of two technologies into one unit, requi -
Toll2Go interoperability between Austria and Germany: integration of two technologies into one unit, requi -
Toll2Go interoperability between Austria and Germany: integration of two technologies into one unit, requi -
Toll2Go interoperability between Austria and Germany: integration of two technologies into one unit, requi -
Toll2Go interoperability between Austria and Germany: integration of two technologies into one unit, requi -
Toll2Go interoperability between Austria and Germany: integration of two technologies into one unit, requi -
Toll2Go interoperability between Austria and Germany: integration of two technologies into one unit, requi -

Toll2Go interoperability between Austria and Germany: integration of two technologies into one unit, requi- ring, however, individual contracts with Asfinag and TollCollect

A similar system is in place in Spain and France. Both systems use microwave DSRC technology and the ViAxxes features contractual interoperability as well. Therefore, drivers use only one unit and are billed on one single invoice that combines fees to be paid in Spain as well as in France. The ViAxxes unit can be since December used in the road tunnel Liefkenshoek in Antwerpen, Belgium.

Using tolling systems for internalization of external costs of road transport

The latest addition to the family of European tolling directives – the Directive 2011/76/EU* – takes an- other step towards internalization of negative external costs of road transportation. Toll rates may therefore be in the future increased by an environmental surcharges.

The directive stipulates the methodology for calculation of negative externalities caused by noise and air pollution. Both the sources of externalities shall be in the future internalized by increased toll fees. The maximum fee for air pollution is set to 12 Euro Cents on interurban roads and 16 Euro Cents on suburban roads. Noise surcharge shall not exceed 2 Euro Cents while distinguishing day and night.

Internalization of external costs into the costs explicitly born by transport companies increases motiva- tion for modernization of vehicles and usage of interurban roads (where possible). The new directive also opens a space for toll operators to increase rates above the currently valid cap defined by costs of the infrastructure. Higher rates would then consist of two parts:

1. Fee covering the cost of the infrastructure limited by the Directive 1999/62/ES amended by the Direc- tive 2006/38/ES: the same fee for all vehicles, differentiation only by the extent of the wear (weight, number of axles)

*) Directive 2011/76/EU is after the Directive 2006/38/ES another change to the original Directive 1999/62/ES on the charging of heavy goods vehicles for the use of certain infrastructures

60

Outlook for the Close Future of Toll Collection 2. Internalization of external costs pursuant to

Outlook for the Close Future of Toll Collection

2. Internalization of external costs pursuant to the Directive 2011/76/ES: by the level of air pollution (rate based on the Euro classification) and noise, taking into account time of the day and location (interurban/ suburban)

This “two component structure” can solve the prob- lem the Czech Republic has been facing since 2011. Rate hike by twice 25 % (effective on January 1 st , 2011 and 2012) was not applied to Euro 5 vehicles. As the share of these modern vehicles is growing, the effective rate rise is estimated only to 19 % in 2011 and 17 % in 2012. The Czech Republic is now in an extreme situation of 100 % difference between the Euro 2 and Euro 5 rate, even without introduction of any environmental sur- charges based on the new directive 2011/76/ES.

New European Directive allows for introduction of air pollution and noise surcharge on top of the toll rate. Czech rate for Euro 2 vehicles is even before introduction of the surcharges twice as high as the rate valid for Euro 5 vehicles.

twice as high as the rate valid for Euro 5 vehicles. Extent of the “ecological penalty”

Extent of the “ecological penalty” for Euro 2 vehicles shown through comparison with Euro 5 rates in Central European countries (CZK, CZK/EUR = 24.5, rates valid as of January 1 st , 2012 for trucks with 5 axles, 12 t+). Source:

MYTOCZ, Asfinag, SkyToll, TollCollect, ViaToll

The structural change is ongoing and toll rates should reflect this change. Update of the rate structure will be a necessity very soon (e.g. Austrian Asfinag works already with Euro 6). The second problem, al- ready very specific and tangible in the Czech Republic, is the decrease of the effective average toll rate. As the share of Euro 5 vehicles grows, the average effective rate is decreasing. Number of Euro 5 vehicles grew from 30 % to 36 % only in 2011. The dynamics of this increase can be illustrated also by share of Euro 5 vehicles on new registration of the system depicted on the following chart.

61

Shares of vehicles characterized by the emission class on new registrations to the Czech tolling
Shares of vehicles characterized by the emission class on new registrations to the Czech tolling
Shares of vehicles characterized by the emission class on new registrations to the Czech tolling
Shares of vehicles characterized by the emission class on new registrations to the Czech tolling
Shares of vehicles characterized by the emission class on new registrations to the Czech tolling system.
Source: ESVZ ČR
A transparent solution is the above outlined construction of the toll rate consisting of a fee for use of
the infrastructure and air pollution & noise surcharge.
Extension of the distance based tolling to non-highway roads

European directives currently require tolling of non-highway roads in case the highway network of the country has not been completed yet and national roads replace the highways. The Czech Republic, as well as neighboring Slovakia and Poland used this possibility. The Czech Republic tolled almost 200 km of national roads that replace (yet to be built) highways connecting important border crossings and the existing highway network (e.g. I/33 from Hradec Králové to Poland, I/52 to Austria). The second reason for national road tolling was prevention of tolled road bypassing (e.g. I/48 that could almost perfectly replace highway D1 for drivers looking for an alternative to the tolled road).

The decisive parameter for economics of any toll extension to national roads is the average income from one kilometer of such a road. Average revenues in the Czech republic are significantly lower than on highways. Average revenue per kilometer of national road in 2011 amounted only for EUR 68 thousand (CZK 1.66 m), while the average kilometer of highway and motorway generated EUR 324 thousand (CZK 7.94 m) revenue. Plans for extension the distance based tolling model to non-highway roads shall, therefore, calculate with real traffic intensities on the roads, not extrapolating current revenues. Rise of toll rates and increasingly cheaper technology would be, on the other hand, the motivating factor for distance based tolling. We expect the French Ecotaxe project to show the direction for future introduc- tion of distance based tolling on lower class roads. The pilot operation shall start in Alsace in July 2013.

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Outlook for the Close Future of Toll Collection Electronic fee collection from passenger cars The

Outlook for the Close Future of Toll Collection

Electronic fee collection from passenger cars

The second direction of possible extension of the distance based fee collection model is passenger car tolling. Introduction of such a concept was discussed in the Czech Republic as one of the options how to leverage the existing microwave DSRC infrastructure on highways. Discussion of a similar electronic fee collection concept has emerged even in Germany, country with a strong tradition of free highways.

Electronic systems can collect time based (creating an “electronic vignette”) as well as distance based fees. Both options bring better control of payments and less fraud. The distance based model is also fair payment dependent on actual use of road by individual drivers.

Distance based fee collection from drivers of passenger cars would become necessity in case of structural reform of infrastructure financing. Should the model based on tax redistribution be replaced by direct financing model, all users would have to pay (not only trucks) and the rates would have to be set on a significantly higher level, corresponding to the real lifecycle cost of the infrastructure.

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Authors and contacts for further discussion on the topic Ondřej Zaoral is the founder of

Authors and contacts for further discussion on the topic

Ondřej Zaoral is the founder of the company Inoxive. You can contact him on the e-mail address ondrej.zaoral@inoxive.com.

Tereza Mlynářová works as an analyst for Inoxive. You can contact her on the e-mail address tereza.mlynarova@inoxive.com.

Zdeněk Lokaj is a Researcher at the Faculty of Transportation Sciences of the Czech Technical University in Prague. You can contact him on the e-mail address lokaj@fd.cvut.cz.

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© Inoxive s.r.o., 2012. All rights reserved. Inoxive s.r.o. Mezibranská 1579/4 110 00 Praha 1 – Nové město Czech Republic

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© Inoxive s.r.o., 2012. All rights reserved. Inoxive s.r.o. Mezibranská 1579/4 110 00 Praha 1 – Nové město Czech Republic