I’ve always considered Transurban, operator of the express lanes on the Interstate 495 and Interstate 95, to be a pretty savvy outfit. The company may have over-estimated traffic demand for its express lanes when deciding back in the mid-2000s to build the Northern Virginia toll operations, but corporate executives seemed highly professional in the way they designed, constructed, promoted and managed the business.
At least, they did until now… Fox News reports that Transurban has filed 26,000 cases against I-495 express lane users for non-payment. It’s one thing to dun people for $10, $20 or even $100. But Transurban is slapping some drivers with thousands of dollars in fees and fines for a single offense. Reports Fox News:
Luis Viera used to take the Express Lanes from Clinton, Md., to his job in Tysons Corner. His E-ZPass was automatically deducting tolls from his credit card.
Then one day, Luis was slapped with a summons to Fairfax County Court. Transurban was suing him for $4,500 in fees and fines for exactly $7.70 in missed tolls.
Luis went to court the first time without a lawyer. “I was nervous,” Luis said. “I didn’t get any sleep. I wasn’t eating. It was a bad week leading up to it.”
In the courtroom, a woman who said she represented Transurban approached Luis before the judge entered. She said the company would settle for $2,488.
“How does $10 turn into $2,000?”
Darn good question. How does $10 turn into $2,000? Transurban responded as follows: “Although less than 0.1% of all 495 Express Lane trips end up in court, we continue to do all we can to minimize any traveler going to court, this is why we have the First-Time Forgiveness program which has helped nearly 800 travelers. Additionally, we do not profit from the fines or penalties. As defined by Virginia law, any and all revenue collected from toll fines and penalties are cost recovery only to fund the enforcement program and we currently we do not even recover costs.”
Ah, hah! The fines cover the expense of the entire enforcement program — including lawyers, license plate-reading cameras, and IT systems to track the scofflaws. I can’t blame Transurban for wanting to cover its costs but the company has to weigh the business consequences: Charging $2,500 or more will piss off a lot of drivers — I mean really piss them off. Luis Viera says he won’t ever use the express lanes again. Who can blame him? How many other people, hearing of Viera’s experience, will refuse to ever use the express lanes? Who wants to run the risk of getting clobbered with a $2,500 fine?
Bacon’s bottom line: Conceptually, using the price mechanism to ration scarce highway capacity is one of the most cost-effective tools we have to manage traffic congestion. But the devil is in the details. Economic models that model supply and demand equations don’t ordinarily consider such grungy facts as enforcement. People make mistakes. People cheat. Toll road operators must have a mechanism for enforcing payment. If those enforcement mechanisms lead to manifestly unjust results, as appears to be happening in Fairfax County, people will avoid the express lanes and political support will wither.
Virginia authorities need to revisit the enforcement provisions in the Transurban public-private partnership contract and, ideally, induce Transurban into re-negotiating the offending clauses. It won’t be easy because traffic volumes and revenues are falling short of projections, and Transurban may not be receptive to changes that might raise its cost structure. On the other hand, the company does have a 70-year contract and it needs to consider the long-term implications of alienating its customer base. If a huge fan of the express lane concept like myself finds $2,500 fines for $10 offenses to be outrageous and indefensible, I feel like I’m pretty safe in saying that Transurban stands all alone on this one.
(Hat tip: Rob Whitfield)