Posted by: tollinfo | January 10, 2007

Costs of nationwide charging are estimated from DfT report to be at over GBP 30 Billion

The ‘Implementing Road Pricing’ supplement to the DfT’s Road Pricing Feasibility Study estimates the cost
of a national scheme. This study looked at the different set-up and operating costs of
different road pricing techniques. The model most akin to the full nationwide charging
discussed above was Scenario 9 in this study, where all UK roads are priced. In
order to do this, all vehicles in he UK must be fitted with a complex hybrid On-Board
Unit (OBU) that tracks distance via the Galileo satellite network. Automated Number
Plate Recognition (ANPR) technology is used for enforcement. As Galileo
technology is still in development, costs may fall, and thus, three levels were
estimated for the OBU: £100, £250 and £525 per unit. In addition, communication
costs for each user may vary as this satellite technology improves, so three levels
were estimated for these costs as well: £12, £24, and £36 per user per year.

With these varying estimates:

• Set-up costs range from £23.4 billion to £62 billion
• Annual operating costs range from £4 billion to £5.4 billion
• 20-year totals range from £105 billion to £170 billion
The study also looked at less expansive scopes of charging, namely:

• Scenario 7a – Charging only urban areas and 15-mile “Travel to Work” areas
around them with optional GPS (rather than Galileo) OBUs: £14.7-£17.6
billion to set up, £2.4 – £3 billion a year to run, and £63.1 – £78.7 billion over
20 years
• Scenario 7b – Same as 7a with mandatory GPS OBU’s: £14.8-£17.6 billion to
set up, £2.2-£2.8 billion a year to run, and £59.1 – £74.7 billion total over 20
• Scenario 8 – Including congested trunk roads in 7b: £18.7-£22.4 billion to set
up, £2.7-£3.6 billion a year to run, and £75.3 – £95 billion total over 20 years

The cost estimates for Scenarios 7a, 7b, and 8 are lower than those for Scenario 9
(full road pricing) for two reasons. First, not all vehicles are equipped with OBUs, so
set-up costs are lower. However, just as the non-mandatory OBU scheme (7a) has
higher operating costs because of the increased need for ANPR enforcement, all of
these schemes may encounter unexpected expenses when non-equipped cars enter
charging areas. Second, the reduced-scope schemes use less sophisticated
technology. However, this GPS technology is less accurate than Galileo is predicted
to be, with possible errors of up to 200m and delays of up to 15 seconds possible in
35% of London.

Thus, with these satellite-based programs, costs are questionably large, while
benefits are questionably small by comparison. At the very least, charging all UK
roads, with costs starting at £105 billion and maximum benefits at £89.5 billion over
20 years, does not seem to be a worthwhile investment. However, with the possible
far-reaching benefits of charging, it is worth finding an alternative solution. Even the
reduced-scale satellite models, though, do not seem to provide good value for
money, with possible cost overruns likely and no guarantees on system accuracy.

Source: cost analysis by Institute of Economic Affairs, based on DfT data

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