Variable Pricing

Variable pricing is not primarily a response to congestion problems. Often on tolled roads, revenue generation is its main objective but variable pricing can also be introduced to reduce peak demand or to improve traffic flow, or both.

There is often pressure to invest in new road infrastructure or improvements that will accommodate peak demand. It can be attractive to recover some of the costs by introducing peak charges. The principles of variable pricing may also be applied to:

dedicated lanes that are partitioned from general purpose travel lanes – such as on State Route (SR) 91 in California (USA)

refine an existing tolling or congestion charging policy (See Toll Collection), HGV tolling (See Heavy Goods Vehicle (HGV) Tolling) or a congestion charging scheme (See Congestion Charging).

A successful variable pricing policy needs to be clearly understood, lawful, acceptable and be seen to meet its original objectives. The policy should be clearly explained, including its:

• rationale and expectations on benefits (such as ensuring a consistent journey time)
• price increments (ideally without any upper limit)
• applicable time-bands (or other variables)

Sustained support for variable pricing will depend on meeting expectations. Policies may be multi-level and include:

• charging all vehicles a standard toll for the use of the road (rates are often varied according to the vehicle type)
• making designated lanes available for all vehicles that pay a toll – which can be waived or discounted for vehicles that carry more than a defined number of occupants (these are known as a High Occupancy & Toll (HOT) lanes – widely used in the USA)

Criteria and Variation

Charges for road use may be varied to enable a stated quality of service to be delivered – such as journey time on a specific road segment. Charges may be varied to reflect time of day or number of occupants in a vehicle or other criteria such as:

• vehicle’s emission profile
• vehicle’s classification or use (HGVs, buses, private car or taxi)
• current use (for example, a passenger car used on military duty)
• category of users (such as mobility-impaired passengers)

In every case the metrics should be measurable so that a vehicle may be checked for compliance. Fully automated methods may not always be feasible. For example, part-time manual roadside checks are necessary to check that vehicles using a HOT lane are compliant. In future (See Future Trends) it may be possible to count the number of occupants accurately by advanced image-based face detection systems or advanced in-vehicle sensors.

Most commonly, charges are varied according to a pre-set schedule – intended to maintain free flow traffic and reduce the likelihood of congestion. Charges may change every few minutes, hourly or monthly – or in real-time, based on stated criteria such as average vehicle speed. The fee varies according to a well-defined and well-understood relationship that can be measured.

A price that varies frequently may be unpopular with road users since it limits users’ ability to vary the time or their mode of travel. A simpler approach – that may be more understandable to users – could be a time-of-day variation that is reassessed annually.

A variation in fee does not always mean an increase in the fee. It may be reduced as an incentive to change behaviour instead. For example, the tolled portion of the Gauteng Freeway Improvement Project (GFIP) administered by the South African National Roads Agency (SANRAL) offers a discount of up to 30% for travel during off peak periods. Alternatively a ‘revenue neutral’ approach may be implemented. This is based on increasing fees during peak periods and reducing them at other times – with the aim of ensuring that the same total fees are collected daily.

Examples of variations of a fee and its associated metrics include:

• variation to regulate the number of vehicles in order to maintain travel speeds and/or travel times on a paid section of the road – such as on State Route 91 in California (which has been operating since 1995 as the world's first fully automated toll road)
• variation according to the time-of-day to encourage road users with some flexibility on time of travel – to use the road between peak and off-peak periods (often referred to as the ‘shoulder’ period) or during off-peak periods (such as the Stockholm Congestion Tax scheme)
• exemptions for vehicles with more than a specified number of occupants – to encourage car sharing (although sometimes public take-up does not match expectations) and to reduce the quantity of single occupancy vehicles (such as the Capital Beltway in Virginia)

Technologies, Data and Resources