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Toll Facilities with Variable Pricing 8. Ontario Ministry of Transportation Highway 407 Express Toll Route The Ministry of Transportation of Ontario (MTO) is responsible for maintaining the trans- portation infrastructure of Canada's largest province. The MTO establishes transportation pol- icy in Ontario and operates with a great deal of freedom from the central government. The MTO's budget in fiscal year 2004 was approximately CAN $1.6 billion and it maintains a provin- cial highway network of approximately 16,525 centerline kilometers (10,268 miles), of which approximately 1,767 kilometers (1,097 miles) are 400-series highways built to standards similar to that of the United States Interstate Highway System. 8.1. Overview of MTO's Congestion Pricing Program Ontario Highway 407--known as 407 Express Toll Route or "407 ETR"--forms a 108-kilometer (67-mile) bypass through the northern flank of greater Toronto, relieving traffic on Highway 401 and Queen Elizabeth Way. It is Ontario's only toll highway and was the first highway to use elec- tronic toll collection exclusively for its entire length. Planning for the 407 dates back to the 1950s, but the actual implementation of the roadway was very slow. In the early 1990s, the MTO con- sidered implementing the original 69-kilometer segment as a public-private partnership, but pub- lic borrowing costs were favorable leading the MTO to complete the project under a design-build procurement. However, MTO did outsource the operation of the highway, which was completed just as transponder technology became widely available. The facility was operated toll-free for the first 6 months, after which electronic tolls were charged to all motorists using a combination of transponder and character recognition video technology. From the inception of tolling on the facility, there was a differential in price for peak and off-peak travel, as well as among different vehicle classes. While the 407 ETR was intended to act as a relief for other major east-west highways, the facility quickly generated its own additional traffic, has been heavily used since its inception, and operates at capacity during peak periods. A downturn in the economy in the late 1990s led the Government of Ontario to privatize the facility, allowing it to recoup a one-time fee of CAN $3 billion, which helped to balance the provincial budget. In 1997, the MTO awarded a 99-year concession to operate and expand the 407 ETR to Highway 407 International, Inc., a concession company composed of Cintra Infraestructuras S.A., Intoll, and SNC-Lavalin. Fol- lowing the privatization, the concession company extended the facility 40 kilometers to the west and 15 kilometers to the east, at a cost of approximately CAN $500 million. In addition, Highway 407 International, Inc., also invested an additional CAN $500 million on widening portions of the original 69-kilometer segment and enhancing the facility's electronic toll col- lection systems. 141

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142 Evaluation and Performance Measurement of Congestion Pricing Projects The 407 ETR toll structure varies by distance traveled, time-of-day, mode of payment, and overall congestion level of the segments traveled. The 407 ETR charges peak toll rates from 6:00 to 10:00 A.M. and 3:00 to 7:00 P.M. on weekdays. As of 2010, a peak-period rate of CAN 21.35 per kilometer is charged for travel on "regular-zone" sections of the facility, while a slightly lower rate of CAN 21.10 per kilometer is charged on "light-zone peak" sections. An off-peak rate of CAN 18.35 is charged at all other times on all segments of the facility. Motorists without a transponder are charged a video toll fee of CAN $3.60 for each trip made on the 407 ETR, regard- less of the time of travel, and both transponder and non-transponder vehicles must pay other fixed fees of CAN 40 per transaction and CAN $2.50 per month. ETC holders must also pay an annual transponder lease fee of CAN $21.50. The distinction between peak and off-peak toll rates was initiated by MTO on opening High- way 407, and Highway 407 International, Inc., retained this precedent when it took over the operation of the facility. MTO has examined the possibility of HOV-to-HOT conversions on other highway facilities in Ontario, but concluded that there was no business case for such conversions because of limited off-peak demand and the costs of implementing and enforcing HOT lanes. 8.2. What Is Monitored? The full spectrum of the MTO's performance monitoring activities is provided in the accom- panying Facility Performance Monitoring Summary Matrix. The matrix is a comprehensive record of all current, known metrics used to monitor performance on the Port Authority cross- ings, organized by evaluation category. Provided in the matrix for each metric used are frequency of collection, purpose, a simple indication of importance, and particular characterizations of the metric that relate back to agency/facility goals or applications. An expanded version of the matrix providing sources of information and other notes is included in the Final Report for NCHRP 08-75 which is available online. The matrix is intended to be a visual overview of the MTO's complete monitoring effort, easily comparable to other fully variable-priced facilities with similar matrix summaries. A more qualitative discussion of how these metrics are applied in practice and which ones are the most significant is provided below. Not all metrics noted in the matrix are discussed here. The concessionaire's monitoring requirements are identified in the Concession and Ground Lease Agreement (GLA) allowing it to operate the 407 ETR. The concessionaire is required to provide quarterly Traffic Characteristics Reports to MTO within 20 days of the close of each quarter. These include forecasts of anticipated traffic volumes by vehicle type for the next 3-month period, traffic volume forecasts for the next year, and actual traffic counts for the past 3-month period. In addition, the concessionaire is required to make real-time traf- fic data reports available to MTO for purposes of the Freeway Traffic Management System of the Province of Ontario. The traffic data is reviewed and verified by an independent auditor. MTO also performs some pre-programmed common-sense tests on the volume data to cross- check the results with other data sources it maintains. Similarly, the concessionaire is obligated to provide quarterly Incident Management Reports. These include the following information on all traffic incidents on the 407 ETR: Type of incident (bodily injury, death, property damage) Classification of incident (road-related, barrier hit, right-of-way, other) Number of incidents by type and classification Number of claims and revenue received by type and classification of incident Cost to correct incidents by type and classification The concessionaire is also required to submit Environmental Incident Reports to MTO within 7 business days reporting any discharge, dumping, or spilling of hazardous substances on the

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Congestion Pricing Case Studies 143 407 ETR, together with the location and time of the incident, description of the damage involved, listing of the agencies involved, and description of any remedial actions taken. The GLA also contains provisions for checking highway design parameters such as shoulder grade, super-elevation, friction, sightlines, and lane width, as well as other metrics related to safety, including the clear zone beyond the edge of the roadway and the flattening of slopes along the shoulder. Safety metrics indicate that the roadway is more than twice as safe as other Ontario highways. Standards of maintenance have evolved with the changing government trend toward outsourcing and privatization. Newer metrics pertain to illumination, signage, and construction and are audited 10 to 12 times per year. The Ontario Provincial Police (OPP) is responsible for enforcing the 407 ETR and contracted at cost. They maintain their own enforcement data, per their own internal established procedures. 8.3. Other Essential Data Gathering Activities Highway 407 International, Inc., was tasked with improving customer service on assuming the operation of the 407 ETR. It employs approximately 60 customer service representatives. MTO staff report that the level of customer complaints has decreased over time. 8.4. Why Performance Evaluation Takes Place and How Performance Monitoring Data Is Used The primary purpose for MTO's performance monitoring on the 407 ETR is to maintain the Province's Freeway Traffic Management System and verify that Highway 407 International, Inc.'s performance meets the standards established in the GLA. There are no established performance thresholds for peak and off-peak periods, nor are toll rates changed in response to congestion on the facility. Toll rates remain at the discretion of the concession company, although certain traf- fic thresholds must be met in order to justify a change in rates. MTO has the right to assess severe penalties if toll rates are changed without the corresponding threshold having been met. 8.5. What Additional Performance Metrics or Data Would Be Helpful to MTO or Other Agencies Considering Congestion Pricing? MTO had no additional comments to offer on performance monitoring issues.

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144 Evaluation and Performance Measurement of Congestion Pricing Projects Congestion Pricing Case Studies 145 Table 8-1. Ontario Ministry of Transportation Highway 407 Express Toll Route summary matrix.