Congestion Pricing

Much like a business allocates its inventory to customers based on their willingness to pay, congestion pricing allocates scarce highway capacity through a traveler's willingness to pay. Congestion pricing is a form of road pricing, a broader concept that includes conventional tolling and charges for vehicle miles traveled. Congestion pricing, like other road pricing, will raise revenues, but will do so as part of a strategy to address highway congestion.

We have not succeeded in attaining our goals for regional mobility and accessibility by managing only the supply of transportation. Demand management is necessary. Likewise, travel demand management is not likely to succeed if it operates only by trying to attract people to alternate modes of transportation. Congestion pricing allows system operators to manage demand like any business – by varying prices to find a "clearing price" where supply equals demand.

Congestion prices can be charged for a variety of travel activities:

• Area Charges. Typically, an area charge is applied to all vehicles traveling within a congestion charge area. For such a system, monitoring is required not only on the periphery of the zone, but in the interior of the congestion charge area. An area charge is expected to reduce the total volume of traffic within the congestion charge area and the immediate surrounding area. An area charge has been implemented in London.
• Cordon Charges. Under a cordon charge system, a cordon line is established, typically around the central area of a city. Vehicles are charged to pass through the cordon line regardless of the functional class of the roadway. Cordon charges reduce traffic in and around the cordoned area. Though substantially simpler to administer than an area charge, a cordon charge may not be quite as effective. A cordon charge has been established in Stockholm.
• Parking Congestion Fees. Instead of charging road use directly, parking fees can be managed to reduce congestion. Such a system has been proposed for the City of Chicago.
• Highway Congestion Fees. Highway congestion fees are congestion charges applied to managed lane concepts. Fees are established as a tool to manage demand on the facility. Typically, highway congestion fees are established to manage demand to attain an established performance standard. For example, highway congestion fees on State Route 91 in California are set so that facility demand does not exceed 1,700 vehicles per hour per lane, eliminating recurring congestion on the roadway. Highway congestion fees have been established in southern California, Texas, and in Minnesota, among other locations.

Managed lanes applications of congestion fees allow system operators to keep a facility from reaching a state of oversaturated flow. Hourly highway volumes serviced are maximized at approximately 45-50 miles per hour; spot volumes may be higher than 2000 vehicles per hour per lane. However, when volumes are maximized, a slight disruption of traffic flow causes a "breakdown" leading to lower speeds and lower volumes comprising oversaturated flow. Maximized volumes at 45-50 miles per hour are not sustainable with current technologies. Thus, by maintaining slightly lower volumes and higher speeds with congestion pricing, system operators of SR 91 in California keep managed lanes volumes and speeds substantially higher than on unmanaged lanes.

Congestion fees are set in a variety of ways:

• Static, flat fees can be established to reduce congestion. For example, London's £8 congestion charge applies regardless of the congestion level and is not regularly adjusted to reflect travel conditions. Flat fees are not well-suited to performance-based pricing.
• Variable fees are set to vary by time of day, reflecting average demand. Such fees are typically reviewed quarterly and reset to meet highway performance standards. Variable fees enable stable travel mode choices, since the fees are known in advance.
• Dynamic prices employ real-time data to vary prices throughout the day as needed to meet highway performance standards. Dynamic prices permit lower average prices than variable prices, but the prices may not be known to users until they are en-route. Therefore, dynamic prices are more likely to affect route choice than mode choice.

A key component of congestion pricing success is the availability of travel options. However, such options do not need to be feasible for all travelers for congestion pricing to be successful. A successful congestion pricing program will encourage users to make different route choices (e.g, a bypass route), mode choices (transit), and destination choices (local instead of distant shopping). The accummulation of different choices in response to price will yield a positive price response.

Congestion pricing can be set differently for various vehicle classes. However, congestion pricing is best limited to passenger vehicles, since passenger travel is best able to divert to other modes. While pricing experiments in other areas focusing on passenger vehicles has demonstrated a strong response to price, a modest pricing experiment limited to trucks showed that truck routing and timing decisions were not very responsive to price.