[Article] No automatic drop in tolls

Carawaystick

From the IT motors section today, confirmation we all knew that the nra are muppets. Why worry about the revenues of the toll companies instead of the citizens of the country.....

http://www.irishtimes.com/newspaper/motors/2009/0819/1224252860325.html

the IT wrote:

THE SHARP fall in the cost of living this year will not lead to an automatic reduction in road tolls, according to the National Roads Authority (NRA).

Toll charges are reviewed each year with any increase calculated on the basis of changes in the consumer price index (CPI) for the previous year.

However, the contracts with operators of the five tolled routes in the State contain no provision for a cut in tolls when price index is falling.

“The contracts limit any increase to a CPI rise but when prices are falling, tolls remain unchanged,” said a NRA spokesman. “During a recession, traffic volumes go down so toll companies actually gain very little additional revenue when toll charges remain stagnant,” he said.

National traffic volumes are down 4 per cent this year according to the authority, while Central Statistics Office data showed prices across the economy have fallen 5.9 per cent in the 12 months to July.

Hugh Cregan, head of public private partnerships with the NRA, said toll charges were reviewed at the end of each year.While no mechanism for obligatory toll reductions exists, the option is open to road companies for “competitive reasons”.

The NRA said it has not received any applications from toll road operators seeking to reduce their charges in 2010.

Last year, the Exchequer received almost €100 million in toll revenues.

serfboard

The Irish Times wrote:

Hugh Cregan, head of public private partnerships with the NRA, said toll charges were reviewed at the end of each year.While no mechanism for obligatory toll reductions exists, the option is open to road companies for “competitive reasons”.

Yeah, except on the M3, Mr. Cregan! When people decide not to use the toll, sure they can just ask the government for the money! :mad:

ardmacha

Actually the M3 probably will be the only road to reflect the CPI at the point that it is introduced. However the one way nature of increases in the other tolls reflects lazy (or corrupt) drafting of the rules once again. Yes companies also lose volume in a recession, but if an increase in volume does not preclude an increase then a decrease in volume should not be used as an excuse to not have a decrease.

dowlingm

The CPI has no real bearing on how much it costs to run a toll road, so it's a pretty bad benchmark to start with.

However, if I was writing a scheme like this, I would accede to no reductions only on condition that when the CPI started ticking upwards again that the "deferred reduction" would be taken into account. In practice, this would mean the following:

Year 1 - CPI = 100
Year 2 - CPI = 103 - 3% increase in CPI - 3% increase in the toll.
Year 3 - CPI = 102 - 0.97% decrease in CPI - no change
Year 4 - CPI = 105 - 2.94% increase in CPI (105/102) - 1.94% increase in the toll (105/103 - i.e. from the point at which it was frozen)

Victor

dowlingm wrote: »

The CPI has no real bearing on how much it costs to run a toll road, so it's a pretty bad benchmark to start with.

However, if I was writing a scheme like this, I would accede to no reductions only on condition that when the CPI started ticking upwards again that the "deferred reduction" would be taken into account. In practice, this would mean the following:

Year 1 - CPI = 100
Year 2 - CPI = 103 - 3% increase in CPI - 3% increase in the toll.
Year 3 - CPI = 102 - 0.97% decrease in CPI - no change
Year 4 - CPI = 105 - 2.94% increase in CPI (105/102) - 1.94% increase in the toll (105/103 - i.e. from the point at which it was frozen)

This is essentially how it works.

While there may be no reduction this year, there may be no increase next year either.

ardmacha

there may be no increase next year either.

No may about it, if there is an increase next year it would be outrageous.

more likely CPI indexing NRA style

2008 index 100
2009 index 95
2010 index 98 increase of 3%
2011 index 100 increase of 2%

so the CPI stays the same and prices increase by 5%.

L1011

I can only see one toll road operator that could have competitive reasons to reduce their toll and thats the M4, where the huge rate of the toll and the fact that it doesn't actually bypass anything much (all other current toll schemes have massive infrastructure to get over or under stuff, the Tunnel, West Link bridges, Blackwater viaduct, etc) mean that theres not a huge reason not to take the old road...

Traffic on the M4 seems to be down more than the average at that.

Chris_533976

I'd be interested to see the figures for the Fermoy bypass, now that the adjacent sections are open. Less toll dodging if you can stay on the motorway rather than staying on the crap roads.

L1011

I use the road frequently (with work paying) and it definitely feels busier since M-F opened.

Of course the entire bypass happens to be one of the areas not covered by the NRA traffic counters so theres no way to verify that!

Tarabuses

This sounds very like the upward revision only clauses in many rental agreements. This is being challenged in the courts and has been criticised by our Government.