Technology is Proving Viability of Mileage-Based User Fee Systems

Original news item appeared in: www.freightwaves.com

‍As a pilot program winds down this month along the East Coast, the provider of the technology behind it spent a few minutes with FreightWaves to discuss how its products can benefit locales when it comes to transportation funding.

Azuga has been supplying the underlying technology that has been used in the I-95 Corridor Coalition’s test of mileage-based user fees (MBUS) in Maryland, Delaware and Pennsylvania. The pilot started in May and concludes this month, explains Nate Bryer, vice president of innovation and the point person for MBUS programs at Azuga, a GPS and fleet tracking data company. Bryer says he believes the Coalition will be conducting further testing of the benefits of MBUS as a means to replace fuel taxes for transportation funding.

“I think most states are taking this seriously and trying to make it work in a proactive way,” he tells FreightWaves.

Many states are saddled with failing infrastructure and more fuel-efficient vehicles are not generating the same level of fuel taxes as prior generation vehicles did, leaving funding gaps. The federal government has felt this as well, several times in recent years pumping funds from the General Fund into the Highway Trust Fund to help it remain solvent.

The I-95 Corridor Coalition says that its research is designed to explore “issues that would have to be considered in the transition from the current fuel tax-based revenue collection to implementation of this potential future concept of operations.” These include the functionality of early stage systems; participation in early stage systems, including vehicle types and the potential for opt-in alternatives; collection and payment enforcement methods, both within individual states and across state lines; strategies for operating under a dual fuel tax/MBUF system during transition, and procedures for properly allocating revenues based on where miles were actually driven.

The group is also studying the costs associated with MBUS compared to costs of collecting fuel taxes currently as well as costs associated with tolls and registration fees.

Oregon is running a pilot program of a MBUS system with 500 vehicles using Azuga’s technology. That program is collecting revenue, which is offset by what users pay in fuel taxes at the pump.

Azuga uses a device plugged into the OBD-II port which monitors the vehicle. “Based on that information, we know when the car is turned on and moving,” Bryer explains. “The information is collected and put into the customer’s dashboard and reported to the state.”

The system then calculates how much the driver paid in fuel taxes based on a formula that includes miles driven and the EPA fuel value of the vehicle (if the actual vehicle fuel consumption is available, that is used). Once calculated, the fuel taxes paid are subtracted from the MBUS taxes and a final bill is generated.

Azuga is working on additional methods of recording the data beyond the OBD-II device, including a mobile app.

“The technology we use is in use because it is readily available and has the broadest reach,” Bryer says. “We’re not an OBD-II company, we’re a data management company that collects [revenue and submits it to tax agencies].”

Before Oregon began its latest pilot, it too ran a test of the technology. The I-95 project was different in that it crossed state lines (and didn’t collect any actual revenue), complicating the project, which included a very short time frame.

“In general, it’s gone very well,” Bryer says of I-95’s test. “I think I-95 and all the testers are pleased with how it’s gone. But, no test is without its [issues] … but I think many of them were due to the aggressive timeframe.”

Among the questions that have been raised by the I-95 test is whether this same reporting technology can be used for tolling purposes. That question remains unanswered as of now, but it is one of the areas being looked at.

Bryer says that the Oregon program and now the I-95 project prove the technology works, so if states want to move away from fuel taxes to a mileage-based user fee structure, it’s possible.

“Is it more complicated? Yes,” he answers. “But we don’t think this is any more complicated than phone companies tracking all the data for phone users every day. It’s easier than that. And technology will make it easier.”

It also has the potential to allow states to easily implement congestion pricing, which some areas have already done as a way to ease traffic bottlenecks.

The questions and potential solutions raised by MBUS are numerous, Bryer admits, but he doesn’t believe any are insurmountable.

“I think you have to take the whole thing together and then look at the individual questions as they come up and address them,” he says. “If you do, they all have solutions.”

In the end, it comes down to finding solutions for states desperate for new ways to replenish shrinking fuel tax coffers.

“If you don’t fix roads, what happens?” Bryer asks. “They fall apart.”

Azuga and the I-95 Coalition are trying to help stop that from happening.