Forecasting Toll Revenues for Fully Electronic Highways Operating Under Transponder and Video-Imaging Systems

For many years, 407 ETR, a four- to six-lane tollway in the Greater Toronto Area, has been considered a relief for Highway 401, the busiest highway in North America, used by more than 1 million vehicles per day. At present, about 67 km of the tollway is operational. Is 407 ETR operating at its maximum revenue potential—and how would this revenue potential change over the next 6 years? Forecasting toll revenue for a fully electronic highway is not easy, since it involves modeling two classes of drivers, who value their times differently but use the highway simultaneously. These two classes consist of drivers who use transponders (TDs) and those who do not—video drivers (VDs). VDs pay $1.00 more than TDs for the same trip. Accordingly, VDs have a higher value of time compared with TDs. Adjustments to the model to deal with these classes of drivers and their values of time are described. Elasticity analysis has shown that TDs are slightly more sensitive to toll changes than VDs. It is concluded that, currently, during the a.m. peak period, the system is operating at its optimal point of gross revenue. In 2004, to operate at the maximum gross revenue level, the variable toll rate should more than double; the revenue also will more than double.