Illinois Tollway spars with Indiana concessionaire over commuter discounts - going to IAG

2007-04-13

TOLLROADSnews

Illinois Tollway are strongly protesting commuter discounts planned on the Indiana Toll Road when transponder tolling begins later this year. Under present plans the ITR concession company will only offer discounts to holders of Indiana I-Zoom accounts, not to motorists with Illinois' I-PASS or eastern states E-ZPass accounts and transponders.

Brian J McPartlin, executive director of the Tollway in an email to Fernando Redondo his counterpart at the Indiana Toll Road Concession Company (ITRCC) complains that the plan "violates the principles of interoperability and reciprocity that have guided the Illinois Tollway consistent with the purpose of the E-ZPass system."

He says that tying discounts to particular brands of transponders "encourages the kind of balkanization of the electronic tolling system that the IAG and the E-ZPass system were designed to prevent."

McPartlin argues that confining discounts to I-Zoom brand transponders will encourage purchase of I-Zoom transponders as a second transponder by motorists seeking to benefit by the discount. He asks the ITRCC to reconsider their decision.

The Tollway's board of directors is backing the move to challenge the concession company's stance, and they plan to take the issue to the Inter Agency Group for E-ZPass. (Letter reproduced in full below)

Concessionaire says three way talks needed

Matt Pierce spokesman for the concession company says three way talks including the state of Indiana, the Tollway and the concession company are needed, and are being set up. He says the company is responding to its reading of the legislative intent of Indiana legislature that electronic toll discounts during the toll rate freeze should go to local residents or commuters using the tollroad.

The discount program for transponder holders was proposed by the state of Indiana after the main concession was concluded. Its details are specified in a First Amendment to the main concession and dated April 12 2006. That provides for $60m of the upfront concession fee of $3,850m paid by ITRCC to be deposited in a Toll Freeze Deposit Account. ITRCC can draw on that account as compensation for the difference between toll rates charged for Class 2 vehicles (cars basically) at approximately a 40% discount off the toll rates allowed in the main concession during the period of the "Freeze" in toll rates promised to northeast commuters until June 30 2011.

When the balance in the Freeze account drops to $20m the concessionaire has to deliver to the state's Indiana Finance Authority a notice advising the need for it to fund the shortfall. The concession company, Pierce says, sees the program as a state initiative and state funded so they need guidance from the state for any change in eligibility.

Although the freeze deposit account is controlled by the company under the terms of the amended concession they see themselves as stewards of a state discount program.

The amendment to the contract does not specify who is entitled to the discounted fare. However the law seems to us to favor the Illinois Tollway's interpretation that the discount should go to all transponder users. There is no reference to any special Indiana-issued transponder. One provision defines "Transponder user" as "any class 2 user operating with a transponder for the collection (payment) of tolls." see http://www.ai.org/legislative/iac/T01350/A00025.PDF

BACKGROUND

The Inter Agency Group for E-ZPass has wrestled with this issue of diversity of offerings throughout the twelve years of its existence. Almost every issuer of E-ZPass compatible transponders offers some special benefits to their own account holders, which are not available to motorists with other accounts and brands of E-ZPass transponders. They all have different charges from one another.

Many brands of E-ZPass only offer transponder discounts to their own account holders. Some offer special deals to residents of special areas. Staten Island residents get specially cheap tolls over the Verrazano Narrows Bridge with Triborough Authority transponders for example and residents of Grand Island in the Niagara area get special discounted tolls with New York State Thruway brand transponders.

For a long time the New Jersey consortium offered transponders free to motorists who signed up allowing automatic bank top-up of their account attracting complaints of poaching customers from other states.

E-ZPass members have their separate brands and separate accounts precisely so they can offer special deals to their own account holders. Otherwise there would be little point to having separate brands within E-ZPass.

At one point the Massachusetts Turnpike proposed only allowing Massachusetts residents the right to buy Massachusetts Turnpike Fast Lane brand transponders which are needed for access to Massachusetts Turnpike transponder discounts.

Lawyers advise however that limiting the offer of accounts to residents of one state is a breach of the interstate commerce clause of the US Constitution and liable to be ruled unlawful by the courts.

Indiana Toll Road Concession Company propose to sell I-Zoom transponders to out-of-state residents including Illinois residents because of the constitution's interstate commerce clause, already perhaps eroding any legislative intent in Indiana that the discounts be directed toward northwest commuters.

To date arguments over different offerings have been handled internally within the E-ZPass IAG. The Illinois Tollway's open challenge on the issue may force the IAG to take a firmer stance on what is allowed and what isn't by way of exclusive offerings versus reciprocity.

TOLLROADSnews 2007-04-13

 

Illinois Tollway CEO McPartlin's email in full

April 11, 2007

By electronic mail

Fernando Redondo
Chief Executive Officer
ITR Concession Company LLC
233 N. Michigan Avenue
Chicago, IL  60601

Re:  ITR Discrimination Against I-PASS and Other E-ZPass Compatible Transponders

Dear Fernando:

The Illinois Tollway is very concerned about reports that the ITR Concession Company LLC ("ITR") is planning to limit the 40 percent discount for electronic transactions by Class 2 vehicles on the Indiana Toll Road to only holders of I-Zoom transponders issued by ITR.

As you know,  ITR recently was accepted as a member of the E-ZPass Interagency Group ("IAG") with the strong support of the Illinois Tollway.  Through that membership ITR's I-Zoom transponder will have E-ZPass status and be accepted at the many toll roads and bridges operated by IAG members.  That kind of interoperability and reciprocity is the purpose of the E-ZPass system so travelers can avoid having to juggle multiple transponders and accounts.

From what we can tell from the Indiana law authorizing the long-term lease of the Toll Road to ITR and from the emergency regulations adopted in connection therewith, the 40 percent discount for electronic transactions should be available to any customer who pays electronically using an E-ZPass transponder.  In this regard, 135 IAC 2.5-2-1(d) provides that "any transponder user becomes eligible for the transponder refund."   We have found nothing that requires that "any transponder user" be only I-Zoom users.

The Illinois Tollway has adopted an approach consistent with IAG principles that ITR should adopt as well.  Any automobile with an E-ZPass compatible transponder is entitled to the 50% electronic tolling discount off of the cash rate when traveling on the Illinois Tollway.   Currently nearly 90,000 I-PASS transponders are owned by Indiana drivers and the Illinois Tollway provides those drivers with nearly $9 million in toll rate discounts annually.

ITR's proposed policy limiting its electronic toll discount to only customers who hold an I-Zoom transponder violates the principles of interoperability and reciprocity that have guided the Illinois Tollway consistent with the purpose of the E-ZPass system. Tying discounts to particular kinds of transponders encourages the kind of balkanization of the electronic tolling system that the IAG and the E-ZPass system were designed to prevent. That policy will require I-PASS holders and any other holder of an E-ZPass transponder other than I-Zoom to purchase a second transponder to benefit from the electronic tolling discount for travel on the Indiana Toll Road.  

Juggling two transponders is both inconvenient for travelers and causes problems for electronic tolling systems.   Having two transponders in vehicles substantially increases the number of false transponder reads.  Single cars are sometimes read as two vehicles.  Other times a single vehicle is billed twice.  These problems degrade electronic toll collection system performance, impose additional administrative and maintenance costs on IAG members, and squander the good will associated with the E-ZPass system.

From the Tollway's perspective, it is unacceptable that ITR expects I-PASS customers to have to buy an I-Zoom to obtain electronic tolling discounts for travel on the Indiana Toll Road while I-Zoom customers can travel on the Illinois Tollway at the reduced electronic rate using only their I-Zoom.  The Tollway believes that it is in the best interests of the traveling public that only one E-ZPass transponder be required to access the benefits of electronic tolling on all the roads and bridges of the IAG members.

I urge you to reconsider ITR's proposed I-Zoom only policy.  If ITR persists in that policy the Tollway will have to give careful consideration to making I-Zoom holders ineligible for the electronic tolling discount for travel on the Illinois Tollway.  The Tollway certainly believes that limiting electronic discounts to only holders of certain transponders is not in the best interests of the traveling public and is contrary to the purpose of the IAG and the E-ZPass system.  Nonetheless, the Tollway must take steps to protect its customers and respond to the ITR's unwarranted discrimination against out-of-state E-ZPass compatible transponders.

I am circulating a copy of this letter to the IAG's Executive Director and members of the IAG Executive Committee.  I believe, however, that this is a matter that the Tollway and ITR should work hard on resolving before involving the IAG in any substantive way.  I look forward to discussing this important matter at your earliest convenience.

Very truly yours,

Brian J. McPartlin
Executive Director
Illinois Tollway

(end of text of email)

TOLLROADSnews 2007-04-13