3 Key Takeaways from the IBTTA RUC Conference

Change and disruption within any industry stirs different emotions. This is certainly the case with Road Usage Charging (RUC). With the increase of electric and hybrid vehicles on the road, RUC is a mechanism to address declining fuel tax revenues. This is one benefit that some states are leveraging today. There are a plethora of other opportunities that can be exploited in the future, as our colleague Tom Krueger shared in an IBTTA article from May.   

On one hand, there are those who see the opportunities for RUC to enhance the future of mobility and address important challenges. At the other end of the spectrum, there are individuals who view RUC as a threat and are not embracing it. The range of differing viewpoints was on display at the IBTTA RUC & Finance Conference in Denver held in mid-May. Here are our three key takeaways from the event. 

1. Leadership matters. 

Part of the reason for the chasm in viewpoints stems from the realities of the RUC landscape in the United States. There are some 30 states that are conducting pilot programs and just three states – Oregon, Utah and Virginia – that currently have operational, revenue-generating programs in place. Virginia’s program just started in early July.  

There is a vast difference between running a pilot vs. an operational RUC program. With a pilot RUC program, there are only mock invoices; no money is exchanged. There isn’t much at stake for the different players involved in a RUC program and it is therefore hard to see real results. It is difficult to get real feedback on the user experience and program acceptance.  

Meanwhile, the states running programs can provide a different and more positive perspective about the opportunities around RUC. From our experience partnering with states RUC programs, one key word stands out – leadership! Keep in mind that with these operational programs, consumer participation is also voluntary. Key decision-makers have demonstrated an incredible focus on customer-centricity by enabling drivers to select the mileage recording mechanism of their choice whether it is an odometer reading, an OBD diagnostic on-board plug-in device or use of telematics. This driver choice has been key to acceptance and has played a role in the success of the respective programs in these states.  

In addition, the leaders running these programs have effectively utilized exit surveys as a tool to evaluate public acceptance and aid their account managers in improving their services. 

2. Rethink collection costs. 

There was lots of talk at the event about the perceived high cost of RUC revenue collection. On-board diagnostic costs typically bring costs to around 15%. Until embedded telematics expands out to more vehicles and the OEMs reduce the cost of providing GPS and mileage data to the customers, this cost will continue to remain at this level.  RUC can be equal or better than this. Many people aren’t considering that RUC provides economies of scale – 100% of drivers within the area running the RUC program pay. In comparison, not everybody pays to use different tolls and bridges.  

As the RUC industry, we all have a role to play in effectively communicating the realities of cost collection. Use of the embedded telematics or odometer reduces these costs as no equipment needs to be purchased and maintained and ongoing operational costs are significantly lower. 

Enforcement is typically easy and costly to evade. The use of odometer photos for validation of device mileage, flat fees for non-compliance of Mileage Reporting Option setup and mileage capture, pre-paid accounts with verified payment methods and DMV vehicle registration holds for non-payment ensure that revenue leakage is held to a minimum. 

There are equity options that allow users to pay their fair share and provide flexibility to the agencies in how RUC is charged. A tiered pricing structure can allow agencies to apply a premium or discount to customers based on mileage location, customer income level, vehicle purchase price, customer address, vehicle MPG, vehicle type (electric, hybrid or gas) or Mileage Reporting Option type selected. This will allow everyone to pay their fair share and costs can be allocated to those who can afford or choose to pay them.   

3. Greater understanding is required on how RUC can address dire infrastructure needs. 

Infrastructure pitfalls have been covered quite extensively in the press recently. During the IBTTA RUC conference, a number was shared by one of the expert panelists highlighting the shortfall in transportation revenue. It is an astounding $16 billion. Only $100 million can be attributed to gas tax shortages from electric vehicles. Collecting gas tax revenue from electric vehicles is certainly not enough to finance our infrastructure needs. 

Improving roadway efficiency and infrastructure asset utilization may be addressed by road pricing, of which RUC is one alternative. These are more localized objectives that vary from place-to-place and time-to-time. The local political support and public acceptance are the real hurdles for any road pricing approach to address these objectives.  

As these conversations unfold, we recommend stakeholders take a comprehensive approach. Components of RUC have the potential to address various aspects of road management – how, when and where they are being used. In response to what we are learning, mechanisms can be put in place to manage areas like congestion charging, zone charging and dynamic pricing.  

Gas taxes provide revenue but does nothing to better the efficiency of our road system. RUC has great potential to do this. In addition, the gas tax really doesn’t consider equity and one’s carbon footprint. RUC has the potential to do this by providing low-income credits to those that qualify and could go further by offering incentives or penalties based on the carbon footprint of the vehicle.  

At Emovis, we are solutions providers, not policy advisors. We do think it is important that stakeholders are aware of the flexible and adaptable nature of RUC programs that can adjust to the regulations of different jurisdictions.  

We look forward to continuing the discussion with all the different stakeholders involved to ensure that the maximum benefits can be achieved. 

Marc Deflin is the Vice President of Sales, North America for Emovis. Scott Jacobs is RUC Product Manager for Emovis. Part of Abertis Mobility Services, Emovis is a world leader in toll-based mobility solutions. Learn more at https://www.emovis.com.