An Alternate Perspective on Road Usage Charging

How can we simulate the federal government’s gas tax for electric vehicles (EVs)? Finding a fair way to distribute the cost for highway maintenance is a topic generating a lot of interest and debate nationally, especially among my colleagues.

The alternative gaining the most traction is Road Usage Charging (RUC), where a fee is charged based upon vehicle miles traveled on state or federal roadways. But is that the only option — or even the best option — to collect funds for highway and road maintenance and projects?

As a transportation engineer, that is the question I ask myself and pose to my colleagues to ensure that we are looking at all sides of the issue as we move forward with RUC testing and evaluation.

RUC might be the answer — or at the very least, a piece of the answer — and from a technological standpoint there is little doubt we have the tools to make RUC a reality.

But from a societal perspective, widespread buy-in and support from motorists is going to be a lot more complicated — and essential if the concept has any chance for success at the state or federal level. Specific challenges around the adoption of RUC will be within the country’s more rural communities, which haven’t been indoctrinated in the use of transponders and tolling. 

How do you go to an Iowa farmer and tell him his 12-year-old F-150 needs to be replaced with an electric vehicle and, on top of that, “we are going to put this device in your car to track your mileage.”

Technically, they are already charged for driving on their farmland because they are paying the motor fuel tax, but why should anyone be paying for driving on their own land when they aren’t even on a road? Or why should anyone driving on a gravel road pay the same amount of tax as someone who is on a new concrete expressway?

Before determining if RUC is the right way to go, we should also look more closely at a few possibilities that expand upon systems already in place.

For example, toll roads are one possible option. While found mainly in larger metropolitan areas, the technology and administrative systems to collect tolls are well established, and people have grown accustomed to using transponders in their vehicles to conveniently pay their tolls. Since payments would be made based on how far the vehicle travels, the way tolls operate are at least comparable to RUC.

However, this technology still presents a perception of privacy issues for many people, and the deployment of toll collection technologies across state and interstate highways would require very substantial investments, as well as a change in federal restrictions on the use of tolling.

Ultimately, tolling and RUC are different funding models. Tolling is considered a fee, generally geared for a specific road segment. Under tolling, motorists still pay a motor fuel tax even when traveling across a toll road. RUC is a tax, applied across all roads, much like the motor fuel tax is applied now.

Also, implementing tolling technology for every road would be extremely expensive, given current technologies, and take a considerable amount of time to install if environmental clearance is required to implement. RUC requires some technology but relies heavily on in-vehicle systems without the need to make large infrastructure investments.

An annual vehicle registration fee is another option that could be considered, as it would be wrapped into an expense that vehicle owners already pay. This option is currently used by 18 states, with a fee that ranges from $50 to nearly $300 per year.

But receiving an expensive yearly (or quarterly) bill could create a financial burden that is more cumbersome than paying a tax that is incremental and hidden within every gasoline purchase, even if the actual dollar amount is roughly the same as the fuel tax. It also would create options for refund of the tax bill when individuals file their annual income tax.

Some states, like Utah and soon Hawaii, are offering an option to motorists to either pay the flat annual registration fee or enroll in RUC and pay that fee on a mile-per-mile basis.

As a third option to RUC, is there a way we could simulate the payment of the current gas tax for EVs? I think it is possible, could be administered equitably and may be the more viable alternative to RUC.

All EVs must be plugged in to recharge, so retail charge stations could be equipped with a gas tax simulation, where users are charged a fee for every kilowatt put into their vehicle. It would be necessary to implement a new payment structure that funneled funds collected by companies owning/managing charging stations to state DOTs and DMVs. Functionally, this would be no different than a sales tax that’s applied at point of sale.

But how would you administer a fee for EVs recharged at home? Currently the infrastructure is not in place to identify an EV recharging on a home meter. Doing so creates more privacy concerns, as now the question is raised if the government is “tracking” a vehicle when it is charged at home.

A vehicle already records the amount of charge received, so a tax could be based on kilowatt-hours a vehicle consumes, captured using the vehicle’s telematics or by using the charging port to communicate the energy used to charge the vehicle. This would address some privacy concerns by removing location reporting but would negate the ability to differentiate between miles traveled between states or on private lands.

The current gas tax is incremental, seamless and hidden. Once the transaction is complete there is no further financial burden; the tax is paid. It’s a decades-old system, efficient and completely agnostic to where you have driven your vehicle.

In any given state, there are only a dozen or so wholesale distributors who pay the motor fuel tax bill to the government. It’s not paid at the retail point; by the time you pump your gas, the cost has been built into the price at the pump.

WSP is at the forefront of collaborating with state transportation agencies across the U.S. to evaluate RUC initiatives. But as motorists ourselves, we are equally invested in making sure that the system eventually adopted is the fairest, least burdensome and protects privacy.

To determine whether RUC is the best answer, nothing is off the table.

Jeff Heilstedt is national highway/bridge and tolling market leader and a senior vice president for WSP in the U.S.