No Double Fees for EVs!

Plug in America has been tracking a number of bills in states that would impose punitive road usage fees for plug-in electric vehicles (PEVs).

A road usage fee is exactly what it sounds like – a fee for using the road, usually collected as part of an annual registration process. The proposed fees range from $100 to more than $330 annually, sometimes in addition to the normal registration and licensing fees. But what many don’t realize is that these road usage fees for PEVs would be a double tax, since drivers already pay electricity taxes to power the vehicles.

Just when PEVs are starting to gain more traction among all consumers, and more states are considering supportive policies to increase adoption, imposing hefty road usage charges would hinder the adoption of PEVs.

Legislators need to realize that until PEVs reach a certain threshold of all light-duty vehicles on the road in a state, they shouldn’t be incentivized on the one hand and punished on the other. Imposing these fees on a population of drivers that is less than 1% nationwide will not make up the deficit of funding needed to repair roads and balance state budgets. Instead, the fees act as a disincentive for purchasing these clean vehicles.

And, PEVs provide more of a win-win for every state right now than the lost revenue from gas taxes.

As the saying goes, a picture is worth a thousand words. Take a look at these charts showing the number of PEVs registered versus non-PEVs in states that are proposing these punitive road usage fees:

Eventually, when a certain pre-determined threshold of PEVs on the road has been met, EVs should pay a fair share of the wear and tear for using the roads. But that time is not now. There aren’t even electric SUVs or pick-up trucks on the roads yet, which dominated sales in the U.S. in 2016. Plus, legislators need to understand that vehicles overall are becoming more efficient, resulting in less gas tax revenue to the state. Average vehicle fuel efficiency has increased from 18.8 mpg in 1990 to at least 21.4 mpg in 2014 for all light-duty vehicles (SUVs and pick-up trucks included) on the road today, with new passenger cars able to achieve 36 mpg and new light-duty trucks able to achieve 26 mpg. Instead of slapping a road usage fee on EVs, it would be best to analyze and feasibly test other solutions that address this issue. See the Plug In America factsheet on registration and licensing principles.

Solutions Besides Penalizing EV Drivers

There are many other solutions to raising gas tax revenue that will work better for all drivers, compared to a punitive road usage fee for EV drivers. The Mileage Based User Fee Alliance lists the states and countries that are participating in mileage based road usage fees for all drivers. Currently, the U.S. Department of Transportation is also providing funding to states to explore road usage pilot programs. In addition, 14 states are participating in Road Usage Charge West, a group that focuses on road usage charges and programs. The following states have either completed or are currently running road usage charge programs through Road Usage Charge West, or independently:

  • Current Launched Programs:
    • Oregon: In 2001, the Oregon Legislature established the Road User Task Force to find new ways to fund the ongoing maintenance needs for Oregon’s roads. After two pilot programs were completed in 2006 and 2013, the state created the OReGO Program, which is a voluntary road user fee program that will likely replace the state fuel tax. The first phase began in 2015 and is limited to 5,000 participants driving light-duty vehicles. The OreGo usage fee is 1.5 cents per mile.
  • Pilot Programs:
    • California: California created a Technical Advisory Committee (TAC) in 2014 to study road usage fees and design a program that could replace the state fuel tax. In 2016, the California Road Charge Pilot launched a 9-month long pilot program with 5,000 volunteer participants. At the end of the pilot program, an independent third-party will evaluate the results and submit a report to the Legislature that summarizes the volunteers’ experiences and input from stakeholder groups. The report is expected in the fall of 2017.
    • Colorado: In 2011, the Mileage-Based User Fee (MBUF) study engaged the public in identifying strategies for MBUF programs. The Colorado Department of Transportation launched the Colorado Road Usage Charge Pilot Program (RUCPP) from December 2016 to April 2017 with 100 volunteer participants. The pilot program will provide insight on mileage reporting technologies, how well the technologies work with the Colorado environment, and the difference between urban and rural drivers. The pilot program simulated a 1.2 cents per mile charge. A final report is expected in the fall of 2017.
    • Hawaii: The Hawaii Department of Transportation and Hawaii Counties plan to test a statewide mileage based user fee program using funding from a FHWA $3.98 million grant received in 2016. The pilot project will be conducted over 3 years in 6 different phases and involves the setup and implementation of an accounting system that provides prototypical invoices for mileage driven. This pilot program recently launched in the beginning of 2017.
    • Washington: In fall 2017, the Washington State Transportation Commission will lead a year-long pilot project that will enable drivers to “test drive” a per-mile charge system at no cost to the drivers. Up to 2,000 volunteers will have an early opportunity to provide feedback to stakeholders, the Legislature, and the Governor on how a road usage charge might move forward in Washington.
    • Minnesota: In 2007, Minnesota obtained $5 million for a technology research project to test a mileage-based road user fee using smartphones with GPS receivers and mileage-metering applications. The program was installed for 500 cars during three six-month test periods. Participants paid 1 cent per mile during off peak times and 3 cents per mile during peak times. This study was one of the first in the nation to test road usage charge best practices. Some of the key findings included understanding that privacy was not a huge concern to participants, learning about the types of planning, management and customer interaction needed, and learning that drivers valued simplicity of design of the road usage program.
  • Research and Feasibility Studies:
    • Vermont: In January 2016 a report by the Vermont Agency of Transportation to the Vermont Legislature examined multiple options for raising the transportation revenue to the state due to the declining gas tax revenue. Options included a VMT program.
    • I-95 Coalition: A coalition of east coast states that encompass the I-95 Highway conducted a study on mileage based user fee programs focusing on administrative aspects, institutional aspects, legal and legislative issues, and estimated costs. The second part of the research involved a further analysis of Maryland, Delaware, and Pennsylvania, including a comprehensive cost analysis. As part of this coalition, several states, including Vermont, plan to launch a pilot program to test the technology and feasibility of implementing this program.
    • New York: NYSERDA and NYDOT conducted a study in 2012 that reviewed the potential for mileage based road usage fees as a replacement for the state fuel tax. The report concluded that there are significant, but not insurmountable, issues associated with a mileage based road usage fee. Some of these issues included the transition from a fuel tax to the mileage based road usage fee, privacy concerns, equity concerns, higher collection costs, and technical matters.
    • Texas: In 2009, the University of Texas Transportation Institute released a report that collected and analyzed the different technology issues for a mileage based road usage fee, with a specific focus on the different architectures of a mileage based fee. The research concluded with recommendations and critical questions for Texas’ policy and program development. Another research study performed in 2010 identified the challenge of public acceptance and the opportunities for potential applications of vehicle mileage fees. Results show that the mileage fee concept is viable, that driver privacy concerns can be addressed by limiting the type of data collected and how it’s stored, and that mileage fees can be implemented with minimal cost to businesses.
    • Nevada: In 2009, the Nevada Department of Transportation, the University of Nevada Reno and the University of Nevada Las Vegas conducted a VMT fee research study to assess and evaluate the feasibility of a vehicles miles traveled program. The research consisted of literature review, public outreach through meetings, workshops, newspaper editorials, newsletters, opinion surveys, videos, and presentations.

New Zealand is currently the only country that has fully switched to a road usage charge system based on vehicle miles travelled (VMT), but only for drivers using diesel fuel. The program was established in 1978, and fees are paid on all diesel vehicles in the light, medium and heavy duty sectors and on all vehicles over 3.5 tons. The road usage charge rates are set according to vehicle types and weights, with the intention to encourage transportation operators to make efficient choices when transporting freight and other heavy items. Electric vehicles are exempt from this charge until June 30, 2020. Revenue collected from the program goes into the National Land Transport Fund, which is used for road construction and maintenance.

Other solutions include accounting for inflation costs within the gas tax, and pinning the gas tax to federal fuel economy standards.

An Optimal Road Usage Charge Program

Any road usage charge program should be kept simple and easy to understand. Since distance and weight are likely the two most critical factors that contribute to road wear and the need to build new roads, the criteria for determining the annual fees under a road usage charge program should be as follows: total electric miles driven, total gas miles driven and weight.

In terms of the vehicle miles driven (distance), more total electric miles driven should result in a lower overall fee compared to total gas miles driven. The final formula for the charge would therefore take into account the clean air quality benefits from PEVs. BEVs produce zero tailpipe emissions, and PHEVs produce less than their gasoline counterparts. The miles driven can easily be taken from the odometer on each vehicle, regardless if the vehicle is a BEV, PHEV or a gas vehicle. A road usage charge policy including these two criteria will fairly assess fees based on which citizens are using the roads the most, and reward those citizens who are also providing clean air benefits by driving PEVs.

It’s important to note that the miles driven per vehicle is common question asked by insurance companies in determining the proper vehicle insurance rate on an annual basis. Plus, as telematics become a part of all vehicles, it will be easier for a state DMV to annually record the miles travelled per each vehicle. A similar advancement in technology happened within electric utility infrastructure – no longer do we see meter men writing down the electricity consumed every month, but instead smart meters that transmit that information directly to utilities.

The weight of any vehicle that exceeds 10,000 pounds is also an important criteria for a road usage charge formula. Vehicles above this weight limit are generally considered medium and heavy-duty vehicles, not light-duty passenger vehicles. The medium and heavy-duty vehicles, regardless if the vehicle is a PEV or not, will cause more road damage over time compared to lighter vehicles.

 

Additional Resources

We’ll continue to monitor these road usage fees in all states and send out action alerts at the appropriate time. Stay tuned for more. If you’re not already signed up to receive our alerts, you can do that here.

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