407ETR goes to court for help with violators and argues over congestion formula


407ETR has a major admin building supporting video tolling

407 International owner of the 407ETR tollroad in Toronto is taking the legal offensive against a hostile provincial government, having recently won its point that the province has no right to interfere in toll setting. 407 announced July 23 that it has filed an application with the Ontario Superior Court seeking a judicial order requiring the province’s Registrar of Motor Vehicles to deny plate renewal to customers with overdue toll accounts.

There is provision in the Highway 407 Act that requires the registrar to deny plate renewal to motorists not paying their toll bills. However the province’s transport minister Harinder Takhar says the registrar of motor vehicles won’t deny license plates of toll debtors until 407 demonstrates its systems are accurate. He said that earlier this year the Province attempted to have an auditor check the 407 system but he was denied entry into the 407 premises.

Takhar says his department receives about 50 complaints per month about 407’s billing, up from an average 30 last year. The government press release says: “The most common complaints are from people who are receiving bills from 407 ETR for trips they have never taken, and from people who are frustrated that the 407 has made a mistake on their bill, and they cannot get it corrected. The mistakes are then compounded

by 407 ETR adding interest charges. Left unresolved, these types of billing errors could lead to an individual being placed in the plate denial process in error.

“Denying someone the right to renew their license plate means taking away

their ability to drive, and that is very serious. It’s even more serious when someone is denied the ability to drive through absolutely no fault of their own, but because an electronic system made a mistake. The registrar has a responsibility to protect the public interest.”

Despite minister Takhar’s statement on behalf of the registrar of motor vehicles that he isn’t satisfied (Apparently the guy is unable to speak for himself) the minister then flips and says: “Ontario’s Registrar of Motor Vehicles is an independent, quasi-judicial provincial official. It is up to him to decide if the company’s customer service, systems, and technology are accurate, and meet all aspects of the Highway 407 Act.”

There has been no license plate denial since February 2000 when the pike went along with suspension of denials that had been made to obtain payment on a regular basis since the tollroad began tolling Oct 15 1997. The tollroad was owned by the province until April 1999 when it accepted $2330m (C$3107m) from the investor group 407 International for a 99-year concession to toll.

The investors have claimed subsequently the toll system software they took over from the province in 1999 was completely inadequate to the task of handling video tolls. They admitted major problems in issue of violations notices late 1999 and agreed with the government that plate denial should be temporarily suspended pending overhaul of the system.

407 dumped the original toll management software and wrote their own, which was itself accompanied by major introduction problems. Customer service staff were increased from about 25 to almost 300 and the admin building in Woodbridge was enlarged to house the extra staff. Call waiting times for customers with questions has been greatly reduced, and the company says, service improved.

The video toll premium has been increased in steps from 75c (C$1.00) to $2.50 (C$3.35) per trip since 1997, and the company says it still doesn’t make any profit from the premium. It only just covers the higher processing costs of video tolls. The company has also said that losses from the growing number of drivers who manage to get away without paying because of the lack of license plate denial add to the pressure to raise the video toll premium.

407 people have told us that they do still have problems with incorrect entries in the motor registry database – and so a certain number of incorrect toll bills are sent. But they claim the problem is now manageable and that many of the horror stories still being told relate to the period 1999 to 2002 before improvements to their systems.

Of the approximate 275k tolls per day on the 108km (67mi) pike about 80% are conducted by transponder, leaving 55k/day or 20% to be tolled by license plate number.

407ETR was the first full tollroad in the world without any provision for on-road payment of a toll. Under the terms of its concession agreement the road must be open to cars without transponders (Commercial vehicles are required to have transponders.) Vehicles without transponders get their license plates recorded by digital camera on entry and on exit from automatic cameras mounted on gantries over the entry and exit ramps in so-called video tolling. The matching of entry and exit pictorial records is used to calculate the trip length and toll. Optical character recognition (OCR) algorithms, or in default of a successful OCR read, operator eyeballing of the pictures on a screen is used to extract the plate numbers. 407 then gets names and mailing addresses of registered owners of those plates from the Ontario motor registry (with similar arrangements in place for many other Canadian provinces and US states.) It then mails toll bills, and if unpaid, further demands for payment. It makes use of normal bill collection services to collect most unpaid tolls.

But without the fallback of license plate denial it has accumulated some $12m (C$16m) of uncollected bad debts. There are 8,000 drivers with debts in the range $750 to $3750 (C$1k to C$5k).

The company says that some inaccuracy in billing and subsequent violation notices is inevitable and that in conformity with the concession contract and the 407 Highway Act it has in place a customer appeal process and independent auditing to sort out mistakes from real violations.

The company maintains that the province’s registrar of motor vehicles is failing to perform his legal duty in denying plate renewal to those found in debt at the end of any appeal and audit process.

Company head Enrique Diaz-Rato says the pike has tried to resolve the issue amicably but being unable to “has no other choice” but to go to court.

Dispute over base year

407 is also invoking the conciliation and arbitration process of their contract to resolve a dispute with the province over a separate issue of the year 2002 as “Base Year” for purposes of calculating traffic thresholds. Future traffic volumes have to be related to these thresholds to determine the concessionaire’s performance in attracting traffic. If insufficient traffic attracted it is liable for “congestion payments” to the province.

The company complains that it achieved necessary conditions for establishing year 2002 numbers as the base and formally notified the province of this in Jan 2002. Recently the province disputed the validity of this, and discussions have not resolved the issue.

The company recently went through the full conciliation and arbitration process with the provincial government over toll rate setting. At the end of the process the independent arbitrator agreed to by both company and government said the government had no case. The government in the person of transport minister Takhar refuses to accept the arbitrator’s decision and plans to take that matter to the courts according to his last word on the matter.

Increased loss

407international, owners of the 407ETR toll concession in Ontario Canada report a slightly increased loss in the second quarter (2004Q2) – an annual $68m (C$22.8m Q2) up from an annual loss rate of $60m (C$19.8m 2003Q2). Reason for the loss is a strong increase in debt service. Revenues in 2004Q2 were running at an annual $290m, up 12% from $260m last Q2 (C$97m vs C$86.8m). Operating expenses are down $11m at an annual rate from $87m/yr to $76m/yr. Depreciation & amortization is up from $36.8m to $40.1m/yr. Operations surplus is therefore running at $175m/yr this year versus $137m/yr last Q2.

Debt service costs are the downer: running at $241m/yr this Q2 versus $193m/yr 2003Q2. Total toll trips number 277k/day versus 256k in Q2 last year, an increase of 7.9%. Average trip toll has grown 2.9% from $2.81 (C$3.74) to $2.89 (C$3.85). Vehicle-km traveled annually are reported at 1.97b/yr versus 1.80b/yr, an increase of 9.3%. Transponders in circulation are 603k vs 557k last year.

407 International Inc is owned by a consortium comprised of Cintra Concesiones de Infraestructuras de Transporte (CINTRA) co-owned by Spain-based Grupo Ferrovial and Australian-headquartered Macquarie Infrastructure Group and Canadia-based SNC-Lavalin. see www.407etr.com All Canadian dollars (C$) reported by 407 are converted to real-$s with 0.75 as the exchange rate. TOLLROADSnews 2004-07-25

Source: http://www.tollroadsnews.com/node/807

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3 Responses to “407ETR goes to court for help with violators and argues over congestion formula”

  1. Steve Fostaty says:

    I drove from Mississauga eastbound to Pickering in a ford F150 pickup . The 407 sent me a bill for $275.00 and has been harrasing me and sending a collection agency . I complained to them and they said they would knock off $50 dollars. How can they get away with this and is there any way to complain ?

  2. Dorothy says:

    My problems with the 407 were absolutely horrible. This article is incorrect when the 407 says the nightmare issues are back in in 2000 to 2004. My nightmare was this year 2012 …… It took a whole year to resolve a problem that would have taken any other company one phone call to fix. 13 months and about 50 calls to the 407 then getting my MP involved. Then 5 more months with the MP’s help!! A COMPLETE NIGHTMARE!!! The worst run business I have ever experienced! And I am no spring chicken

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