14. Linking the load to a fee
Here we enter the world of money
Welcome to the section of the Inside Guide that considers prices, fees, levies, taxes, tariffs – all things to do with money. Before we start to handle this most potent of substances, we must show how this section of the Guide leads on from the last. And we will do that with this thermostat.
Let us imagine this thermostat is connected to your air conditioner.
You can see on the left where you dial in your instructions, and on the right, you can see the copper sensor that reports on the current temperature. Hidden inside the case is the thermometer’s message sending system.
The thermostat requires you to choose your preferred temperature. It seems from the picture that you want 26 degrees. Perhaps it is summer in Melbourne and your room is uncomfortably hot. The thermostat makes a note of your request, checks with the sensor which reports a temperature above 26. The thermostat then sends a message to the air conditioner to get to work. Every so often the thermostat checks in with the sensor. When the sensor reports that the aircon has done enough and the room temperature is down to where you want, the thermostat sends another message to the air con to switch off and have a break.
This is exactly how ramp meters work. The road sensor measures the speed on the road and reports to the road thermostat. The road thermostat refers to the optimum load settings programmed in by the road load managers and sends instructions to the ramp signals asking them to switch on, to adjust the wait time for ramp traffic or to switch off.
This is also exactly how congestion-preventing road prices work. The system measures the speed on the road, refers to the optimum load settings programmed in by the road load managers and adjusts the fees levied by the cash register on the overhead gantry. Some systems do this in real time, just like an air conditioner.
In the first part of the Guide we saw how the measuring the load enables us to set the system. At home we want to be comfortable, and, on the road, we want the flow to be in the optimum band, so we program the optimum load band into the road thermostat. When the load falls below the bottom of the band, we want the road thermostat to send a message to the cash register and say stop charging (or switch off the signals if it is a ramp meter system). When the load rises towards the tipping point, we want the fees to rise to prevent over-load.
In this part of the Guide we will see how the money side works including the price we will use, how we will agree on the appropriate fee and how often we adjust the fees. Later, we look further downstream at system revenue and system surpluses.
To try and keep things clear we will use the following terms in the following ways:
Price refers to the intention or design that determines the dollar amount.
Fees refer to the dollar amount – as in a higher or a lower fee.
Tariffs refer to schedules or tables of fees – as in this electricity company will pay these amounts for your solar exports: 11¢ between 20:00 – 07:00, 5¢ between 07:00 – 15:00 and 9¢ between 15:00 – 20:00.
We will start with prices.
The first point to make is that prices vary because our intention or purpose varies. The link between purpose and price is familiar from our everyday lives. We expect the little local shop to charge ‘cost-plus’ so they stay in business. We know the big supermarkets will offer us below-cost temptations or loss-leaders. We expect prices to be more favourable for loyal customers. We know why cigarettes cost a lot. We expect tradies to offer several types of price including mates’ rates, the scheduled fee, or a go-away price. In fact, there are probably more types of price than there are types of snow.
The second point about prices is that it can be difficult to tell different types of price apart. One of life’s more difficult questions is what type of price did the tradie just offer me?
Given these two points, we should not be surprised that there are different types of road price and that at first it can be difficult to tell them apart. However, with a bit of practice you will soon be able to look at a tariff and be able to tell what type of road price it is and know what it is trying to achieve.
Let us start by looking at four different road prices hard at work on the Sydney Harbour Bridge.