Implementation Strategies and Rate Setting for Road User Charges in California

As California aggressively pursues policies to promote purchase of electric vehicles, pressure grows to find a replacement for the gas and diesel excise taxes that fund so much of the state's transportation program. Although ambitious pilots in California and other states are addressing technical challenges like data security and methods to collect accurate mileage data, two intertwined policy issues that have not yet been studied in such depth are (1) options for how a RUC could be rolled out gradually across different segments of the vehicle fleet, and (2) options for identifying the optimal rate structure to charge. These questions are highly politically sensitive, as the answers must be based on normative judgements of who should pay and how much. However, the state must begin to grapple directly with these thorny policy choices in order to move past pilots towards real-world implementation. This research project will focus on these two issues. Using an in-depth literature review and expert interviews, we will identify an appropriate set of principles that the State of California can use to determine specific road-user rates to charge and a process for phasing in charges across vehicle classes. In both the literature review and interviews, we will study lessons to be learned not only from current RUC experience, but also the lessons that can be learned from rate-setting experience for other transportation facilities (e.g., tolled roads and bridges) and utilities (e.g., power and water).