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EETS Provider remuneration rates and the battle with Germany
In July, The European Commission (EC) issued a letter of formal notice to Germany addressing the lower than average rate of remuneration that the country will offer EETS providers active on the Toll Collect network. In a press released called July infringements package: key decisions, The EC stated:
“The remuneration offered (0.75% of toll revenues) does not cover the costs of EETS providers and is well below the remuneration offered to the national incumbent. The Commission considers the model of remuneration for EETS providers put in place by Germany unfair and discriminatory, and that it will thus jeopardise interoperability for users in Germany. Moreover, it risks jeopardising the creation of a common market for EETS services in Europe”
As discussed in PTOLEMUS’ 2019 Electronic Tolling Study and evident in the chart below, toll charger remuneration makes up a main pillar of the EETS provider’s total revenue. Our primary research shows that actual rates are more in the range of 1-3%, but even at this level, the German rate falls below the range.
Initially, speculative rates such as those proposed in the 2017 EC working document created to address EETS operational problems (1) were much higher. The document discusses three problems with the EETS environment:
- Lack of truly competitive market for providers,
- Foreign-registered toll dodgers,
- Burdensome obligations on EETS providers.
The paper goes on to define specific objectives to meet to solve these problems, and three policy options (PO) through which to achieve the objectives:
- PO1: Self-regulatory + legislative approach
- PO2: Legislative approach
- PO3: Development of new EU technical standards + legislative approach
With regard to the self-regulatory context of PO1, it is assessed that “a variable remuneration amounting to 4% of the collected toll in GNSS toll domains and 1.5% for DSRC toll domains, could be agreed upon.” If a heavier hand of legislation and EU standards are chosen as the solution such as proposed in PO2 and PO3, resulting in stronger bargaining power of EETS providers, “the remuneration could reach 5% of collected tolls in GNSS toll domains and 2.5% in DSRC toll domains.”
Germany has been given two months to reply to the letter of formal notice or risk that the Commission chooses to send a reasoned opinion, after which could be escalated to the Court of Justice of the European Union.
- Proposal for a Directive of the European Parliament and of the Council on the interoperability of electronic road toll systems and facilitating cross-border exchange of information on the failure to pay road fees in the Union (recast)