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Pay-As-You-Drive (PAYD, also called "distance-based") pricing
converts currently fixed vehicle charges, such as insurance
premiums and registration fees, into variable costs, so the more
annual miles a vehicle is driven they greater the charge. These
mileage-based fees can incorporate all existing pricing factors. 

PAYD pricing is justified on a number of grounds, including
actuarial accuracy, insurance affordability, consumer cost
savings, increased traffic safety, reduced uninsured driving, and
reductions in traffic congestion, road and parking facility costs,
and support for strategic land use objectives (reduced sprawl), as
well energy conservation and pollution emission reductions. It is
not a new fee at all, just a different way to pay existing vehicle
fees.

This concept has been investigated by a number of researchers, as
discussed in:

"Distance-Based Pricing" (http://www.vtpi.org/tdm/tdm10.htm )

Jason E. Bordoff (2008) Pay-As-You-Drive Car Insurance, Brookings
Institution
(www.brookings.edu/articles/2008/spring_car_insurance_bordoff.aspx).

Aaron S. Edlin (2003), “Per-Mile Premiums for Auto Insurance,”
Economics for an Imperfect World: Essays In Honor of Joseph
Stiglitz, MIT Press; at: http://works.bepress.com/aaron_edlin/28.

Todd Litman (1997), “Distance-Based Vehicle Insurance as a TDM
Strategy,” Transportation Quarterly, Vol. 51, No. 3, Summer 1997,
pp. 119-138; at www.vtpi.org/dbvi.pdf.

Todd Litman (2008), Pay-As-You-Drive Insurance: Recommendations
for Implementation, VTPI (www.vtpi.org); at
www.vtpi.org/payd_rec.pdf. 


The draft Scoping Plan considers PAYD insurance, but the analysis
is incomplete for the following reasons:

1. It does not consider distance-based pricing options, such as
PAYD vehicle registration fees, lease fees and purchase taxes. 

2. The analysis seems to assume that only a minor portion of
insurance premiums would become distance-based.

3. The analysis does not seem to account for co-benefits such as
traffic safety, affordabilty, congestion reductions, road and
parking facility cost savings, 

4. The analysis seems to assume that PAYD would be implemented
using electronic instrumentation that tracks when and where a
vehicle is driving, which adds costs and raised privacy concerns.


To correct these omissions, additional analysis should be
performed with the following features:

* All vehicle insurance premiums and registration fees are
converted to basic PAYD pricing, based on annual odometer audits
(odometer readings collected by a third party, such as service
stations and insurance brokers).

* The PAYD pricing analyzed meets the minimum standards defined in
my report, "Pay-As-You-Drive Pricing: Recommendations for
Implementation" (www.vtpi.org/payd_rec.pdf).

* The analysis takes into account economic and social co-benefits,
including crash reductions, congestion reductions, consumer cost
savings, and road and parking facility cost savings.


I believe that this more comprehensive analysis will show much
greater emission reductions and benefits than what was previously
considered. Odometer-based pricing eliminates privacy concerns.