407 proceeds with hike despite government threats

TORONTO, (Feb. 2, 2004) — The 407 ETR fulfilled a pledge to raise toll rates on the 407 highway, making it less likely the Ontario Liberal government can keep its own pre-election promise to roll back the charges.

Toll rates for heavy trucks have now risen three cents (41.85 cents/km for peak times; 39.30 for off-peak), while the price for straight trucks went up two cents (27.90 cents/km for peak hours; 26.20 off-peak). Tolls have gone up six times in the last four years, and the last increase in February 2003 was almost 13 per cent.

407 International — a private consortium that bought the 108-km highway from the Conservative government in 1999 for $3.1 billion — put into effect the controversial toll hike at 12:01 a.m. yesterday despite government claims the company broke the contract and threats the 99-year lease would be in jeopardy if 407 ETR went ahead with the increase.

The government is trying to fulfill a pre-election promise that it would roll back any toll increase to 2 per cent, plus inflation. However, 407 ETR has maintained the existing contract allows the company to raise rates at its own discretion without government interference.

“We’ve been saying for years that we have the sole authority to set rates without authorization and approval from government,” 407 ETR spokesperson Dale Albers told Today’s Trucking this morning. “The contract is public. It’s not a secrete. I think most people understand that the (government’s agenda) is a very political one and their legal case is not strong at all, and it all comes at taxpayers expense.”

The highway group went ahead with the planned toll increase after the government rejected a last-minute proposal from the company this weekend, which would have offered users a temporary 60-day discount for the difference between the old and new rates if the government agreed to skip the first two steps of dispute resolution and go directly to third-party arbitration.

Today executives from both sides will begin the first step of the dispute resolution process. If an agreement cannot be reached, the second step will involve face to face meetings between ETR President Enrique Diaz-Rato and Ontario Premier Dalton McGuinty. “Because we’ve been so clear throughout the media and through letters to the government that our legal position will not change, we offered the discount if we could expedite the process and go straight to mediation,” Albers said. “We don’t want to constrain the process, only accelerate it, because we felt nothing would change in the first two steps. Since (the government) declined that, we have not implemented the discounted rate.”

The opposition Conservative government — as well as a few third-party financial agencies — have echoed 407 ETR’s position that the government’s legal argument is weak. “I’ve had the same briefings as (Transportation Minister) Takhar had,” PC MPP Frank Klees said, “and the government protection he’s talking about (in concession contract) simply does not exist. Bad PR, weak legal threats and brinkmanship isn’t going to help consumers get better rates and better service from the 407 ETR.”

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