The Canadian Automobile Association is backing the Ontario government's bid to block the latest toll increase on Highway 407, which the CAA says is already one of North America's most expensive toll roads. "If they can get away with this (increase), the sky is the limit," said CAA spokesperson John Sherwin, whose organization represents 1.7 million Ontario motorists.
"The previous government gave the ETR (Express Toll Road) carte blanche," said Sherwin. "The latest increase is hard to justify."
The CAA fought the sale of the electronic toll highway by the province in 1999, warning then tolls would rise steadily.
Highway 407 International Inc. bought the east-west link across the top of Toronto from the Progressive Conservative government for $3.1 billion.
The company has just announced a one-cent-a-kilometre toll increase Feb. 1, the sixth hike since it took over. That would bring the toll to 13.95 cents a kilometre, a move the CAA calculates will cost the average commuter an extra $78 a year.
Tolls on Ontario's only toll highway, now 108 kilometres long, have risen from 30 to 230 per cent, depending on the time of day, since the road was sold.
In a new report, Dominion Bond Rating Service said the government's ongoing criticism of the consortium could "discredit the company in the eyes of users of the highway" and damage its bottom line.
But the Liberal government of Dalton McGuinty, which campaigned on a promise to roll back 407 tolls, has warned ETR it must justify any rise.
"We are contesting their right to increase tolls without the prior approval of the government as required under the agreement," said Transportation Minister Harinder Takhar. "We will take every legal action available to us under the contract," he vowed.
Lawyers from ETR and the province are poring over the 2,000-page agreement that awarded the highway to the private operator under a 99-year-deal.
At the time the highway was sold, the Conservative government issued a background paper which said: "Tolls can be adjusted by two per cent per year plus inflation for the first 15 years and thereafter by inflation only."
Today, the private owners say there's nothing to stop them from raising tolls and they need more revenue to service debt and pay for highway expansion and other improvements.
In a sharply worded letter to the Transportation Ministry, Jose Maria Lopez de Fuentes, president of 407 International, disagreed the operating agreement requires his firm to seek approval for toll hikes.
"Furthermore, we note that, in past years, the government has never indicated the need for 407 ETR to obtain the government's consent or agreement to establish tolls," de Fuentes wrote Dec. 31. He said ETR is convinced its interpretation is correct.
"If the government of Ontario chooses to initiate legal action against 407 ETR at taxpayer expense," he said, "the government would leave 407 ETR with no choice but to defend the contract and to seek its rights and remedies, including damages."
The squabble has some observers wondering if the government will hang tough as the CAA wants or back down, losing face but saving money.
CAA spokesperson Sherwin puts it this way: "They (ETR) are thumbing their noses at the government . . . it's a real test for the new government."
Meanwhile, the province has suspended the practice of denying licence renewals to motorists who have run up $15 million in unpaid ETR tolls. A Transportation Ministry spokesperson said the suspension -- in effect since 2000 -- will continue until the province is satisfied with the operation, particularly in customer service.
That suits the CAA just fine. As Sherwin says: "I don't feel the government should be in the collection business."
It's been suggested, however, the toll increase might be averted or moderated if the province reinstated the plate-denial arrangement.
