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Electric Vehicle Rates - Can you promote electrification and still fully recover the cost to serve?

Russ Hissom's picture
Owner Utility Accounting Education Specialists - utilityeducation.com

Russ is the owner of Utility Accounting Education Specialists a firm that provides power utilities consulting services and online/on-demand courses on accounting, finance, FERC best-practices,...

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  • Sep 7, 2021
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Promote EV’s for electrification without rate subsidies?

Electric vehicle (EV) sales make up approximately 3.4% of car sales as of mid-2021, with projections of market share of nearly 30% by 2030. As we are on the left hand side of the bell-curve of EV sales and technology, electric utilities and cooperatives are asking the question:

"Do we want our EV electric rates to spur adoption of EV technology and/or do we want to recover our full costs of serving EV customers?"

You can have both (say, spur adoption of EV vehicles through building infrastructure for EV charging, giving rebates on in-home fast charging units (Level 3 units (DC connection) vs. the slower charging Level 1 and 2 AC units)) while building these costs into the cost-of-service analysis for the particular electric utility or co-op. This would involve NO subsidies from other electric customers on your electric system.

So, let's take a very short tour of some of the rate structures and rebates that electric co-ops and utilities are using in 2021 to either attract customers to purchase electric vehicles, recover their costs to serve those customers, or both.

Charge your EV at night

Pacific Gas & Electric offers two plans:

a.   Combine your vehicle’s electricity cost with your residential electric use or  

b.   Install a separate meter for EV charging

Both rates are time-of-use plans, so the rate is based on the time of day. Rates are much less from 11 PM to 7 AM.

Here are some more details on this rate structure.

 

Charge your EV really late at night

 San Diego Gas & Electric offers a super off-peak rate rate for EV charging that is 70% less than its on-peak rate. The off-peak period is midnight to 6 AM. Set your charger timer and go to bed, you’ll be set in the morning! Here are some details on that rate.

Rebates for EV chargers

 There are many EV charger rebate programs offered by electric co-ops and utilities. Here is a program from the Tanner Electric Cooperative, in North Bend, WA. The program offers a $250 rebate towards a Level 2 charger. An installed Level 2 charger can run as much as $1,000 installed, so the rebate defrays a substantial portion of the cost. Here are details on the rebate program.

Check your local electric provider for similar programs.

 Grants for EV school busses and charging infrastructure

 American Public Power Association reports that Anaheim Public Utilities is donating eight electric school buses and related charging units to the Anaheim Elementary School District. The busses and a portion of the chargers were funded through a grant from the California Energy Commission and rebates from the Anaheim Public Utilties.

The Anaheim program follows similar EV initiatives at utilities such as Seattle City Light, working with the Electric Power Research Institute (EPRI) and the Sacramento Municipal Utility District (SMUD). 

The subscription model

Many of us are used to the subscription model. We buy our usage of apps, video (Netflix, Prime), and audio (XM) to meet our expected usage (or sometimes we forget to use the product and accidentally renew the subscription).

PG&E also offers a business plan that works on the subscription model. The consumer chooses their subscription level based on their maximum EV charging kW consumption. Overage fees apply at double the rate per kW. Here’s more detail on this rate structure.

This is just the taste of the smorgasbord of possibilities

 The purpose of this article is to give you a flavor of various rates and programs that are evolving as the market for EV’s expands. What will be the dominate form of EV programs and rates? It’s too early to tell, but we will explore this in more detail in future posts.   

Russ Hissom is the owner of UAES, a company that offers online electric co-op and utility accounting, finance, rates, business process and strategy courses, custom courses, articles, and eBooks. Russ has over 35 years of electric co-op and utility industry experience, serving as a partner in a national public accounting and consulting firm’s energy practice. Russ has worked with electric investor-owned and public power utilities and electric cooperatives, learning and leading best practices. He is passionate about the power and utilities business, and his goal is to share his knowledge of best practices with you and provide value to your organization. Y

The puaes.com website has a wealth of articles and online resources that will benefit your utility’s accounting and customer ratemaking strategies. 

 

Discussions
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Matt Chester's picture
Matt Chester on Sep 7, 2021

It seems like there are a ton of options for utilities who want to engaged in these types of programs, but there are also a good amount of utilities not doing anything yet. Do you think those waiting are just looking to see what is most successful from these early observers? 

Russ Hissom's picture
Russ Hissom on Sep 7, 2021

Intuitively I think that is the case. I hear a lot of comments such as, "we'll address that in our next rate filing" when it comes to EV rates. I think that if a co-op or utility does not have a residential time-of-use rate (with a demand charge) their customers will begin to request it. 

Matt Chester's picture
Matt Chester on Sep 8, 2021

Sounds about right-- and to be certain, I'm absolutely a customer who has already requested a time of use rate from my utility that doesn't yet have one!

Jim Stack's picture
Jim Stack on Sep 9, 2021

The Off Peak charging is good for EVeryone. V2G feeding the GRID is also great. The right policy will make all the difference. 

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