It’s unsurprising that electric utilities stand to benefit from the sale of plug-in vehicles, providing a bump — even a small one — for flat-lining sales.
Utilities throughout the country that are looking for authority to spend millions of dollars building out charging networks say their customers will benefit, too — even those who don’t own EVs.
Just in the past six months, the state of Washington passed legislation allowing utilities to put EV charging infrastructure in their rate base. In California, Pacific Gas & Electric and Southern California Edison are proposing huge investments in EV charging infrastructure (ClimateWire, Feb. 10). In the Southeast, Southern Co.’s Georgia Power subsidiary is spending $12 million on a pilot program to install as many as 50 public EV charging stations by the end of 2016 (EnergyWire, March 5).
The proposals are surfacing in the Midwest, too. In Illinois, Commonwealth Edison is lobbying for a bill that would allow it to build 5,000 charging stations. And Kansas City Power & Light is asking utility regulators in Missouri and Kansas to recover costs for a 1,000-station EV charging network (EnergyWire, Jan. 28).
The proposals follow the release of a white paper by the Edison Electric Institute a year ago, calling electrification of the transportation sector essential to the long-term health of the industry.
While the Kansas City area has relatively few plug-in vehicles on the road today, KCP&L’s $20 million Clean Charge Network proposal is being closely watched by the industry as an important test case.
The network, to be completed this summer, is being developed with partners ChargePoint and Nissan Motor Co. It would support as many as 10,000 EVs, and users would be allowed to charge their cars at no cost for the first two years.
According to filings with the Missouri Public Service Commission, the network buildout would initially cost typical residential customers about 15 cents a month. Despite the modest price tag, the plan has gotten a chilly reception from consumer groups and the PSC staff, which urged regulators to reject the proposal and leave EV charging an unregulated business.
Chuck Caisley, a utility spokesman, said KCP&L had to file the formal request as part of an electric rate case to put the issue in front of regulators. In states like Missouri, assets must be “used and useful” before utilities can seek cost recovery.
But the utility said it also wants to engage in broader policy discussions, a reason why it sought to initiate work groups in Missouri and Kansas.
“We understood this would certainly be a case of first impression in Missouri,” Caisley said. “We were aware that there were going to be some policy questions.”
Parallels to rooftop solar
Among those policy questions: Should all of the utility’s customers be forced to subsidize investment in infrastructure that will directly benefit the few who own plug-in cars?
It’s a familiar question that is also being asked about compensation rates for customers with rooftop solar energy systems — a separate debate that’s playing out at utility commissions and legislatures across the nation.
And according to KCP&L, the answer is yes, all utility customers will benefit.
Caisley said the utility analyzed the issue in depth and found “compelling reasons” why it should be able to recover costs for its EV charging network from ratepayers.
At its core, the plan addresses the biggest challenge faced by the utility industry and — by extension — its customers. Electricity sales growth is flat. But costs, including those required to meet more stringent environmental regulations, are increasing.
Helping stimulate adoption of plug-in vehicles helps address the disconnect by enabling use of existing power plants that sit idle much of the time, Caisley said. That means an increase in off-peak kilowatt-hour sales, helping the utility recover costs. And spreading fixed-cost recovery over more units of energy means lower kilowatt-hour rates.
There will also be environmental benefits as plug-in vehicles replace gasoline-powered cars.
According to KCP&L, the benefits from the Clean Charge Network are significant — much greater than the systemwide benefits from the almost $100 million it will pay out in solar rebates for Missouri customers.
Caisley said the utility is supportive of distributed generation and sees a future for rooftop solar in its service area.
At the same time, the policy decision made by regulators regarding the EV charging network could have consequences for future decisions regarding customer-owned solar.
“If the commission denies recovery for this, I think it unwittingly gives us the precedent to completely stop solar in our jurisdiction,” he said.
Finding utilities’ role in the market
Not everyone agrees with that assessment. Nor does everyone agree that utilities should be tasked with building EV charging networks at ratepayer expense.
Arun Banskota, president of NRG Energy Inc.’s eVgo subsidiary, which operates the largest public fast-charging network in the country, said the market should be allowed to develop on its own. Letting utilities spend millions of dollars of ratepayer funds to build out charging networks would put competitors like NRG at a disadvantage.
In general, “it’s not the right thing to do,” Banskota said in an interview. But, he added, “I would not say that utilities should be not be involved at all.”
There is a case for EV charging stations subsidized by utility customers or taxpayers in instances when the market isn’t functioning on its own. That could include underserved communities, such as low-income neighborhoods, where there’s little EV penetration and third-party developers and there’s not a financial case for investment, he said.
Banskota said a better role for utilities involves extending the existing distribution grid to enable EV charging infrastructure.
Curt Volkmann, senior clean energy finance specialist for the Chicago-based Environmental Law and Policy Center, agrees.
Volkmann said the “made-ready” approach to utility involvement in EV infrastructure being proposed by Southern California Edison is preferable to a network owned and operated by a large utility, such as the one proposed by ComEd in Illinois.
The California utility is asking regulators for permission to develop the infrastructure for up to 30,000 EV charging stations — distribution lines, transformers and other infrastructure. It will then be up to third parties to own the charging stations.
“It significantly reduces cost for a third party to put in a charger and let the utility stick to its core business,” Volkmann said.
Dan Welch, a transportation fellow at the Center for Climate and Energy Solutions, said policies regarding who can own EV charging infrastructure are rapidly evolving on a state-by-state basis. And what’s acceptable in one state might not be well-received in another.
“I think the markets need to be able to find their own equilibrium,” he said.
Exactly what role utilities play will differ, but companies that operate the distribution grid will undoubtedly be involved at some level.
“Utilities are familiar, they’re knowledgable, they’re trusted by governments, PUCs and consumers,” he said.
Caisley said utilities, with their century of experience building and running the grid, are best-suited to develop EV charging networks.
“This is electrical infrastructure,” he said. “And we can do it cheaper. By doing it in big tranches, we can bring down the cost.”
In fact, the utility says in regulatory filings that it’s not just the best company for the job, it’s the only company.
KCP&L says it’s obligated under Missouri law to build infrastructure to serve electric load in its service territory, whether demand is coming from a home, a commercial building or an automobile.
The law also prohibits the resale of retail electricity in KCP&L’s service area, raising questions about the ability of a third party to charge EV owners for plugging in.
“But we don’t even have to get to that question,” Caisley said. “Why not let the utility do what it does best?”