Imagine that instead of the wave of jealousy you feel when you see your neighbor driving that newly minted Tesla (just me?), a feeling of financial well-being set in? With the way utility accounting works, it is possible for electric rates to actually go down with large-scale EV adoption—but only if the utilities don’t get in our way.
Let me explain. New load from EVs can lower all customers’ rates because the cost to serve electricity to the vehicle, the marginal cost in economic terms, is lower than the retail rate paid to charge — note this is generally true for all new load, not just EVs. We can think of the retail rate paid by the EV customer less the marginal cost as “net revenue.” This net revenue is the financial benefit conferred to all utility customers to reduce total electric rates.
Sounds great, right? There’s a catch, at least in California. If utility programs to “support” EVs — charging stations the utilities claim must be built with ratepayer funds to achieve state goals — have greater costs than the net revenue, financial benefits won’t materialize, or will be continually pushed so far down the road that customers will be flying to work with a personalized jetpack (hopefully electric) by the time they appear, if at all.
Unfortunately, this fear is more than just theoretical. Exhibit A is Southern California Edison’s (SCE’s) current proposal to build EV charging stations at workplaces and apartment buildings, called Charge Ready 2. SCE says its program for 2020–2023 would cost $760 million — that’s a pretty staggering number in its own right, but back to that funny utility accounting, the cost paid by SCE’s customers would actually be $1.8 billion over several decades, if the proposal is approved.
TURN’s analysis (see Appendix) provided to the California Public Utilities Commission demonstrates that even if California’s adoption goals are met through 2023 (the end of the program), the cost of this one program would obliterate the financial benefits of all EVs adopted in SCE’s territory over the program period (2019–2023), including 10 years of the incremental vehicle’s charging revenues. And that’s due to just this one proposal, never mind future EV programs, wildfire costs, and the next “modernization” activity cooked up to feed the beast.
It doesn’t have to be this way. TURN has demonstrated to the CPUC that this level of cost and ratepayer harm is absolutely unnecessary for California to achieve its environmental goals. SCE’s proposal is rife with problems, or to put it more positively, significant opportunities for improvement. If these are addressed the Commission can lower costs and increase the efficacy of the program. Though you may hear otherwise, TURN supports EVs and utility programs to build charging infrastructure — but only if they are done the right way. This includes equitable distribution of costs and benefits, accountability to achieve real results, and a reasonable overall burden for utility ratepayers at a time of massive affordability pressures throughout California.
EVs provide the potential for a double-win: environmental and financial. Let’s not let this unique opportunity go to waste.
