Electric vehicles sales have been surging, with every quarter of 2016 showing the highest sales yet in the United States. Electric utilities see an opportunity to sell more electricity. Renewable energy advocates dream of using car batteries to store energy from wind that blows most fiercely at night, or from the noonday sun. Grid efficiency experts eye a chance to make use of surplus power at nighttime.
Off-peak charging programs for electric vehicles (samples from our 2017 report below) can marry all of these dreams, providing a discount for utility customers to charge their vehicles when electricity is abundant or demand for it is low, or both. So why would a utility propose a program that offers customers no benefit to charge?
ILSR filed comments this week on a proposed electric vehicle charging program by Xcel Energy in Minnesota. Designed as an improvement over the utility’s current offering — it is, decreasing the upfront cost by $1000 or more to participate — the new program unfortunately won’t mean any financial savings for participants, unless they drive far more than the average electric car owner.
The key benefit to the program is allowing customers to participate by owning a charger, also known as “electric vehicle supply equipment” (EVSE), which can control when the vehicle charges, instead of installing a second utility meter to do the same. The latter offers no material benefit to the customer, whereas many modern vehicle chargers are internet-connected, have phone apps, and other data that gives the owner much more knowledge and control over their vehicle charging.
Unfortunately, the implementation of the program leaves much to be desired. The utility proposes to purchase the EVSE or charger themselves, charge a maintenance fee to maintain them through the 24-month pilot program, and then sell them at their current value after the program ends. The utility earns a return on investment for its part, but thanks to relatively high maintenance fees, the utility customer won’t save a dime despite charging their vehicle at times when power is cheap. Our full comments explain the problems with the proposal:
Support for Reducing Upfront Costs
We very much appreciate the pilot’s elimination of a second meter install, taking advantage of Electric Vehicle Supply Equipment (EVSE) technology that makes it unnecessary. We also support comments by Fresh Energy, et al., noting that second meters offer no material benefit to customers, unlike many commercial EVSEs that provide apps and interactive interfaces for managing vehicle charging and costs.
Frustration with Lack of Financial Benefit for Participants
As noted in comments by Fresh Energy, et al., off-peak charging for electric vehicles offers benefits to all customers. Therefore, it is difficult to understand why in this pilot it will not offer benefits to participants.
ILSR obtained the bill of a residential Xcel customer who owns an electric vehicle to do a comparison between participation in Xcel’s pilot program and the customer’s current costs to charge their Nissan LEAF on Xcel’s flat rate residential tariff. Our conclusion is that the monthly maintenance fees proposed by Xcel erase any potential savings for off-peak charging, despite evident benefits to other customers and to the utility. We used the same assumptions for charging rates as provided in Xcel’s filing, and used the rates from the customer’s July and December 2017 electric bills for the per kilowatt-hour charges and fuel costs (we used the higher value from July 2017 for the latter). Our analysis is shown below:
The lack of financial benefit is particularly telling for electric vehicle drivers that cover less distance. Xcel’s assumption of 1,000 miles per month is higher than the average monthly driving distance covered by most Americans, according to the Federal Highway Administration.
Typical annual estimates of driving (often around 15,000 miles) also overstate potential savings, because they include some long-distance travel that will either not happen in a shorter-range electric vehicle, or more importantly, not include charging at home.
The Wrong Comparison
ILSR concurs with other commenters that a pilot will provide valuable data about costs and EVSE technology that will benefit a permanent program. However, comparisons of the proposed EV pilot to the existing EV tariff (requiring a second meter) are misapplied. Pilot participants will be choosing to participate on its value proposition relative to their existing electric service. If ILSR’s calculations are correct, then that value is zero (or negative). And given no benefit, it will be difficult to enroll enough participants to provide the data that both the utility and commenters (and ILSR) desire.
A Note on Marketing
There is a Facebook group with over 1,000 members for Minnesota owners of plug-in electric vehicles. If the EV pilot program offers a financial benefit to participants, I’d suspect it could be a very low-cost way to identify 100 participants.
Recommendation: Approve the Pilot, Cut the Maintenance Fee
The increasing adoption of electric vehicles means that Xcel customers need a better option for charging their vehicles at times that maximize benefits for the entire grid, as well as themselves. If the data to be gathered from this pilot will lead to better financial and reliability outcomes for the entire grid, then give participants a financial incentive to participate. Even if Xcel collected zero monthly maintenance fee (instead of $13.88) from participants, the total cost over 24 months would be approximately $33,000, comparable to just three rebates for Nissan Leaf vehicles the utility offered in 2017. That seems a reasonable down payment on a program designed to increase sales, manage charging, and cost-effectively integrate electric vehicles into the utility’s grid system.
Thank you for the opportunity to comment; we appreciate that there has not been any legislative preemption of this regulatory process.
For more on electric vehicles, see ILSR’s 2017 report Choosing the Electric Avenue.