According to the cover article in today’s Technology Review, there are legal barriers in a lot of states that prevent utilities from opening charging stations. What is the rationale behind this?
Thanks,
Rob
Utility commissions are charged with the responsibility of making sure that the market is fair.
Basics of the system
- The utility invests in the fuel and infrastructure needed to deliver electricity
- The commission oversees the charges that the utility applies to the customer and allows the utility to make a fair profit in delivering those goods
- (here’s the big one) The commission protects groups of customers from being forced to subsidize other groups of customers. (Example: retail customers are protected from having to pay for special equipment used by wholesale customers)
(continued)
Couple of thoughts
So I have to pay for someone to charge up their car? Who helps me pay for my gas?
Because now they wouldn’t be a public utility but a private retailer and I believe that would mean they would fall under different laws such as those dealing with de facto monopolies (I only can get electricity from one company at my home) and public oversight (rate prices must be approved by a PUC). Maybe it is best that each of these utilities - or a group of them - set up a private company to sell electricity for cars but there may be laws against that as well.
Electrical system is based around three groups of entities
[ul]
[li]those who produce electricity[/li][li]those who transmit electricity long distance[/li][li]those who distribute and sell it to individual customers[/li][/ul]
One or more of these groups can be government owned. But if they are private, they are usually kept separate to prevent collusion and exploiting of monopoly advantages.
So the chicken and egg dilemma occurs. There are so few electric cars out there now that putting in charging stations and transferring that cost to those customers would make the price of charging too high. And people are hesitating to buy electric cars because there aren’t many charging stations.
So the commissions are faced with a situation that goes against rule number #3. The utilities won’t build anything that they can’t at least get an even return on. The commissions are reluctant to open the door and have the general customer base fund capital which is used by (initially) a small customer class.
It really doesn’t matter how many or how few electric cars are out there. It’s basic fairness. Taxpayers don’t subsidize gasoline prices. Quite the contrary, taxes on gasoline are a major revenue source for most states. A “fair” solution would actually involve the charging stations billing at above market rate for the electricity, with the state adding a tax.
I’m not sure that this really applies here. There is nothing of legal structure which would stop a retail company (like a major gasoline supplier) from building charging stations, buying electricity from a utility and then selling it to customers for a profit. They aren’t doing that because the investment is too big for the rate of return they need. They are waiting for a critical mass of customers to occur before they do that.
That is in fact exactly what Tesla is doing with their network of charging stations. I imagine gas station franchises will be next, but they will have to wait for electric cars to become more popular.
Yes, I agree. The problem comes down to the fact that a considerable investment has to be made in order for the system to work. And that problem requires that somebody takes the risk for that initial investment.
Maybe the millions of people who spend billions of dollars on armed defense to make it safe for oil producers and importers? Perhaps you’ve heard of them, they’re the American taxpayers.
Is the technology settled enough to begin putting in large numbers of charging stations? Is there agreement among car makers for instance, about the shape of the plug that charges the car? I’ve even heard stories of stations where they expect to swap out batteries to save the time of recharging them.
Or is it a case of “As Tesla Goes, So Goes the Industry.”
Nissan and BMW use the same plugs for their electric cars.
You don’t really want dedicated charging stations, though. What you would really want is to have charging stations at the places where people leave their cars parked during the day. A lot of businesses already offer charging stations in their parking garages for use by employees, as one of the perks of employment. Since they’re doing this as private entities, they’re free to charge for it however they want.
In the long run, a charging station should pay for itself.
The cost of electricity here in Oregon is about 7 cents per KwH at the wall socket. The Blink Network charging stations charge 39 cents per KwH for members, 49 cents for guests. So they’re taking in an extra 32 or 42 cents per KwH above and beyond the cost of the electricity. https://www.blinknetwork.com/
A residential charging station costs $500. Let’s suppose that a commercial charging station costs $2,000 including installation. Then they need to sell about 5,000 KwH for the charging station to pay for itself and then after that they’re making a profit. If the station gets used three times a week for 16 KwH each use, that’s two years to the break even point.
If an electric utility pays $2,000 to put in a charging station and then they charge higher than normal rates to cover the cost of the equipment, then the other customers aren’t really subsidizing anything except a loan which will be paid back in two years.
We have an EV which belongs to our company. We usually charge it from the wall socket but sometimes use a commercial charger on longer trips. I’m speaking from experience.
I’m not following this. How is the loan paid back to the ratepayer who doesn’t own an electric vehicle?
You want both types. One of the drawbacks to electric cars is their short range. Having charging stations along Interstates would allow electrics to travel outside their home territories. And they would be helpful even inside cities for travelers. That’s assuming that charge times can get down to an approximation of gas fill-up times, minutes instead of hours.
The larger issue is the status of utilities. Back in the 1930s and surrounding decades, utilities often ran the largest appliance dealerships in town. That encouraged people to buy electric appliances which used more electricity and pleased everybody except for competing stores. They pushed for utilities to just sell electricity. Then deregulation hit and states thought that by separating production and distribution of electricity the market would create lower costs. That hasn’t worked out as well as the somewhat ridiculous initial pie-in-the-sky hopes had it, especially when the regulators stepped in to guarantee prices as a way of enticing more players into the business. Turned out customers wanted both the lowest of costs and the highest of reliability and that, surprise, surprise, wasn’t possible.
There are 50 different state regulatory environments, which makes generalizations impossible. Some states work better than others, some specific plans work better than others, some long-term planning works better than others. Which means that some works worse. Utilities could be valuable players by providing a network of public charging stations not limited to one brand or type of car. But the regulatory background has to be jiggered to favor that. Otherwise it is a subsidy to certain car owners.
But right now certain forms of transportation do get far huger government subsidies than other types, so anyone who would object on that ground is fighting reality.
If the ratepayers have to contribute more money this year when the charging station is built (which they might not have to, but hey let’s assume for the sake of argument that they do have to pay higher rates) then over the life of the station they should be paying LOWER rates because that station is producing a surplus of money. This isn’t really a loan, it’s just similar to a loan in the sense that one party put up money in advance with the expectation that they’ll get the money back and then some. In real life, they might actually get a loan from the bank, in which case it really is a loan and the ratepayers have nothing to do with it; their rates don’t go up and their rates don’t go down either.
Consider this example. A utility company has 1,000 customer who consume a total of 24 million KwH each year. The utility company’s expenses are $840,000 each year. So they charge the customers 7 cents per KwH and the average monthly bill is $70.
And then someone says “Hey, let’s build a dozen EV charging station and charge people 39 cents per KwH to use them.” But each station costs $2,000 to build. So they way they’re gonna cover that extra $24,000 is that each of their 1,000 customers has to chip in $24 this year. So the average monthly bill just went up to $72 instead of $70. So, one way to look at it is that they are charging 7.2 cents per KwH instead of 7 cents.
But next year their expenses go DOWN because those charging stations are making a profit, taking in more money than they cost to run. Every time an EV owner buys 16 KwH at the station, the utility company makes $5.12 more than what the electricity costs, so every month they’ve got an extra $1,000 and this is money they don’t have to collect from their customers. So now the average monthly bill goes down to $69. and the year after that it’s still $69 and now you’ve made back your money and the year after that you still only pay $69 so you (the ratepayer) are coming out ahead.
When we say “charging station” I assume we’re talking about the ones in parking lots, where you leave it plugged in for a few hours, perhaps all day. The vast majority of these use a J1772 plug which can supply either 110V or 220V. AFAIK, every production EV for sale in the US has one of these plugs EXCEPT Tesla. Tesla has their own proprietary plug.
There’s also a fast-charging plug called CHAdeMO (which means power in motion, and it’s a pun on the Japanese phrase for “have a cup of coffee”). Most of the Japanese EVs have them (like the Nissan Leaf) but the American EVs don’t. These are the ones you see near the interstate. They provide 400V DC and can give an 80% charge in as little as 20 minutes, just enough time to go sit down and drink a cup of coffee.
No matter which kind of charger we’re talking about, they always charge a lot more money than just what the electricity costs, by about a factor of five.
Just read an article about the debacle of the Kemper County Energy Facility, the showcase for Clean Coal:
Billions over budget. Two years after deadline. What’s gone wrong for the ‘clean coal’ project that’s supposed to save an industry?
[ Warning: Flat Style Site]
Should have started generating in 2013; costs estimated $1.8 billion, now $6.2 billion. ad so infinitum. Total mess.
But what struck me was the then governor of Mississippi, a Mr. Haley Barbour, who had worked for the Southern Company owning ( geez, you’d have thought they could call it the Grand Old Southern Company, or something ) blasé attitude:
- Barbour took an active interest in getting the Kemper plant up and running, urging state lawmakers to pass a law allowing power companies to raise rates on customers to pay for new plants during construction, rather than wait until the units are actually up and generating electricity.*
It’s nice when one has the power to force customers to pay for private companies’ mistakes before they make those mistakes *. Especially for friendship sake.
‘Wet Weather’ was one of their excuses, I kid you not.
Minor comment: The utility also forces some customers to subsidize others (e.g. low income residential and new factories routinely get subsidized rates). Not commenting on the appropriateness or inappropriateness of this, merely pointing out the fact that it’s not “everyone pays only for their share.”