Editor’s note: The Regional Transportation District pays nearly 60 percent more per mile to power the 16th St. Free MallRide electric buses than its diesel buses, according to a report in yesterday’s Denver Post. Xcel Energy’s “demand charge” adds 82 percent to the cost of charging the buses, even though RTD plugs them in at night, when electricity demand is at its lowest.

In California, two electric utilities changed their commercial pricing to encourage electric vehicle adoption, a model Xcel Energy could follow. The story below outlines the California changes and was originally published on the Natural Resources Defense council’s blog on December 18. The NRDC has provided to funding to Streetsblog Denver.

Reforming Rates for Electric Trucks, Buses & Fast Chargers

Charging an electric truck or bus at a fleet depot—or an electric car at an apartment, workplace, or a public fast-charging station—should be far cheaper than filling up on gasoline or diesel. Unfortunately, that’s often not the case at sites that receive electricity under utility rates designed for commercial buildings and industrial operations that don’t reflect the flexible nature of electric vehicle (EV) charging. To remedy this mismatch, Southern California Edison (SCE) and Pacific Gas and Electric (PG&E), two of the largest utilities in the nation, have developed an innovative suite of rates designed specifically for commercial EV charging, providing significant fuel cost savings to customers who charge EVs in a manner that supports the electric grid.

These new commercial rates were needed to successfully implement EV charging infrastructure deployment programs approved earlier this year by the California Public Utilities Commission (PUC)—totaling more than $600 million to support electric trucks, buses, forklifts, other medium and heavy-duty vehicles, and fast-charging stations. SCE’s companion rates were authorized earlier this year, while PG&E proposed its new rates in early November. These new rates are not subsidized, but were instead designed to reflect the unique nature and costs of EV charging, and will help to expand the EV market. Here’s a summary of the SCE and PG&E approaches:

SCE’s Approved Commercial & Industrial EV Rates

Electric buses, trucks, and public fast charging stations aren’t like buildings—EVs charge for only a few hours a day and can shift their charging demand to when most people are sleeping and there is plenty of spare capacity on the electric grid—but until now they’ve generally been forced onto rate plans designed for large buildings and industrial operations that use electricity more constantly. Most commercial and industrial rates include “demand charges” based on the facility’s highest point of demand for electricity at any time in a given month. Because EVs consume a lot of electricity while plugged in, these demand charges mean big bills, even if they’re charging when the grid is underutilized and electricity is cheap.

SCE solved this problem by ditching demand charges for the next five years and recovering costs purely through “time-of-use” rates (based on the total amount of electricity used and when it’s used) that encourage customers to charge when cheap solar and wind energy are abundant and when there is excess capacity on the grid. After five years, demand charges will be phased back in, with the theory being that demand charges won’t be such a big deal when there are more EVs on the road, increasing charging station utilization and allowing customers to spread the demand charges over more hours of charging. That will probably hold true generally, but demand charges could still pose a problem for locations that are unlikely to ever see high rates of utilization (but that might still be important places to have a charging station, like a remote location needed to allow folks to make the occasional trip).

The utility estimates these new rates will cut the bill for a typical customer in half—not by subsidizing EV charging or shifting costs to other customers, but by creating rates that more accurately reflect the true costs and unique nature of EV charging. In fact, because widespread EV charging can put downward pressure on rates for all electric customers by spreading the costs of maintaining the grid over more sales of electricity, these new rates benefit everyone by helping to expand the EV market.

PG&E’s Proposed Commercial & Industrial EV Rates

On PG&E’s existing commercial and industrial (C&I) rates, the cost of charging is often equal to or more expensive than filling up with gasoline or diesel (see orange diamonds in figure below). However, under PG&E’s newly proposed commercial EV (CEV) rates, these sites would save 30 percent to 50 percent on their current monthly bills and would pay roughly half the price they would have if they used gas or diesel (see green bars in figure below).