Though they make up only a fraction of cars and trucks on the road now, many projections—from Wall Street firms, trade groups, and automakers themselves—predict an imminent surge in electric vehicles over the next decade.
S&P Global estimates that the nearly 2 million EVs on U.S. roads today will grow to more than 28 million by 2030, when they’ll comprise 40% of all new cars and trucks sold.
The Edison Electric Institute, which represents investor-owned electric utilities, arrived at a similar forecast last year, even before the passage of the federal Inflation Reduction Act, which contained big incentives to spur EV adoption.
That means tens of thousands of additional public charging stations will need to be built across the country.
But there’s a big debate taking place at state capitols across the country about who should take the lead role in building them—electric utilities or private businesses?
“That’s what retailers are there for”
The Charge Ahead Partnership, composed of big fuel retailers, grocery chains, convenience stores, gas stations, and other businesses exploring installing vehicle chargers, argues that private businesses, particularly those that have been selling fuel to motorists for years and are already located in optimal spots to serve drivers, are best suited to making the switch to electric chargers. And they say they’ll have a tough time competing with monopoly electric utilities who can build charging infrastructure on the back of their ratepayers.
“The utilities are actively laying the groundwork to extend their monopoly into this new business field,” said Ryan McKinnon, a spokesman for the partnership. “If you’re going to be driving an EV you’re going to want a reliable network of charging stations. . . . You really want entities to provide this that are good at selling things to people. That’s what retailers are there for.”
McKinnon pointed to recent legislation in Oklahoma, Georgia, and Texas that imposes limits on utilities using ratepayer money for charging networks. In Georgia, for example, legislation passed this year restricts utility ownership of charging stations to a single program that allows the dominant electric utility in the state, Georgia Power, to provide chargers in remote and rural areas, with private retailers offered a right of first refusal.
“This will ensure ratepayer funds only subsidize EV charging operations in areas where private industry cannot operate,” the Charge Ahead Partnership said in a news release last month.
But other states, like Minnesota and Colorado, have taken or are considering steps in the other direction. Proposed budget language that would allow utilities to bill ratepayers for EV charging infrastructure has also come under fire in Ohio.
And in Florida, the nation’s largest utility, Florida Power & Light, is building hundreds of chargers over the objection of critics like former Jacksonville Mayor John Peyton, president of GATE Petroleum, which owns gas stations and convenience stores in Florida, Georgia, and the Carolinas. Peyton argued in a Florida Times-Union column that “no private business would sink $100,000 or more to install EV chargers with the knowledge that some of the state’s most powerful monopolies can undercut them, using your ratepayer funds.”
An “all-of-the-above approach”
Some proponents argue, however, that there could be a place for utility-owned charging, since electric vehicles have long posed a chicken-and-egg problem. Mass adoption isn’t likely until drivers are comfortable knowing they can always find a charger. And companies aren’t likely to build chargers until there’s a critical mass of EVs to help them recoup their investment plus a profit.
Katherine Stainken, VP of policy at the Electrification Coalition, a nonpartisan, nonprofit organization pushing for the widespread adoption of electric vehicles, said there’s too much variation across states and markets to foreclose options like utility ownership. She characterized the debate over who should own charging networks as the “growing pains” of a nascent industry.
“We support kind of an all-of-the-above approach,” she said. “There are a lot of different factors here.”
Stainken added that for-profit companies might not be able to meet the needs of, for example, low-income apartment complexes, or instances in which no host comes forward to site a charging station through the National Electric Vehicle Infrastructure (NEVI) program, which is making billions of federal dollars available to states to boost charging infrastructure.
“If there are some areas where there is no site host coming forward, and the utility is the only one . . . I don’t think we would want to say ‘Forget it,’” she said.
The Edison Electric Institute likewise said the coming surge in electric vehicles requires an “all-hands-on-deck approach.”
“No one is preventing private-sector stakeholders from investing in EV charging today, and the idea that some stakeholders are trying to prevent electric companies from building EV charging infrastructure is senseless,” said Kellen Schefter, the institute’s senior director of electric transportation. “Electric companies are well-positioned to make targeted and strategic investments in EV charging infrastructure that will benefit the broader community and accelerate EV adoption. America’s electric companies have proven expertise and decades of experience in deploying and maintaining electric infrastructure that is safe, affordable, and reliable.”
Charging on demand
Beyond who builds and owns the chargers, however, there are other thorny issues to untangle.
One of the most pressing, according to Angela Holland, president of the Georgia Association of Convenience Stores, which supported the new Georgia law limiting utility ownership of chargers, is how much private businesses who install chargers pay for electricity.
“One of the other things we’ve asked is for our utility friends to come up with an EV charging rate,” Holland said. “You can’t go to market with a product and not know whether or not you’re going to make money on it.”
In neighboring Alabama, Alabama Power (which, like Georgia Power, is part of Southern Company) offers a special rate for commercial and industrial customers for public EV charging stations. Electric usage for charging is metered separately from other uses at the location.
That’s crucial because in many utility billing frameworks, commercial and industrial customers often pay a demand charge based on the maximum amount of electricity they use at one time, usually measured as an interval of 15 or 30 minutes. The charge is meant to compensate an electric company for maintaining the generation and transmission capacity to meet that peak demand, even though it won’t be used all the time.
“Demand charges are intended to help (electric service providers) keep power systems appropriately sized, efficient, and more affordable for all consumers,” says a 2021 report spearheaded by the National Association of State Energy Officials that looked at demand charges and EV charging in Arizona, Colorado, Idaho, Montana, Nevada, New Mexico, Utah, and Wyoming.
Electric vehicle charging infrastructure, though, “has relatively unique power demands, with high power capacity required for fast charging, but relatively small amounts of energy consumed per charge,” the report said, noting that demand charges “are one element that may prevent [direct current fast-charging] station hosts from earning a profit from EV charging services.”
The town of Derry, New Hampshire, pulled the plug on its four free municipal parking lot electric charging stations in 2021 after its utility instituted demand charges and caused the price to spike, officials wrote to the state utilities commission.
McKinnon, the Charge Ahead Partnership spokesperson, gave the example of a business that installs a 150-kilowatt charger with four ports, the minimum standard for the federal government’s NEVI program.
“You’re not going to have a ton of usage immediately. But as soon as one person uses it they are probably going to set the new peak usage for the month,” he said. “We’re not advocating for any specific rate. . . . We’re just saying let’s pick a fair rate.” Low usage and big demand charges, he added, “kills the financial incentive” for businesses to install chargers.
This article was originally published on Stateline.
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