Three years ago, the state of California banned utilities from becoming investors in public EV charging, saying they represented an unfair competitive threat to independent parties in a still-nascent market.
But now the California Public Utilities Commission (CPUC) has proposed lifting that ban -- a necessary first step in unlocking nearly a half a billion dollars in EV charging investment plans from Southern California’s biggest utilities.
On Friday, CPUC Commissioner Carla Peterman issued a proposed decision that would “expand the electric utilities’ potential role in ownership of electric vehicle charging infrastructure" (PDF). Specifically, the proposal would lift a 2011 requirement that utilities demonstrate a “market failure” or “underserved market” before investing in EV charging.
CPUC would replace that burden with a case-by-case “balancing test” approach to each utility proposal, to weigh “the likely competitive impact on the market segment targeted, and whether any anti-competitive impacts can be prevented or adequately mitigated,” according to the filing.
The proposal, which awaits a vote by the full commission to become legally binding, is a critical development for San Diego Gas & Electric and Southern California Edison. Both would like to enact massive, ratepayer-funded investments in EV charging throughout their service territories. Each utility’s plan includes features meant to provide assurance that they are not using their market power unfairly, and that the costs to ratepayers will be outweighed by the benefits accrued over time.
SDG&E’s electric vehicle-grid integration pilot program (PDF) would be the first utility plan to be subject to the CPUC’s new balancing test, if the proposal is approved by the full commission. SDG&E wants to spend about $103 million over the coming years to “contract with third parties to build, install, operate and maintain EV charging facilities,” which would be held to the utility’s specifications and supervision.
Meanwhile, Southern California Edison is seeking approval to spend about $355 million on its “Charge Ready” program (PDF), including a $22 million, 1,500-charging station first phase, and a second phase involving up to 30,000 charging stations over five years. Under this plan, SCE would cover much of the installation and permitting cost of the stations, allowing customers to buy their charging systems from a list of utility-approved vendors.
Support from the industry
One might think that independent EV charging network operators would be against the CPUC’s proposal. But according to Friday’s filing, commenters from across the spectrum of participants in the EV market expressed “near unanimity that the utilities should have an expanded role in EV infrastructure support and development in order to realize the potential benefits of widespread EV adoption.”
That makes sense, given that managing EV charging systems could be seen as a natural extension of a utility’s core role as electricity provider. Utilities are also going to have to manage the rates and tariffs that will apply to EV charging, as well as the potential for grid disruptions and energy imbalances that could come from lots of chargers operating on circuits that weren’t designed to handle them.
Not everybody wants utilities to be able to charge ratepayers for their EV investments, however. The CPUC's proposed decision noted plenty of “disagreement [as to] the appropriate degree of increased utility participation" from ratepayer and consumer advocates demanding "limited utility activity, with stringent criteria applied to approval of utility program proposals.”
Still, as the CPUC’s proposal noted, “even limited involvement to accelerate the PEV infrastructure market can improve the business case for third parties.” California reached a record 100,000 plug-in vehicles sold in the state in August, but most of these EVs are being charged at home, or perhaps at work. The infrastructure for public charging stations at this time is relatively small by contrast, and utility-funded programs could both reduce the costs of expanding those stations, and ensure would-be investors that there's a future market.
California is home to several public EV charging networks, including Tesla Motors’ Supercharger fast-charging network and NRG Energy’s eVgo deployment backed by a state-ordered $100 million settlement agreement. ChargePoint, the Campbell, Calif.-based startup, has also deployed thousands of charging stations in the state.
ChargePoint CEO Pasquale Romano said in an interview last week that he supports utilities taking a bigger role in EV infrastructure, as long as it allows companies like his to compete on a level playing field. In that light, SCE’s Charge Ready plan seems to offer a good balance of utility oversight and control with third-party ownership and flexibility, he said.
“What we like is that it preserves customer choice, which means that not only ChargePoint, but all our competitors, now have a bigger market,” he said. While ChargePoint hasn’t made any deals with SCE yet, it’s certainly hoping to have its equipment, network and software platform approved for participation, he said.
As the vanguard in EV adoption, California’s proposed changes could help set a trend in other states when it comes to balancing utility and third-party access and opportunity in EV charging. Few states have formally addressed this issue, although Oregon regulators decided in 2012 to allow utilities to participate in EV charging, and to recover costs from ratepayers, if they could show a long-term benefit that outweighed the costs (PDF).
GTM Research considers electric vehicles as likely “mobile agents of the grid edge,” with the potential to be both a significant burden to utilities and a valuable future asset. It will be interesting to see how California’s utilities lay the groundwork for expanding their role in managing these customer-owned assets, as they start to be allowed back into the EV charging game -- with limitations, of course.