This week’s column delves into updates on electric vehicle programs and clean fuel standards under consideration in Oregon, Washington, D.C. and a few other places in between. These local initiatives could play a role in helping all-electric vehicles surpass the number of gasoline-powered cars worldwide by 2040, according to a new assessment by Morgan Stanley (more on that below).
But before shifting into gear on EVs, let’s take a quick look at the latest federal energy policy developments.
Correction: a previous version of this story incorrectly stated that the Michigan Public Service Commission launched a proceeding on emerging utility issues. The Missouri Public Service Commission launched that proceeding.
Updates from Washington, D.C.
Stepping away from the Comey controversy, President Trump issued an executive order on cybersecurity on Thursday that requests an assessment of the nation’s response capabilities in the event of a prolonged power outage associated with a significant cyber incident. The study will be conducted by the Secretary of Energy and the Secretary of Homeland Security, in consultation with the Director of National Intelligence, with state, local, tribal and territorial governments, and with others as appropriate.
Edison Electric Institute President Tom Kuhn praised the president for making critical energy infrastructure a top priority. “We value this partnership and appreciate President Trump’s support for improving the security posture of the electric power industry and, by extension, the nation,” he said.
In a win for environmentalists, Congress failed to roll back an Obama-era methane gas rule this week, with three Republicans siding with Democrats. The rule requires oil and gas companies to plug natural-gas leaks and scale back gas flaring in order to extract more profitable crude oil. The Interior Department now plans to suspend the rule through a rewrite. Meanwhile, lawsuits opposing the rule are set to continue.
Turning to the north, Secretary of State Rex Tillerson chaired the Arctic Council Ministerial Meeting in Alaska this week, where global warming was a hot topic. The Arctic Monitoring and Assessment Program report, Snow, Water, Ice, Permafrost (SWIPA 2017), was presented at the meeting, and included two especially stark findings, according to the Union of Concerned Scientists (UCS). First, the least bad scenario for sea level rise has gotten a lot worse. Second, the cost of climate change challenges in the Arctic will run into trillions over the century. At the meeting, Secretary Tillerson signed the U.S. onto the Fairbanks Declaration, which recognizes the impacts of climate change and reiterates the need for global action to reduce greenhouse gas emissions under the Paris Climate Agreement.
Tillerson supports the U.S. remaining in the agreement, but the Trump administration still has yet to make an official determination on whether to leave or stay.
Meanwhile -- bringing it back to the state level -- California Governor Jerry Brown announced Friday he will be traveling to China next month “to further strengthen California’s long-standing climate, clean energy and economic ties with China,” according to a statement from his office. The state has pledged to continue addressing climate change even if the White House won't.
Electric vehicles in Washington, D.C.
In local Washington, D.C. news, Potomac Electric Power Company (Pepco) recently proposed a $1.6 million EV pilot program in the District to test incentives and encourage customers to charge at off-peak times to ease impacts on the grid. If approved, the program will begin accepting customer applications a month afterward and operate until the end of the third quarter of 2019, WTOP reports.
The proposal outlines a voluntary pilot program consisting of five key offerings to customers: 1) Up to 100 residential customers with electric vehicles and installed electric vehicle supply equipment (EVSE) will have the option to select a 100 percent renewable energy option; 2) Up to 50 qualified residential customers will receive a discounted installation of a smart Level 2 charging station or EVSE (that Pepco will have the ability to remotely manage) and a special rate; 3) Up to 10 commercial customers who own or operate condominium/apartment complexes with garage parking will receive smart Level 2 EVSEs at a 50 percent discount; 4) Four DC fast chargers will be strategically placed in locations within the city for public use; and 5) An additional 500 residential customers with electric vehicles will have the ability to choose a discounted “whole house” time-of-use rate.
Advanced Energy Economy’s PowerSuite notes that petitions to intervene are due by May 22, 2017. Initial comments are due by May 22 and reply comments are due by June 5, 2017.
Oregon investigates utility participation in clean fuels program
The Oregon Public Utilities Commission has launched a proceeding to investigate electric utilities’ participation as credit generators in the state’s Clean Fuels Program (CFP), according to EQ Research. The proceeding will also develop rules for utility participation and how revenues from it can be allocated in the public interest. The PUC believes EVs could provide utilities with significant monetary value as EV adoption grows.
The CFP requires large companies importing and distributing transportation fuel in the state to reduce average lifecycle greenhouse gas emissions per unit of energy in the fuels they sell by 10 percent by 2025 compared to 2015. 2016 was the first year of the Oregon CFP and so far the program seems to be working, with credits surpassing deficits. The Union of Concerned Scientists reports that some of the program’s critics have been pushing legislation to change the rules of the program.
Speaking of utilities and EVs, it’s worth noting that Portland General Electric Company and PacifiCorp both filed transportation electrification plans in December. PGE’s $8.7 million plan includes a five-year strategic outreach, education and technical assistance plan, six electric bus charging stations, six EV charging stations and five small demonstration projects, including a vehicle-to-grid project in partnership with Nissan.
PacifiCorp’s $1.1 million program includes a three-year education and awareness pilot, a three-year technical assistance pilot for non-residential customers, and a three-year community partnership pilot. A final decision on both plans is expected by November 9.
Support for California’s low carbon fuel standard
As California policymakers work to implement the historic climate law SB 32, a group of 155 clean transportation technology companies sent a letter this week to California Governor Jerry Brown, state legislators, and the Air Resources Board, urging them to continue supporting California’s Low Carbon Fuel Standard (LCFS).
The LCFS, first implemented in 2011, requires California fuel providers to reduce the carbon intensity of transportation fuels by at least 10 percent by 2020. In five years, the LCFS helped inspire a 57 percent uptick in the use of clean fuels in California, according to the clean transportation group CALSTART. More than 300 companies in the clean transportation technology industry now employ more than 25,000 workers in California, CALSTART showed in a 2016 report.
Volkswagen’s EV infrastructure plan at risk?
A separate group of California clean transportation stakeholders expressed concern this week about the approval of Volkswagen’s proposed EV infrastructure plan.
In April, the EPA approved the first phase of VW’s national plan, under which the German automaker will invest $1.2 billion over the next 10 years in zero-emissions vehicle “infrastructure, education and access” outside of California. Within California, the automaker is required to spend $800 million on EV-related investments. However, the Natural Resources Defense Council and a consortium of EV infrastructure companies are worried that part of the deal could be at risk if the Air Resources Board makes too many changes.
“Generally, I’m worried about calls for changes that go beyond the four corners of the deal,” said Max Baumhefner, clean vehicles and fuels attorney at the Natural Resources Defense Council. “This time, with Trump’s EPA as a counterparty to the negotiation, I’m not confident that California would get a better deal with Trump at the table than CARB got for us the first time.” Full story here.
Missouri researches how to support EVs
This entry was updated: The Missouri Public Service Commission has opened a proceeding to gather information on emerging issues related to utility regulation, including how to promote a competitive market for plug-in EVs. EQ Research reports that the PSC has scheduled a full-day workshop on May 18 that will address the following topics:
- Shaping the “solar landscape,” including PURPA, net metering and CHP rules, avoided-cost calculations, value-of-solar calculations, and utility-scale and community solar projects. This topic also encompasses relevant activities in other states.
- Shaping AMI deployment.
- Shaping PACE and on-bill financing programs.
- Implementing modified rate-design proposals, including residential TOU rates, inclining-block rates, and effects on renewables and efficiency. This topic also encompasses relevant activities in other states.
- Promoting a competitive market for plug-in electrical vehicles, including infrastructure-ownership issues.
Morgan Stanley analysts predict the future for EVs
While we’re on the subject of EVs, let’s take a look at what all of these efforts could be leading to. A group of Morgan Stanley analysts recently released a report that predicts more EVs will be sold worldwide than gasoline-powered cars in 2040, Electrek reports. The base case predicts there will be 1 billion all-electric vehicles on the road all around the globe by that year. The report notes that things could ultimately go a couple of other ways, however.
“Our base case BEV penetration assumes that the 16% penetration in 2030 accelerates to 51% by 2040 and 69% by 2050,” the report states. “In our bull case, based on an even more aggressive regulatory regime to accelerate the reduction of emissions, we get to 60% penetration by 2040 and 90% by 2045. Our bear case BEV penetration model assumes that BEV development proves too expensive, or technically not viable and governments are forced to delay regulatory tightening. In this case, new BEV models grow global share to 9% by 2025, but fade after that, as they have done previously.”
The findings show that governments will play a key role in determining the fate of these zero-emissions vehicles.
Class cost of service studies
How much do you know about the use of electric utility class cost of service studies and how they’re used in rate cases and rate design? Do you want to know more? If so, EQ Research has the study for you.
Late last month the policy research and analysis firm released a report called New Uses for an Old Tool: Using Cost of Service Studies to Design Rates in Today’s Electric Utility Service World. The paper explores the history of the class cost of service studies (CCOSS) tool in ratemaking and how the utility industry can use the tool to reach better outcomes. It argues that CCOSS -- in its current form -- is poorly suited to answer today’s rate design questions.
“The use of cost of service studies has assumed new importance as more data is available, but the CCOSS is not innately objective. CCOSSs provide perspective, but not answers,” said Pamela Morgan, energy policy expert for EQ Research.
The report offers recommendations to stakeholders and regulators on how to think about rate structure and the role of the CCOSS, as well as suggestions for refreshing the CCOSS methodology. The report comes as the number of utility general rate cases has started to surge as new technologies, evolving customer needs and stagnant load growth reshape the industry.