Research scientist Andy Satchwell of Lawrence Berkeley National Lab had a caveat for the audience at the beginning of his presentation last week on electric vehicle rate designs and utility programs.

“The questions about what rate design and utility programs will drive EV adoption are unanswered,” he told the National Association of Regulatory Utility Commissioners’ Annual Meeting and Education Conference. But as a researcher, this does not make him unhappy. “This is an emerging and dynamic — and therefore really exciting — topic,” he enthused.

Satchwell was joined by Patty Durand, CEO of the Smart Energy Consumer Collaborative, which has been asking consumers the same questions annually for more than seven years. “We have probably the longest longitudinal study of residential consumers in the nation,” she said.

In a second panel, Chris Budzynski, director of utility policy for Exelon; Lydia Krefta, Pacific Gas and Electric’s manager of regulatory, compliance and pilots for clean energy transportation; and Kelli Newman, senior marketing analyst for Georgia Power, discussed their utilities’ EV programs.

Durand said her group uses customer segmentation as the “backbone” of its research, breaking residential consumers into four groups. The “most engaged” segments are the Green Innovators, who care about sustainability, and the Tech Savvy Proteges, who embrace the “cool” factor of new technology, Durand said.

Next comes the Movable Middle: “They care a little bit about sustainability; they care a little bit about technology. They’re probably not going to do anything unless there’s an incentive, a program, marketing — some kind of thing that hooks them and gets them engaged. They will engage with the right program and messaging.”

Last, Durand said, are the Energy Indifferent. “They’re probably not going to engage. They generally are not interested in anything to do with energy. … We recommend just leaving them alone and focusing on the majority of consumers who do care or would engage.”

While only 1% of consumers currently own an EV, about 16% report they are very interested in acquiring one, and 29% are somewhat interested, Durand said. The numbers are higher for Green Innovators (29% very interested, 33% somewhat interested) and Tech Savvy Proteges (25/37%).

The segments are reflected in consumers’ willingness to pay more for an EV: A 10% increase in cost reduces interest among Green Innovators by 4 percentage points — from 51% to 47%. Interest from Tech-savvy Proteges also drops by 4 percentage points, from 40% to 37%. Interest among the Movable Middle drops 3 points from 27% to 24%.

EV Rate Design

Awareness of EV-specific rates is “extremely low” between 5 and 6% of the whole population, with even 91% of Green Innovators unaware, Durand said.

“We asked consumers, ‘If you have an EV, are you on an [EV] rate plan or would you sign up for a rate plan?’ And most consumers either didn’t answer the question or said ‘no,’” she said. “So, these are really terrible numbers for those who want EVs to be more common [and] want beneficial electrification to include transportation.”

She added: “It’s an easy-to-overcome barrier. Education is one of the easiest things to do. But this does show a problem with residential consumer awareness.”

Satchwell said some states have adopted “advanced” rate designs, including the unbundling of service costs (e.g., energy, capacity and ancillary services); hourly or sub-hourly marginal prices (vs. average utility costs); and include feeder-level or more granular marginal prices (vs. rates applied regardless of grid-specific locations).

The major debate in designing EV rates is whether they should be based on demand charges or time-of-use (TOU) rates, he said. “Demand charges can impact public charging by penalizing fast chargers, but they may, arguably, better match cost causation depending on how they’re designed,” he said. “EV supporters believe time-of-use rates are better for customer economics and better reflect that hourly marginal value.”

There are also multiple flavors of TOU rates, with some utilities offering multiple rate periods with mid-peaks and some offering super off-peak periods with significant discounts. The latter “sometimes have been referred to as matinee pricing — the same way that theaters … used to try and fill seats during the middle of the day with a huge discount,” he said.

Some utilities offer flat “all-you-can-charge” monthly fees, such as Austin Energy, which charges $30/month but prohibits charging during peak hours.

There are also differences in metering requirements for home EV chargers. For example, Georgia Power’s whole home rate applies to all household electricity usage, which eliminates the need for additional equipment or changes to data collection and billing systems. But it can be a disincentive to EV charging if the rate is tiered with inclining block rates.

In contrast, Austin Energy’s EV-only rate requires a separate sub-meter and dedicated circuit, adding costs, but can allow clearer cost-based price signals.

Rates for commercial customers — such as fleet owners and public charging stations — are more likely to include locational and temporal specificity. San Diego Gas & Electric’s Power Your Drive program charges customers based on the CAISO day-ahead market price, with an adder for the top 200 distribution feeder load hours.

PG&E’s Business EV rate, which took effect Oct. 1, replaced demand charges with a monthly subscription charge, which the company said lowers charging costs by 40% on average. The subscription fee, based on whether consumption is above or below 100 kW, is combined with TOU rates.

PG&E also is seeking regulators’ approval for a pilot project using dynamic hourly rates for commercial customers, also based on CAISO day-ahead prices.

The company powers more than 303,000 EVs in its service territory and offers $800 rebates. EVs’ share of new vehicle sales in the territory peaked at 14% in 2018 before the federal Tesla tax rebate expired. It dropped to 12% in the first quarter of 2020 before falling to 6% in the second, when the coronavirus pandemic hit the state.

In Georgia, EVs’ share of new car sales peaked at 3% in 2015, when the state offered a $5,000 tax credit. After the credit expired, the share dropped to less than 0.5% but has neared 1.5% since mid-2019. “We’ve now started to see more organic growth, and we attribute this to the affordability of some Tesla models now,” Newman said. “People who got familiar and comfortable with EV driving back in 2015 are now starting to buy electric vehicles again.”

Georgia Power’s rates range from 1 cent/kWh for super off-peak charging (11 p.m.-7 a.m.), 7 cents for off-peak (which varies by month and weekdays vs. weekends) and 20 cents for on-peak (2-7 p.m. June through September). It said drivers that spend $170/month on gasoline would pay only $19/month in charging fees if they limited their charging to the super off-peak period.

Satchwell discussed how customers respond to EV rates, based on a review of 11 evaluation reports of offerings published between 2013 and 2020, most of them short-term pilots. Most of the pilots had at least a 2:1 peak-to-off-peak price ratio, with a small number having a ratio of 4:1 or greater. Not surprisingly, higher peak-to-off-peak ratios result in more off-peak charging, he said.

PVs and EVs

But customers who owned a PV system were significantly less responsive to prices than their non-PV counterparts, according to a review of an SDG&E residential EV rate pilot. “This maybe suggests that PV customers place a higher value on [selling PV electricity back to the grid] than the increased electric costs for EV charging,” he said. “Certainly, there’s more here to unpack.”

Durand said she was shocked by her group’s finding that 50% of those with rooftop solar also own an EV.

“The interest was very high,” she said. “If as a stakeholder, you’re interested in more EV purchasing or finding customers interested in EVs, pursuing the consumers who have solar … or having policies that help consumers get solar, is a way to accelerate the transition to EV ownership.”

Government, Utility Incentives

Satchwell said that although some utilities encourage adoption of EVs through small rebates in partnerships with car dealers, federal and state tax credits have been the primary financial incentive to reduce that upfront cost of EVs to customers.

Satchwell’s review of 30 proceedings in 19 states found that about 85% of capitalized utility costs are for EV charging infrastructure on the customer-side of the meter, which addresses “range anxiety” and allows customers to participate in retail and wholesale market opportunities to sell power back to the grid, where available.

Some utilities’ investments have been to modernize their distribution grid, which can provide benefits for all customers, not just EV owners, he added.

Georgia Power is offering business customers $500 rebates on Level 2 chargers on 240-V circuits for workplace and customer charging. It is offering residential customers $250 rebates on Level 2 chargers and offering builders $100 rebates for installing 240-V garage outlets in EV-ready homes.

Car Dealers’ Lackluster Support

Durand said car dealers could encourage EV sales by pointing out that while their purchase price is higher than gasoline vehicles, they are cheaper over the long-term due to lower maintenance and fuel costs.

Dealers “don’t know enough about [EVs]; I usually come in knowing more than they do,” she said. “They are underwhelming in their endorsement of an EV. The total cost of ownership (TCO) is something that consumers don’t understand. Utilities could work with dealers and have TCO stickers on the cars so that customers can browse the lot and see: ‘Oh, this costs a little more upfront but then by year two I’m really saving money. Or the stickers could include state and federal incentives, which consumers don’t understand or know much about.”