Late last week, California’s three largest investor owned utilities (IOUs), which provide service to over 30 million people, agreed to a five-year, $738 million plan to invest in transportation electrification. The plan was formally approved in a unanimous vote by the California Public Utility Commission (CPUC), the culmination of a process required by California’s 2015 Senate Bill 350, which set a timeline and pathway for transportation electrification to help advance CA’s clean air and greenhouse gas reduction goals. (CA’s smaller IOUs are on a different timeline.)
The IOU’s projects are complex and multilayered, deliberately linking a range of issues, from economic to social, including new rate policies, competition and private-sector opportunities and concerns about environmental justice.
The projects will be built around the following core activities:
- San Diego Gas & Electric will implement a $137 million Residential Charging Program. Rebates will help customers install up to 60,000 Level 2 charging stations. SDG&E will complement this with an optional EV-only rate that varies hourly based on day-ahead forecasts of grid conditions.
- Pacific Gas & Electric will invest in “Make-Ready” programs (a term primarily referring to distribution infrastructure, e.g., wires/cables/utility poles), spending $22 million for about 234 fast charging stations and $236 million for at least 700 sites supporting electrification for a minimum of 6500 medium or heavy-duty trucks.
- Southern California Edison will install make-ready infrastructure at a minimum of 870 sites to support electrification of at least 8490 medium or heavy-duty vehicles. And, SCE will establish three new commercial “time-of-use” rates.
The $738 million five-year cost includes $29.5 million set aside for program evaluation. Program costs will largely be recovered via customers’ rates. But that doesn’t mean that every ratepayer will be equally affected. For example, electric vehicle (EV) owners (from private autos to transit buses to freight and drayage equipment), obviously, will pay for the power they use and related charging infrastructure, although there are rebates for some of those costs.
The Commission worked to abide by the principle that these rather singularly focused programmatic investments should largely be paid for by those who benefit, i.e., EV owners. However, if investments benefit all ratepayers than Commissioners can judge it fair that everyone chips in.
It’s a difficult balance to advance public policy goals without impacting electric rates. Many TE specialists, however, expect that EVs will benefit the larger, overall electric grid, providing storage, power and stabilization.
Of course, that’s still in the future, making cost allocation now a bit of a gamble; but there’s no progress without risk. Whether the Commission got it right will be closely watched, in California and across the nation.
Commissioner Carla Peterman, who wrote the policy guidance for the IOUs, said that the CPUC’s decision weighed costs and benefits for all rate-payers “and directs significant portions of the utility programs to disadvantaged communities often hit hardest by traffic and air pollution.”
“If we’re successful much of the nation will likely follow California’s lead, and together we will make a difference in the fight against climate change,” she added.