Minnesota now requires investor-owned electric utilities to offer special rate plans for owners of electric vehicles.
UtilityDive reports that the Minnesota Public Utilities Commission took the step because of increased interest in electric vehicles (EVs) but decided to apply it only to investor-owned utilities and not to publicly owned utilities.
At the same time, regulators also approved a surcharge for customers who want all of their EV electricity to come from renewable sources.
The Public Utilities Commission decision follows by about a year the passage of a state law requiring investor-owned utilities to file proposed tariffs allowing customers to buy electricity solely for the purpose of recharging their EVs. Utilities were permitted to offer either a time-of-use rate or an off-peak only rate, according to briefing papers on file with the commission.
Utilities responded to the May directive in different ways. Minnesota Power began offering summer and winter off-peak rates of 4.332 cents per kWh, UtilityDive said. Otter Tail summer off-peak rates were set at 2.962 cents/kWh, with its winter rate at 4.661 cents/kWh. Xcel Energy’s off-peak rate is 3.3 cents/kWh; its peak rate is between 14 cents and 17.5 cents/kWh.
Two of the utilities won’t allow EV charging during peak hours.
Encouraging EV owners to plug in during off-peak hours will help level off some peaks of residential power consumption while giving the utilities a boost in overall demand, the commission’s staff noted:
“If the EV tariffs are well designed and marketed, EV charging during off-peak hours will enhance utilities’ operational efficiency (through increased load factors) and will reduce EV owners’ bills by taking advantage of lower nighttime electricity prices,” the briefing papers said.
“If EV owners have no incentive to charge their cars during off-peak hours, it’s likely that most will begin charging when they arrive home, which could exacerbate the ‘peakiness’ of residential demand,” the staff continued. “A Level 2 EV charger uses a typical household service of 240 volts — similar to an electric dryer — and often requires upgrading or adding wiring and other electric equipment wherever the vehicle will be charged.”
A first in the country?
CleanTechnica reported that Minnesota became the first state in the country to require investor-owned utilities to provide specific peak and off-peak rates for EVs.
But, according to a Tweet that quickly followed, California’s major investor-owned utilities and two largest municipally owned utilities have had EV rates for 15 years or more.
Regardless of who went first, Minnesota sees strong growth ahead for EVs as costs decline and battery technology continues to improve.
“Though EVs are primarily a niche product in Minnesota today, their costs are falling rapidly,” the utility commission staff wrote. “Technological advances have reduced battery costs — which are typically the highest-cost component of an EV — by 50 percent over the last four years… This dramatic decline in battery prices will allow for both price decreases and driving range increases.”
The staff argued EVs can have “tremendous environmental benefits,” particularly if the energy that powers them comes from a diverse generation mix, but that their greater convenience ultimately will give the vehicles broad appeal.
“Extended driving ranges mean EV owners will be able to virtually eliminate trips to the gas station as over 99 percent of trips in the U.S. are less than 100 miles, an overnight charge in the garage will provide more than enough power for practically all outings,” the briefing said. “EVs also cost much less to fuel: if an EV battery is charged on an off-peak rate of 4¢/kWh, the electricity required to drive an EV the same distance as a gallon of gas (the “eGallon” price) would cost only about 40¢.”