Utilities charge ahead on EV charger charges

By Elizabeth Earl

It may not be long before electric vehicle drivers have a fast-charging network to keep them powered as they crisscross Alaska’s Railbelt roads. 

Electric vehicle technology has improved drastically in the last decade. In 2011, there were three all-electric vehicles (EVs) on the market, and the average range on a full charge was 73 miles, according to a 2019 report from the US Department of Energy’s Office of Energy Efficiency and Renewable Energy. By 2018, there were 14 models on the market, with an average range of 125 miles. But convenient travel by EV requires a network of direct current fast chargers (DCFCs) -- without them, charging takes hours. Right now, DCFCs are clustered in about 30 locations around the Railbelt, concentrated mostly in Anchorage, Wasilla/Palmer, and Fairbanks, with long stretches between them.

Alaska’s lack of DCFC infrastructure has contributed to a feedback loop: with fewer chargers, fewer people want to invest in electric vehicles, and with fewer vehicles, there isn’t an incentive for business owners to install charging stations. With additional confusion over how utilities bill charger operators for their power, the buildout of charging stations in Alaska has lagged.

So far, the two biggest barriers to the installation of DCFCs has been the regulatory barrier preventing the resale of electricity and the cost of the power from utilities.

The Regulatory Commission of Alaska is seeking public comment on a proposed plan to deal with those two problems. On May 19, the four major Railbelt utilities jointly submitted a DCFC-friendly pricing method that exempts EV charger sales from the rule against electricity resale and by temporarily limiting demand charges. 

“(The four utility companies) believe this proposal strikes the appropriate balance aimed at addressing rate and other regulatory barriers to the deployment of EV charging infrastructure, while ensuring adequate cost recovery is achieved for the utilities, without undue discrimination to other ratepayers,” the utilities stated in the plan submitted to the RCA.

The first problem is relatively easy to solve: the plan proposes changing regulations to not consider electricity sold from charging stations as “resale of electricity.” The normal tariffs would then apply.

The second, thornier problem is demand charges. These are how utilities recover the cost of maintaining a constant power supply to large power consumers such as businesses, or EV chargers. They are based on the ratio of a user’s average electrical consumption to their peak electrical consumption. For a business like a factory that uses a lot of power all the time, demand charges are manageable and not an economic barrier. DCFCs, however, use large amounts of electricity for short periods of time, creating a high demand for electricity in short bursts. 

At this point, most DCFCs are not being used terribly often in Alaska. That means their demand charges have come out excessively high. The Alaska Center for Energy and Power estimated in February that a demand charge for a DCFC that supplied one 25-minute 120-kilowatt charge during a month would get its owner a $2,767 power bill from Chugach Electric Association. Under Municipal Light and Power, the most expensive estimate would come to more than $5,600 per month.

Michelle Wilber, a researcher with ACEP, said the high rates are a factor of how few EVs are currently on the road in Alaska.

“As you have very low usage, as would be expected early on with just a few cars on the road, you get this exponential curve where you get very high per-car, per-hour charges,” she said.

The utilities’ proposal to the RCA would help with a temporary formula that offsets the demand charge with a cap on load factor, or how the user is billed for their level of use. All the utilities would use the same formula to create their rate for DCFCs: 

[Demand charge/(load factor * 730 hours per month)] + Electricity charge

“This approach does not mean that demand-related costs, i.e., those costs associated with standing ready to serve customers, are not recovered but rather both demand and energy costs are recovered through a single energy charge,” the utilities’ proposal states.

This graph from the Railbelt utilities’ proposal to the RCA shows the current price structure for DCFCs with existing demand charges.

The inception rate would cap load factor at 15 percent. As you can see in the graph, the change would essentially cut off an exponential rise in cost if very few cars use the charger. Once there are more charging instances, the charge per vehicle goes down.

This graph, also from the Railbelt utilities’ proposal to the RCA, shows the effect of the proposed changes to the demand charges for DCFCs, essentially cutting off the first (exponential) part of the price structure.

“What it will do is basically make this cap where instead of this exponential curve … it goes up a bit, and then it tails off, and that tail-off would be set to a pretty reasonable rate,” Wilber said. “That would mean that the station owners have some certainty, could make their business plan—they have certainty in what their electric rate is going to be at the end of the month.”

The proposed inception rate would sunset after 10 years or when the RCA sets a different regulation in place. Wilber said she saw benefits for both sides under the structure, as it would help incentivize more DCFC infrastructure, which in turn benefits the utilities because of the additional purchase of electricity. 

Public comment is open on the proposal until June 18. Comments can be filed under matter R-20-005 on the RCA’s website or by email.