Restructured Residential Managed Charging Incentives

For the first year of the program, there was one incentive program. This was a so-called demand-response (DR) program, where the EDCs would declare demand events during peak load periods on hot days. These occurred during 3-9 PM on weekdays from June through September. They don’t happen all the time, just when demand is very high due to heavy air-conditioning use.

The new plan revises this DR incentive and adds a second level of incentive known as Advanced Managed Charging, or Advanced Tier.

Before getting into the details, let’s zoom out a bit.

As noted, current peak demand periods occur during hot summer afternoons. In a fully decarbonized, meaning electrified world, demand patterns will significantly change. If heat pumps become the primary means of climate control, they will be working hardest on the coldest nights where gas and oil do the heavy lifting now. The summertime demand will be reduced since heat pumps are more efficient than AC compressors. So the Public Utilities Regulatory Authority (PURA) wants to inculcate in consumers the habit of thinking about peak and off-peak utilization as a year round thing, while still responding to the near-term load-shedding needs that occur over the summer.

The Authority directs the EDCs to implement an annual passive managed charging program for the residential Baseline Tier, with the on-peak period of 3:00 P.M. to 9:00 P.M. weekdays

participants shall be eligible for a maximum monthly incentive of $10, so long as the customer charges the EV at least 80% of the time during off-peak hours for the given month

EDCs will stagger start times to prevent “timer peak.”

These new programs are anticipated to be effective as of April 1, 2023.

Baseline Tier

The Baseline Tier is structured in 2 parts with separate payouts.

The first is a Passive Managed Charging tier where participants charge 80% or more of the time during the off-peak period and would be entitled to a $10/mo award. Peak times are 3 PM – 9 PM weekdays for this monthly incentive.

Additionally, the Demand Response Events remain during June to September where participants are encouraged to not opt-out of optional DR Events. There can be up to 15 such events, occurring between the hours of 3 PM – 9 PM per month. Participating (i.e. not opting) out in all events in a given month would entitle a Participant to and additional $20/mo for the four DR months.

In total, customers could earn $120 ($10/mo for 12 months) and $80 ($20/mo for 4 DR months) for a total of $200 in Baseline Tier. The total amount of the incentive remains unchanged; only the structure is different.

Advanced Tier

This tier is referred to as Active Managed Charging, where participants work with their utility to set a daily charging schedule that avoids on-peak charging. Customer inputs the State of Charge (SOC) that they need and a Time Charge is Needed (TCIN) and the utility does the rest. Participant can set these as default, for example, “every day, I need 100% charge at 7am” and the utility does the rest. They can also adjust these inputs as needed. Participant is responsible for not overriding the schedule where that act of overriding causes them to charge on-peak. Participants are able to opt out in such a way twice in a given month and still retain their incentive – any more and they forfeit the incentive in that month. There must be a minimum of two at-home charging sessions during the month. The incentive is $25 per month or $300 per year.

Peak time is the same 3 PM – 9 PM as in the Baseline Tier.

Of the comments noted in the docket, the most interesting was from DEEP, which “opined that rather than limiting charging under this tier to solely off-peak hours, the Advanced Tier should instead allow charging during all hours and provide dynamic managed charging to real-time grid conditions.” That would be an optimal approach as, for example, it would take into account weather and distributed energy resource contributions, rather than the current flat approach of set time periods. Ultimately, that is the way we need to go.

Note: Purchase, installation, telematics enrollment incentives are unchanged. In the original docket there was an enrollment option involving a device that would be placed on a dumb charger. There is no sign that one has been approved. There was no mention of anything about it in the participation data.

Additional Funds

Eversource and United Illuminating, the electricity distribution companies or EDCs, have reported high rates of participation for the DCFC (level 3) part of the program, as well as for the installation of level 2 chargers at Multiple Unit Dwellings (MUD). The MUD incentives apply to buildings with more than 5 units and are governed by the rules for commercial incentives. The Public Utilities Regulatory Authority (PURA) has authorized making more funds available in the near term (by accelerating funds designated for other years). Eversource and UI have compiled waitlists for applications received subsequent to funds depletion which will now be able to be included.

Leasing Program for Level 2 Chargers at MUDs

MUD = Multiple Unit Dwelling.

For these dwellings, defined as having 5 or more units, PURA has directed the EDCs to implement a leasing program for EVSE (chargers) as of February 2023. It is felt that some buildings may find it challenging to foot the upfront cost for multiple chargers/ports, even with the incentives and that leasing could ease overcome that. Furthermore, it allows the homeowner associations or building owners to gain experience with charging and tenant interaction.

The leases will be offered for 5 years, followed by an option to renew for another 5 years (at a lower price to reflect depreciation). At the conclusion of the second lease period, the dwelling will have the option of buying the chargers or allowing the EDC to repossess them.

During the lease period, the EDCs are obligated to engage a third party to maintain the equipment.

These are the prices listed in the December docket for the first 5-year term and are not final. Note that they are reflective of the distance between the EVSE and electric service.

Managed Charging for MUDs

How to charge for the power and offer incentives for load-shedding are complicated in an MUD setting, given that incentives are not always aligned between landlords and tenants, and there could be competition between tenants for less expensive charging slots. The EDCs have been directed to propose a voluntary opt-in managed charging program for MUDs for review by May 1 and implementation by July 1, 2023.

Rivian Service Center Stalled By Dealership Lawsuit

We’ve seen this movie before.

In a replay of what we recently saw with Tesla, a lawsuit by an auto dealership has stalled the opening of a service center by a company that employs a direct sales business model. As reported in the GreenwichTime, the Town of Shelton approved a permit for Rivian to build a service center and this was appealed by Mario D’Addario Buick, Inc. As noted in the article, the complaint states that the facility will engage in the “sale of new and used Rivian vehicles in violation of Connecticut law.”

Tesla previously received a permit from East Hartford to open a badly needed second service center in Connecticut. Hoffman Auto promptly filed an action specifying a similar basis. East Hartford subsequently withdrew the permit and Tesla did not further pursue the matter. The company continues to scout for another suitable location.

Of course, both Rivian and Tesla know the law and don’t have plans to violate it. However, if the law were to be changed, and it has come before the legislature repeatedly (thus far unsuccessfully), their use of the facilities may change accordingly.

There is a difference between the Rivian and Tesla cases, which is that Rivian plans to use the proposed facility to deliver vehicles bought online. In Texas, another state that bans direct sales, Tesla has been able to deliver new vehicles at its service centers. They do not make deliveries in CT.

With a hat-tip to Philip K. Dick who coined the phrase, pre-crime refers to knowing someone is going to commit a crime they haven’t yet committed, and is in the realm of science-fiction where it belongs. In our version of reality, it amounts to dealerships using the franchise laws pretextually to make getting these vehicles serviced as inconvenient as it is to buy them. It is part of the dealerships’ continuing campaign to stifle competition and consumer choice.

Sanity Finally Reigns

The body-style of an EV determines the MSRP cap for incentive eligibility. Sedans have an MSRP cap of $55,000 and SUVs, pickups, and vans can be eligible up to $80,000. MSRP is defined by the manufacturer suggested base price plus factory-installed options. Dealer installed options, software, taxes, and destination fees are not included.

The first round of classifications issued by the IRS fell in the “What were you thinking” category. For example, the Tesla Model Y 5-seat was classified as a sedan while the 7-seat version, which uses the exact same body, was an SUV.

These classifications have been revisited and it is looking much better. All Model Ys are now SUVs. The same is true for the Ford Mustang Mach-E, which had been classified as a sedan. All versions of the Volkswagen ID.4 are now SUVs.

The old classifications were based on the EPA CAFE standards. The revisions result from moving to the consumer-facing EPA Fuel Economy Labeling standard.

This is the IRS page with all of the vehicles for which a determination has been made.

Best of all, these changes are retroactive to January 1! And because of the delay in battery rule making, all of these vehicles receive the full $7500.

Post by Barry Kresch

CHEAPR as a Proxy for EV-Friendly Dealers

It is not unusual for a consumer to reach out to us, usually after a bad sales experience, and ask if we can recommend a dealership. We have some recommendations from members who have had good experiences, but nothing that covers every vehicle make and every dealership across the state. This is our attempt to at least partially address this.

We are using CHEAPR rebates sorted by dealership within vehicle make as a rough proxy for dealer EV-friendliness. There are some limitations. Not all makes have CHEAPR-eligible vehicles. They may be too expensive (e.g. Jaguar) or they’re just not in the game (e.g. Honda). EV prices have gone up in this inflationary time and the CHEAPR MSRP cap was $42,000 for the first 6 months of the year, rising to $50,000 as of July.  There have been continued difficulties with vehicle availability, but at least we are comparing like to like.

Some dealerships are charging a “market adjustment,” meaning the vehicles are being sold for above the MSRP. That does not get reflected in CHEAPR. The MSRP cap is based on the manufacturer’s base MSRP for the trim level without options. That may, however, have deterred some consumers from doing business with them.

There continues to be wide variation among dealership performance, as in past years. If you know of a dealership but do not see it in the charts, that means there were no rebates associated with it in 2022. Sometimes there seems to be a conflict in that a particular dealership name includes a different make than some of the rebates credited to it. That is because the way the dealership name is represented in the data does not indicate that it sells other makes. I cross-checked all the instances of this and the data are correct.

Mitsubishi, which had only one rebate is omitted. Subaru, also with a low count, is included. Chevy and Toyota drove the biggest numbers. Tesla is omitted for obvious reasons.

Rebates by dealership in alphabetical order by make and ranked by the number of rebates within make. All data from the Center for Sustainable Energy.

Based on new data released by the Department of Motor Vehicles, Department of Energy and Environmental Protection, and the Department of Transportation, the number of electric vehicles on the road has increased to 30,181 up from the 25,444 published in July and 21,377 one year ago. The year over year increase is 41%.

This information comes from what has been published by DEEP and is not the granular data that we request in order to produce the Interactive EV Dashboard. No ETA on that at this point.

Tesla’s Model 3 remains the most widely registered vehicle with the Model Y at number 2. Some newer EVs, such as the Wrangler and Mustang Mach-E now make the list.

Fairfield County remains the EV nexus. This is the percent distribution (not population adjusted).

The definition of EV includes both battery electric vehicles (BEV) and Plug-in Hybrid (PHEV) vehicles, as both are included in the state’s EV goals. The market continues its trend toward BEVs. As can be seen in the chart below, BEVs now have 62% share, up 3 points from one year ago. If that increase seems small, it isn’t. Given that it is based on total registrations, it takes a pretty big shift to move the needle that much. (Case in point – the Chevy Volt, a PHEV that was discontinued in March of 2019 is still the 7th most widely registered vehicle.) For whatever reason, fuel cell vehicles and battery electric motorcycles are not included in the dataset. They don’t account for many vehicles, but they have always been part of the data we have received in response to our FOIA requests.

Recent trends have improved, and no doubt, lingering supply chain issues have been a restraining factor, but we are still a long way from where the state has determined we need to be. This chart looks at the trend historically, where we are today, and then a straight line model to the 2025 and 2030 goals of 150,000 and 500,000 respectively.

EV Manufacturers/Dealers Offering Consumer EV Leases, Incentives Included

This is a follow up to a post from January 5, when we first published about a surprising turn of events with respect to eligibility for the electric vehicle (EV) incentives that are part of the Inflation Reduction Act.

As we have written here and other places, while the Inflation Reduction Act, IRA, has a lot to recommend it, the design of the consumer EV incentive is overly complicated and confusing with numerous restrictions on which cars and individuals qualify.

In a counter-intuitive twist, the complex became simple, at least for leasing customers. While there are all sorts of restrictions around whether a vehicle or a purchaser qualifies for the tax credit, the IRS issued guidance on 12/29/22 that a consumer lease should be considered a commercial transaction. The commercial EV incentive has none of the restrictions that apply to a consumer purchase. Whatever the vehicle cost, wherever it is made, no matter the body style, it qualifies for the $7500 maximum incentive. (If you want to know the details of those consumer restrictions, see our incentives page.)

The IRS logic here is that the dealer or manufacturer sells the vehicle to the finance company which holds the title. This is a commercial transaction. The fact that the finance company then executes a lease with a consumer is beside the point. As such, it falls under the rules for commercial incentives, which are governed by a separate provision in the law that does not impose the consumer restrictions.

We are now seeing examples of this in the marketplace. The photo at the top of the post is of an ad for a Lucid EV. A recent entrant as an EV-only startup, Lucid makes ultra high-end EVs that, judging by the reviews, are pretty great. Car and Driver described its “unbeatable range and great performance.” However, the Lucid far exceeds the price caps imposed on the EV incentives in the IRA. But with a lease, voila, no MSRP cap. I received similar information from a CT dealership company that sells Hyundai and Genesis vehicles, that they have received new lease pricing that reflects the incentive. Both of those vehicles are manufactured in South Korea and thus run afoul of the North American final assembly rules if purchased.

Delay in Battery Rules

For buyers there is another loophole, for want of a better word, that gives the consumer a break, albeit temporarily. The IRS has not finished writing the regulations for the battery mineral sourcing/refining and manufacturing requirements. As a result, the incentive defaults to the old battery rules until the IRS issues these new regulations. They have said this will happen in March. In the meantime, we are now in a period where incentives are likely to be higher for most, if not all, EVs than they will be in a few months. Buy now, but be sure to take physical possession of the vehicle before the battery rules take effect or risk losing the incentive.

Manchin Agonistes

It has been widely reported that Senator Joe Manchin  is not happy about either of these two developments. As reported in The Verge, he has introduced legislation to delay the implementation of the incentives until the IRS finishes its rule making, and to claw back incentives that may have been granted under the IRS interim rules.

Manchin is also not pleased about the IRS interpretation of leasing as a commercial transaction and may try and correct that legislatively as well.

I doubt Manchin’s legislative proposal(s) will become law. The House is too preoccupied getting its house in order. And what appetite will the Senate have to revisit this hard-fought reconciliation-passed bill? Nobody else in either chamber seems to be all that concerned about either of these developments, at least not on the record.

I think Manchin genuinely wants to bring manufacturing back America. I’m not so sure he cares about people buying EVs. The threat of a retroactive restriction and claw back only punctuates this. Part of the cleverness of the IRA is that it strikes a balance of both supply side and demand side incentives. But when it comes to EVs, the design of the consumer EV incentive is so perversely self-defeating, that with respect to Senator Manchin, this feels like karma.

Update: As reported in Reuters, Manchin tried to get his bill passed on January 26th by unanimous consent, but it was blocked by Sen. Debbie Stabenow of Michigan. She is quoted saying, “It is not unreasonable what Treasury is doing … they have been given an incredibly complicated task to try to figure out how this consumer credit will work.” Separately, she also noted the inherent unfairness of this bill to consumers in that it “would literally take away credits from people who are buying cars today … Fundamentally, (Manchin) is not a fan of EVs.”

The usual disclosure: This information is accurate to the best of our knowledge. Always check with an accountant when it comes to tax matters.

EV Club Meeting - SPAN Smart Panel Deck

New CHEAPR incentives to arrive this year

Expansions to CHEAPR, courtesy of Public Act 22-25, passed by the legislature last year, effective as of July 2022, implemented piecemeal as they are built, will see the remaining parts come online this year. The new pre-qualification process for income limited incentives should be ready by the end of March and the “non-personal” incentives (businesses, municipalities, etc.) should be ready at some point in the second quarter. Unlike the cash on the hood consumer rebates, the non-personal incentives will have a post purchase process to claim the rebate. These will tell the tale as to whether the program will accelerate to a higher level. We are also expecting DEEP to expand the list of eligible used EVs, which we feel are unnecessarily constrained to only vehicles that were eligible as new vehicles.

November was similar to October with 121 rebates, slightly higher than the 112 (slightly restated) for November. Below is the distribution by model with the Tesla Model 3 the largest, followed by the Toyota RAV4 Prime PHEV and the Chevy Bolt EUV. The file sometimes breaks out different trim levels, which is what happened with the RAV4, where the SE (2 rebates) was reported separately. As we’ve noted before, CHEAPR can be a useful proxy to gauge which models that fit under the price cap are resonating with consumers, but it does that less well in this period where there are supply shortages. For example, even though the Bolt EUV looks like it is successful, GM is still dealing with recovering from the extensive recall and as a result, it is building replacement battery packs alongside new vehicles. That is a GM specific circumstance, but it has the same effect of constraining deliveries.

There was one income-limited rebate in November, a used Chevy Bolt.

Can Leasing Be a Workaround for the IRA EV Incentive Restrictions?

Post by Barry Kresch

This notion was floated a while back and I dismissed it as a fringe theory. However, it seems to be gaining traction.

The EV incentive is complicated, confusing, and a moving target. There are a lot of rules for consumers to understand. Manufacturers have to re-orient their supply chains in a hurry if they want to be compliant with battery and final assembly rules. And the IRS has not yet finished its battery-related rule-making, leaving us in a state of partial implementation for at least 3 months. Even a high level listing of all the rules is exhausting to read: North American final assembly, battery critical minerals sourcing percentages, entities of concern rule, battery North American manufacturing percentages, MSRP cap, income caps, confusing body-style rules, transfer option. It’s a lot.

These rules apply to consumer purchases of a new EV. There are also incentives for commercial EV purchases. There are some important differences, but the salient point for this post is that none of the consumer restrictions apply to commercial. When an individual leases a vehicle, the incentive goes to the dealer/lessor, which is a commercial entity. So does it, therefore, get classified as a commercial transaction? Consumer Reports writes that they have been told this is the case by a spokesperson at the Treasury Department.

The commercial incentive is 30% of the cost of a BEV/15% of the cost of a PHEV or the incremental cost over a replacement vehicle. These are capped at $7500 for vehicles under 14,000 pounds (light duty) and $40,000 for vehicles over 14,000 pounds. Per the Department of Energy, all light duty BEVs and most PHEVs qualify for the full $7500.

In addition to Consumer Reports, this has been reported in other major press outlets and is being discussed seriously by other organizations that are closely reading the IRS text. Senator Joe Manchin is hurling thunderbolts that he adamantly opposes this interpretation, that it goes against the intent of the law. He’s right about that, of course, but that may not matter. It’s the IRS’s ballgame now, (Section 45W). It could potentially be addressed legislatively but nothing is happening in this Congress (as of this writing, not even a Speaker). The fact that Manchin is that exercised is an indication that he is taking this seriously.

This seems to be the relevant language from the IRS:

“Q5. Is a taxpayer that leases clean vehicles to customers as its business eligible to claim the qualified commercial clean vehicle credit? (added December 29, 2022)

A5. Whether a taxpayer can claim the qualified commercial clean vehicle credit in its business depends on who is the owner of the vehicle for federal income tax purposes. The owner of the vehicle is determined based on whether the lease is respected as a lease or recharacterized as a sale for federal income tax purposes.”

A typical 36 month lease should qualify (i.e. not be in danger of being reclassified as a sale).

Leasing has always been a way for someone who does not have enough tax liability to make use of the full tax credit because it goes to the dealer. It is up to the buyer to press the seller for transparency regarding how much it is lowering the monthly payment as the seller is not legally obligated to pass it on to the consumer.

This is a major development. We will follow this and provide updates as they become available. If anyone tries to obtain this incentive, please share your experience with us.

One other note – while we are in this period before the battery minerals sourcing and manufacturing rules go into effect and the old battery rules are still in force (meaning incentives are most likely higher than they will be once the rules are implemented), Treasury has announced that eligibility for these temporarily higher incentives requires physically taking possession of the vehicle (the IRS language is “placed in service”) before the rules are in effect. A firm contract is not good enough, as it was regarding the August 16th start of the final assembly rule.

The photo at the top of the post is of a Hyundai Ioniq 5. It has been a well-received EV but is currently excluded from incentives because it is imported (though they’re building a factory in Georgia). It is one of the more significant models to be affected by this prospective development.

2022 was an action-packed year as you can see below. But we wanted to begin by saying a big Thank You to all of our members and supporters.

EV Evangelist Award

Club president, Barry Kresch, was given an award by Southwestern CT Clean Cities Coalition for Outstanding Leadership in EV Education. This award is a public acknowledgement of the positive contributions Barry and the EV Club of CT have made towards our mission of evangelizing the rapid adoption of EVs.

The Year of Incentives

With legislative and regulatory pushes at the federal and state levels, EV purchase and charging incentives became both more numerous and more complex in a big way over the past year – and it’s not over yet. The IRS is still working on the rule-making for the incentives in the Inflation Reduction Act and the US Treasury has delayed EV tax credit guidance regarding battery sourcing until March 2023. DEEP is still in the process of implementing the changes to CHEAPR from PA 22-25, and PURA is conducting its year one review of the charging installation and managed charging incentives being offered via Eversource and United Illuminating with anticipated changes to follow. We have spent considerable time keeping up with developments on our incentives page and various blog posts.

Advocacy

We remain engaged with policy makers, including for SB-4 last year, which significantly augmented the CHEAPR program. Our biggest disappointment was another year without a direct sales bill. The club has a seat on the policy committee of the national Electric Vehicle Association, with whom we partnered to submit comments to the IRS regarding the Inflation Reduction Act. Similarly, the club partnered with our EV Coalition partner, Save the Sound to submit comments to the Public Utilities Regulatory Authority regarding the year one review of the utility incentives.

Speaking Engagements and Appearances

The club educates the public about EVs through virtual and in-person speaking engagements, panels and events. Engagements in 2022:

• Wakeman Town Farm Westport
• Transportation Summit – CT League of Conservation Voters
• Schiller Shoreline Lifelong Learning Institute in Guilford (with People’s Action for Clean Energy – PACE)
• Y’s Men – YMCA, Westport
• Greenwich Conservation Commission/Greenwich Sustainability Committee
• Westport Rotary
• CT Humanist Society – Hamden
• Town of Kent (with PACE)
• Sustainable Essex
• EVs for Law Enforcement – Clean Cities Panel
• Westport Senior Center
• Clean Transportation Day for legislators in Hartford

EV Showcases

There are numerous events around the state and the club supports as many as we can, sometimes by participating directly or other times by helping to recruit EV owners to exhibit their vehicles. We let our members know about these via emails, blog posts, and our event calendar and have participated in events from Greenwich to Essex. Showcases tend to cluster in spring and fall around Drive Electric Earth Day and National Drive Electric Week. We also supported the return of the Electric Car Guest Drive, an event in which EV owners are paid to participate with their vehicles. 

Wilton Fire Department

As we did with Westport a year ago, we arranged for club members to bring EVs to the Wilton Fire Department for first responder training. Aside from the requisite instruction, these events are a lot of fun as the first responders we speak to are genuinely engaged and have many questions.

Food Rescue US

When gas prices spiked, the volunteer drivers that this organization depends upon to “rescue” food before it is discarded so it can be donated to organizations serving food insecure families became harder to come by. A number of club members stepped in to fill this need. Food Rescue advised us they considered club participation to be a huge success.

EV Club Joins for Event with Rivian Owners Club

The new Rivian R1T pickup and R1S SUV have begun to be delivered to reservation holders in 2022. In May, the EV Club joined up with the Rivian Owners Club for a meetup at the Bridgeport Brewing Company with Rivian owners showing their vehicles to EV Club members. Funds from an event fund raiser went to support our EV Coalition partner, Save the Sound. See the video tour.

CT EV Data

• EV Dashboard based on our Freedom of Information Act Requests of the Department of Motor Vehicles – updated semi-annually.
• CHEAPR rebates monthly and an annual summary of rebates by dealership (our proxy for EV-friendly dealers to the extent they sell CHEAPR-eligible vehicles).
• Ad hoc projects, such as the financial analysis done for the Westport Police Tesla Model 3 patrol car with the possibility of an update for the new Model Y patrol car.

Public Meetings

It has been more challenging to hold meetings during the pandemic. We have tried to fill the gap with virtual meetings at which we hosted speakers. This year we had speakers from Eversource and UI discuss the new consumer and commercial charging programs. A brand ambassador from Aptera joined us to discuss their unique approach to a solarized EV. We ended the year with a gathering at the new net-zero Hotel Marcel in New Haven where we celebrated the opening of L2 and Tesla charging stations.