Few CHEAPR Rebates Given in August

Another tepid, desultory, underwhelming (I’m running out of adjectives – feel free to help in the comments) month for the CHEAPR program with only 40 rebates given out and a total dollar amount of $28,000. This is the second-lowest month of the year and continues the dispiriting (another adjective!) trend we have seen since November 2019. One interesting item: there were 9 rebates for the new Toyota RAV4 Prime plug-in hybrid. Between the RAV4 Prime and the Prius Prime, Toyota vehicles dominated the rebate activity. The reporting has been that the plug-in RAV4 Prime is a severely supply-constrained vehicle at present and there was some doubt that any would make it out of California, but apparently, they have.

Note: CHEAPR often restates the prior month when issuing new data. In this case, July has increased from 57 to 62 rebates and it is incorporated into the title graph.

Decision Time

The next CHEAPR meeting is scheduled for October 9 at 11:00 AM.

The Center for Sustainable Energy (CSE) presented a set of proposals for program revisions in July. The agenda includes a vote on the new program. The meeting is scheduled for only one hour, so we don’t expect much discussion. We do not know if this will be an up or down vote on the package or if the items will be considered individually. We know that despite 3 meetings and public comments, there isn’t a consensus on all the items.

This is what we know to the best of our information.

The package that will likely be presented to the board in October will have no differences relative to what was proposed in July.

• No e-bike incentive or even a pilot test. Ix-nay on this from the DEEP attorneys.
• A used-EV income-limited (lower/middle income, or LMI) incentive (non-controversial).
• A supplemental LMI EV incentive (non-controversial).
• No changes to base incentive levels or to the MSRP cap.
• No changes to the much higher fuel-cell vehicle incentive, which stands at $5000 with an MSRP cap of $60,000.

UPDATES as of 10/25/20

Modeling scenarios include:

• Maintaining the current (since 10/19) MSRP cap of $42K or raising it to $50K.
• Base BEV incentives of $2500 or $1500.
• A possible temporary “stimulus” additional sample of $1750 for BEVs and FCEVs, and $500 for PHEVs.
• $500 increase to $2500 for the LMI incentive.
• Possible inclusion of scenarios with base-level incentives less than $1500.

Incentive Levels and MSRP Cap

Much commentary, from board members, public attendees, and public comments, was in favor of raising the base incentives and the MSRP cap to at least where they were before DEEP lowered them in October 2019. These currently stand well below comparable incentive programs in nearby states. The CSE was tasked with modeling scenarios and they forecasted that there was a possibility that demand would exceed available funds, thus risking disruption. This blog doesn’t buy that line of argument for several reasons.

• A pandemic and recession of unknown duration make for a difficult environment in which to model. There is a lot of guesswork here, exacerbated by the fact that there are no empirical data on the take-rates for the new LMI incentives. A disruption would likely only occur if the economy roars back and the participation rates are at the high end of estimates.
• The dealership contingent spoke out for a higher MSRP cap. They argued that leases have grown in popularity to about half of all new car sales, and people can manage a lease payment on a vehicle they can’t afford to buy. Also, we are soon to see a wave of crossover and SUV EV launches, and these popular form factors are more expensive than sedans.
• Based on our analysis, and comments from the dealers, there isn’t much of a used EV market at this time. The incentive will help, but it will take some time for auction bids to be influenced such that inventory can build. Also, used Teslas are probably too expensive for an LMI limited buyer (and we don’t know how the rules will work for them – they may not qualify – something we will seek to find out).
• At the July meeting, when CSE proposed this incentive regime, they advised that the LMI system development would cause it not to be available until Q1 2021. We don’t know if they have been able to work on it during this period when the program isn’t finalized, but there could potentially be a delay.
• There is more money available – DEEP has indicated that the unspent funds from 2020 (they have only given out $398,000 in consumer rebates), as well as unspent bridge financing from 2019, will be rolled over into 2021. This will yield approximately $4.9 million in available funds (compared to the $3 million budget).
• The CHEAPR mission seems to be increasingly skewed towards the equity part of the mission. This blog supports the LMI incentives (and e-bikes, for that matter), but also sees the mission as just getting more EVs on the road. The program has fallen seriously short of that in the past year.

For these reasons, we think the best course is to raise the incentives and collect data. There will be plenty of time to course-correct if necessary. CHEAPR has an important role to play in moving people to drive electric. This is attested to by consumers, dealers, and our data. Let’s allow it to fulfill its potential.

Closing Pet Peeve

The $5000 fuel-cell rebate has never been given out in the 5+ years of the program’s existence, and there is no sign it will be anytime soon. You can’t buy one of these vehicles at present, and there is only 1 public hydrogen refueling station in the state. And yet, DEEP continues to use this as its headline incentive. It is misleading. It can be seen in the first sentence of the first paragraph on the CHEAPR home page. It was spoken out loud by Tracy Babbidge during the Sustainable Fairfield Webinar on September 28th. It was said by Victoria Hackett when she spoke at the Tesla leasing kickoff in February. Those are the occasions we are aware of but this is clearly not inadvertent. They are not helping themselves.

Editors Note: The October 9th meeting did not yield a resolution. A letter from the EV Coalition was debated that proposed a different structure. No vote was taken.

Meeting Details

We encourage members of the public to listen in! This is the Zoom info:

Webinar Information:

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An E-bike Pilot

Among the suggestions offered by members of the new CHEAPR board has been a pilot project for e-bike rebates.[1] This is most strongly advocated by those who are focused on lower-income households, which are often clustered in the state’s largest cities.

E-bikes are an emission-free mode of transportation and could provide another transportation modality option for people who can’t afford a car. Or it could be a cost-effective replacement for a second car.

E-bike Proposal Receives Divided Reception

An e-bike incentive has received a divided reception. If I were to characterize the opinions expressed during the public meetings and in the public comments submitted to DEEP, there seems to be support for an e-bike incentive, but with many opposed to its inclusion in CHEAPR.

The opposition to e-bikes being part of CHEAPR comes from two places. First, DEEP’s reading of the statutory language concludes that CHEAPR can only be used for vehicles and that e-bikes cannot be considered vehicles, or more specifically, ‘battery electric vehicles’ based on the language. That interpretation has been disputed,[2] but from DEEP’s perspective, this seems to be an end to the discussion.

The second reason is that a group that supports an e-bike purchase incentive feels that it should be done outside of CHEAPR with a separate pot of money to avoid being dilutive to getting EVs on the road.

The EV Club supports e-bike rebates. It would be preferable to have a new funding stream for them. Several people have pointed out that CHEAPR, which is funded by clean-air fees[3],  receives less than half of those fees, with the rest going to the general fund. We would like to see more of those funds diverted to supporting clean transportation, which could be where to source e-bike funding.

Proposal for E-bike Pilot

There is also the situation we are faced with this year. It is almost certain that CHEAPR will not spend its budget. The amount of money spent on rebates and dealership incentives in the first half of the year is only equal to about 22% of the $3 million budget on an annualized basis. No matter what changes are made to the program, it will be next to impossible to use these funds. The under-spending is due to the changes made to the program in October 2019 and exacerbated by the recession.

So, here’s our proposal. Create a carve-out and conduct an e-bike pilot in 2020 and into 2021. Allocate some reasonable budget, say in the range of $150,000 – $250,000, that would be a cap. We think this should be an LMI[4]-limited proposal, as the intent is not to subsidize e-bike purchase among affluent folks whose main interest is recreation. There would then be the opportunity to collect data. We could find out who is buying them, what they are being used for, and how effective the incentive is for motivating purchase and reducing emissions.

Rethinking the Cityscape

The broader context is that during our pandemic-induced lockdown, the clean-air benefits of having fewer cars on the road became palpable. That, coupled with fears about virus transmission while using mass transit, inspired many cities to think about what a more people-friendly, less polluted urban landscape/streetscape might look like. Cities and town centers have been closing streets to vehicular traffic and adding protected bike and pedestrian lanes. Parallel parking spaces have been converted to outdoor dining areas. Some of this is temporary and responsive because everything happened so fast. But it could be permanent, and we would all be better off for it.

The City of Hartford has a city-wide bicycle network plan approved, a Complete Streets ordinance, and a goal to reach 10% bicycle mode share by 2035 (in the Plan of Conservation and Development). Plans like this have not only environmental and lifestyle benefits, but they would reduce overall crash fatalities, especially for people walking and biking.

E-bike incentives are an idea worth exploring[5] and we have an opportunity to learn something about how such a program would work with funds that would otherwise remain unspent.

[1] Index of e-bike rebate support letters

[2] People for Bikes, 8/12/2020 – CT CHEAPR public comment and e-bicycle as vehicle legal analysis

[3] Total proceeds from the motor vehicle greenhouse gas reduction fee were estimated to be $8 million per year based on these two Office of Legislative Research reports, here and here.  Only $3 million per year from that fee revenue was dedicated to the CT CHEAPR EV incentives.

[4] Low to Moderate Income Household

[5] How E-Bike Incentive Programs are Used to Expand the Market, 2019

The CHEAPR board virtually convened for their first meeting since late January to consider what the program should look like going forward.

To briefly recap recent history, changes were made to the rebate parameters on Oct. 15, 2019, which lowered the MSRP cap and the rebate amounts. The number of rebates immediately dropped precipitously. As CHEAPR morphed into its new administrative structure as of January 2020, these rebate levels were held over on an interim basis, which continues to this day. The board received a proposal for a revised rebate structure from the Center for Sustainable Energy (CSE), as well as a proposal for a used EV rebate, along with requests for an e-bike rebate. These are described below, but no final decision was taken. DEEP is setting up a mechanism to receive public comments for a 3-week period. The board will meet again in 4 weeks for the next steps, which presumably could mean a vote.

New EV purchase rebate proposal:

As you can see, the proposal leaves the lower rebate for new vehicles in place and adds a supplemental LMI (lower-middle income) incentive. We do not endorse leaving the existing rebates and MSRP cap at these low levels that were established in October. There were a number of attendees from the public who also spoke in support of this position.

For the 4 months prior to the October change, there were 616 rebates awarded. The corresponding post-change period, November through February, saw 272 rebates. And this was before COVID. As a result of the changes, plus the recession, CHEAPR is 81% underspent through May (the latest available data at the time of this writing).

This is the proposal for used EVs:

The supplemental LMI and used EV LMI proposed rebates are generous, and we accept the analysis that this is what is needed to make the program work. The definition of LMI is an AGI of $50,000 for a single person and $75,000 for a family. There is a proposed mechanism to verify this through federal income tax returns.

For either LMI incentive, the consumer, upon income verification, would be given a voucher that they would then bring to the dealer. This would apply to both franchised dealerships and independent pre-owned car dealers. (The rebate for FCEVs in this context is ludicrous, but more on that later.) The two dealer representatives (Jim Fleming of the CT Automotive Retailers Association – CARA, and Brad Hoffman of Hoffman Automotive Group – both organizations are represented on the CHEAPR Board) who were on the Zoom both said that there are few used EVs available and that it will be a couple of years until there is a critical mass of inventory. They said the rebate would induce dealers to bid on used EVs that become available via an auction, which would speed the accumulation of inventory in the state. They also cautioned that the incentive has to be structured in a way that prevents “flipping.”

The supplemental LMI and used EV rebates will not come online until the first quarter of 2021. The backend architecture still has to be developed.

The request for e-bike rebates met with a mixed response.

E-bikes were not part of the CSE proposal. Many on the Zoom felt that e-bikes have the potential to be a valuable component of an emission-free transportation mix, especially in the larger urban centers. A petition was submitted to DEEP to formally make this request. Here is a link to the letters. DEEP raised the question of whether it is statutorily permissible to incorporate e-bikes into CHEAPR (they will research that further). Some others felt that an e-bike rebate is a good idea, but that it shouldn’t be part of CHEAPR.

Dealer Incentive

The proposal modifies the dealer incentives to be either $125 or $75, depending on the level of rebate. When CHEAPR was first begun, they were as high as $300.

Fuel Cell Vehicles

Several participants voiced skepticism about the inclusion of a fuel cell rebate, especially considering that no vehicles of this type are currently sold in the state. DEEP briefly explained (there really wasn’t time to get into it) that it had to do with the multistate ZEV and CARB arrangements that CT participates in.

The CHEAPR board

While CHEAPR had a quorum to hold this meeting, over a year after the enabling legislation was passed, and 7 months into its first year, there are still unfilled positions. As far as we know, that number is 2. The board does not include any representation from an EV Advocacy organization (ahem, the EV Club), nor are there any persons of color. (The CHEAPR board itself doesn’t appoint members, though they may have influence.)

Where are the Funds?

CHEAPR is funded to a level of $3MM for 2020. Through May, the program paid $242,000 in rebates. We estimate that payments to dealers amounted to approximately $29,000 (adjusting for Teslas). The presentation from the CSE listed an amount of $1.9MM remaining. So how was the other $829,000 spent?

These are the club’s positions:

• Raise the incentives back to the pre-October, 2019 levels. Given that CHEAPR is so underspent and the supplemental LMI and used incentives will not happen this year, there is virtually no financial risk. The data can be re-evaluated later in the year, along with updated modeling for the LMI and used incentives, to determine the plan for 2021. And even in 2021, based on the dealer POV, there won’t be that many used EV rebates.
• We support the LMI and used EV incentives.
• We support e-bike incentives. There is enough money in 2020 to support a pilot. We are concerned that the wrangling will indefinitely delay action on this.
• Dispense with dealer incentives. They aren’t having a noticeable impact. In the DEEP EV Roadmap, it was reported that incentives were often not being passed along by the dealerships to the salespeople, which is who they were intended for. And the landscape has changed. This is the concluding sentence on the subject: “The auto dealer incentive may have been necessary during CHEAPR’s earliest years, but the availability of greater numbers, models, and types of EVs and the need to maximize available funding for EV deployment may necessitate the discontinuation of the auto dealer incentive.”
• We have nothing against fuel cell vehicles but see no point in keeping this incentive. At least, we would like to hear a more convincing rationale. We don’t see how credits earned from an out of state sale have anything to do with a local incentive.

This is what we think. Whatever your point of view, make it known to DEEP/CHEAPR. The information about how to do that will be provided when it becomes available.

Rebates at Lowest Level Ever

The lowest number of monthly rebates since its inception has been awarded by CHEAPR in April 2020, a not so grand total of 13, down from 90 in March.

There is almost no public reporting anymore of monthly new vehicle sales, but we know the automotive sector rapidly plunged in the latter half of March, which was felt over the duration of April. There have been some reports of a modest uptick in May.

Following the counter-intuitive increase in rebates in March (relative to Jan. and Feb.), when the rest of the world was collapsing, this is probably more in line with what will be the new normal for the time being. Tesla so dominates the EV market, as well as being the only manufacturer to post a sizable YOY sales increase in Q1, that how many Model 3s are rebate eligible is mostly what determines where the trend goes. It is also possible that some Model 3 supply disruption due to the temporary closure of the Fremont plant is part of the reason, as well. The Model 3 accounted for 54% of April rebates, which translates to all of 7. General Motors has been heavily discounting the Chevy Bolt, but there were no Bolt rebates in April.

CHEAPR Way Under Budget

This blog has been critical of the drastic restrictions imposed on rebate parameters in October 2019. DEEP told us at the Tesla Leasing Event in February that they were concerned that funds would run dry. That was a 3-month problem (Oct – Dec. 2019) until the new funding started, but the new CHEAPR board has yet to course-correct, despite pacing hugely under budget.

The CHEAPR budget is $3 million annually and there are no rules about how it is supposed to pace. There are good reasons for carefully managing the budget. Temporary funding disruptions are, well, disruptive. However, if we look at the budget on a straight-line cumulative basis and compare it to the dollar amount issued for rebates, by that definition it is pacing 79% below budget.

There is also the consideration of a forthcoming rebate for used EVs. To this point, there has been no announcement, and we are doubtful there will be one anytime soon because the Roadmap recommends that an outside contractor be engaged to design and implement it, meaning this presumably hasn’t happened yet. We also expect that an incentive for a used EV will be lower than for a new vehicle, and will include an income cap, as well as a lower MSRP cap. We don’t see this as a budget-buster.

EV Roadmap and CHEAPR

The subject of purchase incentives is accorded 15 pages in the EV Roadmap and it traces the origins and thinking about the program. It is still true today, as it was in 2015 when CHEAPR was begun, that while battery prices are on a downward trajectory, EVs have not yet reached cost-parity with ICE vehicles. Cited in the Roadmap is a stat from the Multi-State ZEV Action Plan that there was an average purchase price difference of greater than $10,000 between comparable EV and ICE vehicles in 2016. While EVs cost less to run and maintain, this headline price difference is a real barrier.

I have to say that it was a surprise to learn from the Roadmap that until 2020, CHEAPR was a pilot. For 5 years. Well, okay. With the legislation that was passed last year, it is now reconstituted with an independent board that remains situated in DEEP for administrative purposes.

Something that has changed is that two manufacturers, Tesla and General Motors, have exceeded the unit sales threshold for the federal EV tax credit and have passed beyond the phase-out period. There is no federal incentive for vehicles from these two manufacturers. The Roadmap cites projections from EVAdoption that indicate the next automaker to cross the sales threshold will be Nissan in the latter half of 2021. (This projection predates the COVID-19 crisis.) Attempts in Congress to modify the program and raise the threshold have not met with success. In this context, CHEAPR assumes a larger role.

Value of Purchase Incentives

The EV Club of CT is a supporter of CHEAPR and available data indicate that incentives matter. CHEAPR has handed out 5,984 rebates through April 30, 2020. Given that there were 11,677 EVs registered in the state as of Jan 1, 2020, the program looks to have played a meaningful role. Survey-research of rebate recipients reports that over 80% of respondents cite the incentive as being either extremely or very important to their decision to acquire an EV.

The Roadmap cites experiences of similar programs in other states. One of them is Georgia, which has been cited previously in this blog, as a dramatic example of a “light switch test.” When Georgia lawmakers rescinded a generous tax credit of $5,000 and added an annual EV fee, sales fell off a cliff. This is a graphical representation of what happened that was published on page 89 of the Roadmap.

Rebate Parameters

There are several variables that go into how much of a rebate if any, a given EV purchaser qualifies for, which we are calling rebate parameters (and which DEEP refers to as “bins).

• Available funding
• Rebate size and tiers
• MSRP cap
• Future consideration of a rebate for used EVs, along with a likely income cap.
• One rebate lifetime per licensed driver

Rebates are offered for battery electric vehicles (BEV), Plug-in Hybrid Electric Vehicles (PHEV), and Fuel-Cell Electric Vehicles (FCEV). Rebate parameters have changed several times since the program began. The size of the rebate was originally pegged to the size of the battery pack but was modified in 2017 to be based on EPA-rated electric range. Battery pack size is not directly indicative of the range, so this approach makes sense. Also, over time, there are changes in technology (substantially longer ranges) and other aspects of the environment that gradually, but consistently, evolve.

The MSRP cap initially was $60,000. It was changed to $50,000 in October of 2018 and then to $42,000 where it currently stands. Rebate tiers are currently $5000 for any FCEV, $1500 for a BEV with a range of at least 200 miles, $500 for a BEV with a range of fewer than 200 miles, and $500 for any PHEV.

The number of rebates awarded has declined significantly since the October change and it is obviously because the lower level now excludes almost all trim levels of the Model 3. This blog has discussed this previously on April 2nd and in earlier posts.

We also noted that the lowering of the MSRP caused a shift in the mix of rebates toward PHEVs, which we discussed here. (April is the low-volume exception.) But you wouldn’t know this from the Roadmap, which on page 83, contains this exhibit of rebates by fuel-type.

The footnote indicates that the rebate data had been updated through July 26, 2019, in other words, before the changes were made. It seems clear that lowering the MSRP cap was counter-productive, both from the perspective of consumers being able to use the rebate along with making the funds less efficient in terms of zero-emission miles subsidized. The market in general is trending toward BEVs which may eventually change things. But we strongly feel that the MSRP should be raised to at least $50,000 (same as MA) or higher (NJ is $55,000 and NY is $60,000). The rebate levels could be left in place while the run-rate is evaluated with the higher MSRP, whatever modeling has been done for used EVs, and projections for when this depressed market normalizes. We are not aware of the law allowing unused funds from one year to be carried forward.

Dealer Incentive

A headline that appeared over a NY Times story in 2015 read, “A Car Dealers Won’t Sell: It’s Electric.” The unwillingness of many dealers to sell EVs has been a persistent bottleneck. So the idea that DEEP included in the original CHEAPR formulation a $300 incentive that would go to the dealership for each EV sold seemed a worthwhile experiment. It may sound slightly farcical to pay a business that is in the business of selling cars to sell cars, but if that is what it takes to seed change, so be it.

The incentive was subsequently lowered from $300 to $150. In the Roadmap, DEEP openly questions whether it is worth it and whether the funds would be better allocated to consumers to stretch what is a modest budget when compared to incentives in other states. (For example, the New Jersey per capita funding is 50% higher.) DEEP also found that the majority of the incentives were kept by the dealership, i.e. not given to the salespeople, which was kind of the basic idea.

This was underscored by two EV Shopper Studies done by the Sierra Club in 2016 and 2019. In the latter study, it was found that 74% of dealers did not have a single EV on the lot. The study did not report out CT separately (only CA had sufficient sample size for that) but in the 2019 study, there were no local dealers among those visited in the research that scored the highest rating. Our EV Club does know of some dealerships that do a good job with EVs and we appreciate them. We just wish they were the norm and not the exception.

VW Works Around Its Dealers in Germany

The most interesting recent development is from VW in Germany. They have announced that VW corporate will take responsibility for selling EVs and the dealers will only act as agents. Dealers will arrange test drives and deliver the car, but will not otherwise be part of the sales process. They will receive a fee for each vehicle they deliver and they will not have to buy the car. This last part is particularly interesting because it eliminates the risk of having to carry the cost of financing the vehicle if it is a slow-seller. It is the closest one can come to direct sales while still maintaining the franchise sales model and implicitly acknowledges its limitations. Here is a more detailed description published in ChargedEVs.

Dealer Recognition Program

Instead of the dealership financial incentive, we endorse DEEP’s proposal to work with the CT Auto Retailers Association (CARA) and create a dealer recognition program. If this is promoted to the consumer, it could serve to avoid some of the negative feedback loop that currently exists. We encourage that care is taken in giving this award so it isn’t vaporware. EV Club of CT works with the Sierra Club to conduct its EV Shopper Studies and our feedback to them will be to separately track visits to dealerships that are recognized in this way to see if their actions match the certification.

Fuel-Cell Electric Vehicle Incentive

CHEAPR has included FCEVs in its incentive plan from the beginning when incentives were set at $3,000. In July of 2016, the FCEV incentive was raised to $5,000. And when the MSRP cap was lowered to $42,000 for EVs, it was raised to $60,000 for FCEVs (they’re more expensive).

There have been exactly zero of these incentives awarded and there is a total of 3 FCEVs registered in the state. There is only 1 public hydrogen refueling station in CT.

FCEVs were dropped from the federal tax credit in 2017.

The rationale in the Roadmap is to support all promising new technologies and DEEP recommends continuing these levels for FCEVs for the duration of the current funding, which is through 2025. Their goals are modest: 591 FCEVs in the fleet and 6 or 7 refueling stations in the state by 2025. Keep in mind that a hydrogen refueling infrastructure has to be built from scratch. The other rationale that we have heard is that FCEVs have a longer range (and a short refueling time if you can find a place to fill up). The range part of that used to be the case, but now the longer-range BEVs have a similar range as FCEVs and higher mpg-e. Certainly, the differential in incentive can no longer be justified by range alone.

This blog is not against FCEVs, which are zero-emission vehicles. We do feel that DEEP/CHEAPR over-emphasizes them and, at times, uses them to represent CHEAPR in an intellectually dishonest way. At the Tesla Leasing Event in February, the DEEP spokesperson said that the CHEAPR program offers rebates of up to $5,000. It may be a convenient headline, but it is only true in the narrowest technical sense. For all practical purposes, the max rebate is currently $1500. And almost no Tesla qualifies for even that.

This is a link to the Roadmap. DEEP recommendations for CHEAPR are on page 92. We won’t repeat them here.

As we have made clear, these are our priorities:

• Raise the MSRP cap.
• Move quickly to implement an incentive for used EVs.
• Raise rebate levels, funds permitting.
• Eliminate the dealer incentive and re-purpose those funds for consumers.
• Develop guidelines for a dealer recognition program, which hopefully includes some input from consumers.
• Publish rebate data at the dealership level as they do in New York. Arguably, that alone is a dealer recognition program.
• Make e-bikes eligible for incentives under CHEAPR.

And, finally, one area where we are in agreement with the Roadmap, is to look to the future and the potential for leveraging incentives by partnering with utilities, as part of TCI, and with the manufacturers.

The EV Roadmap prepared by the CT Department of Energy and Environmental Protection is a dense, 104-page document. We recommend reading it if you have the time. But for those who want to cut to the chase, below is the cut/pasted recommendations from each section. Following the recommendations is the glossary from the report, which is nothing if not laden with jargon.

Policy Recommendations

Public and Private Fleets

1. DAS should develop a detailed light-duty fleet transition plan that outlines annual EV procurement targets for the state fleet, beginning with a 5 percent target of eligible state vehicles in 2020, in order to meet ZEV procurement requirements in accordance with Public Act 19-117.
2. Public and private fleet managers should utilize vehicle telematics systems, as DAS is currently piloting, to establish fleet benchmark data on the day-to-day operations of both EVs and comparable ICE vehicles, in order to inform future vehicle purchasing and infrastructure deployment decisions.
3. Public and private fleet managers should align the useful life cycle of EVs with manufacturer battery/mileage warranties and consider total cost of vehicle ownership when making procurement decisions.
4. DEEP will look to partner with other interested state agencies to create a web-based resource center dedicated to fleet electrification with helpful resources for public and private fleet managers, including case studies, best practices, and vehicle benchmarking tools.

 

Medium and Heavy-Duty Electrification

1. DEEP will continue to evaluate the benefits of adopting California’s ACT regulations. A CARB staff report summarizing the initial statement of reasons for adopting the rule was proposed in October 2019.
2. DEEP will continue to monitor the effectiveness of freight truck voucher incentive programs in accelerating the adoption of freight trucks.
3. DEEP will continue to engage in outreach with Connecticut municipalities through the Municipal Collaborative on Fleet Electrification regarding electric school bus and other medium and heavy-duty fleet deployment opportunities available through the VW Grant.

Residential Charging

1. A residential Level 2 EVSE incentive program tied to participation in TOU rates or a managed charging pilot program should be implemented in the near-term so that it can be scaled up to meet market growth while minimizing grid impacts.
2. DEEP will explore pilot programs for EVSE deployment at MUDs.
3. Connecticut should enact right-to-charge legislation that prohibits condominium associations and landlords from restricting condominium owners or lessees with designated parking spaces from installing EV charging equipment and associated metering equipment.

Workplace Charging

1. DEEP encourages employers considering workplace charging solutions to distribute a survey to gauge employee interest and determine charging infrastructure needs.
2. DEEP recommends that employers considering workplace charging solutions contact their EDC as early as possible in the planning process to assist with site evaluation, equipment selection, cost estimates, and possibly even financial incentives for EVSE.
3. DEEP encourages employers to equip at least 10 percent of their total parking spaces with Level 1 charging plugs and evaluate opportunities for installing networked Level 2 EVSE with co-located DERs to meet the refueling needs of employees.
4. Connecticut should support legislation that more broadly enables EVSE at commercial properties to qualify for C-PACE funding.

Fleet Charging

1. DEEP suggests that fleet operators and managers work with their EDC to identify solutions that will minimize distribution system impacts and help realize greater cost savings, including managed charging specific to fleet use case, deployment of DERs, and optimizing infrastructure buildout for their use case.

Consistency of Consumer Experience

Interoperability

1. All publicly-accessible Level 2 and DCFC station sites, installed or operated with the use of public funding, should be required to have both CHAdeMO and CCS connections available on site.

Future-Proofing

2. The make-ready portion of electrical infrastructure installed at publicly-funded, publicly-accessible locations should be capable of supporting chargers with a minimum 150 kW capacity.
3. Charging station developers should be encouraged to evaluate the potential to pair charging stations with on-site DERs when assessing and selecting a charging station location.
4. The potential future need for additional charging stations should be considered when installing make-ready electrical infrastructure and selecting the placement of charging stations at specific locations.

Minimizing Grid Impacts and Maximizing Benefits through demand-reduction measures

Active and Passive Managed Charging

1. DEEP will explore the potential for an active managed charging program that incents EV drivers to charge during off-peak periods.
2. The EDCs’ current TOU rate tariffs should be optimized, and EV-specific TOU rates and dynamic pricing should be evaluated as additional options, to shift charging behavior to off-peak periods.
3. DEEP will continue to monitor the effectiveness of innovative programs in other jurisdictions, unrelated to rate design, to incent off-peak charging.

Fleet Charging

4. DEEP will explore options to examine distributed and grid-side technologies and services that could help to more cost-effectively integrate charging for the Hamden Bus Pilot and other fleet electrification initiatives through its Public Act 15-5 proceeding.
5. The potential should be explored for establishing a commercial EV fleet rate that incents off-peak charging and minimizes adverse impacts to the electric grid.

Demand Charges

1. DEEP recommends exploration of a sliding scale tariff approach for both Eversource and UI that is responsive to DCFC station utilization and EV market penetration.
2. DEEP recommends exploration of the costs and benefits of a commercial EV fleet rate that incents off-peak charging and minimizes adverse impacts while maximizing benefits to the electric distribution system and its customers.

Building Codes and Permitting Requirements

1. DEEP recommends that the State Building Code standards be updated to: (1) require that all new MUDs and commercial construction be pre-wired to accommodate Level 2 EV charging equipment; (2) require that 10 percent of parking spaces be pre-wired to accommodate Level 2 EV charging equipment and outfitted with a 120-volt power outlet for Level 1 EV charging; and (3) establish ADA compliance requirements for EV charging stations.
2. DEEP recommends that the state adopt a voluntary municipal stretch building code and that municipalities adopt zoning ordinances with more stringent EV pre-wiring requirements.
3. DEEP recommends that the Codes and Standards Committee and the Office of the State Building Inspector adopt best practices for DCFC permitting and deployment Consolidate and streamline the permitting and inspection process for Level 2 EVSE and DCFC installations.
4. DEEP will update and publish guidelines for the installation of EVSE at state-owned facilities and public and private EV charging stations.

Innovation

1. DEEP recommends that the EDCs and charging station developers partner on a pilot program to identify existing locations with excess load capacity that can support the deployment of publicly accessible curbside EV charging.
2. DEEP will explore the potential for V2G/V2B pilots.
3. DEEP will monitor potential opportunities for developing a transactive energy marketplace that rewards optimal EV charging behaviors and expands the public charging network.

Purchase Incentives

1. Continue to collect and analyze CHEAPR purchase survey data to implement changes that improve overall program effectiveness.
2. Move expeditiously to implement the revised CHEAPR program per Public Act 19-117, including:

o          Establish rebate parameters, including rebate levels, bins, LMI components, MSRP, eligibility criteria, and strategy to communicate program adjustments.

o          Consider implementation options with and without auto dealer incentive.

o          Maintain and expand education, marketing and outreach.

o          Develop strategies to manage exhaustion of funding each year.

o          Retain a program administrator familiar with used electric vehicle rebates.

o          Establish metrics necessary to maintain program health and funding.

3. Support expansion and extension of the Federal EV Tax Credit.
4. Work to develop market-based incentives to support EV adoption through TCI, the EDCs, and the OEMs.
5. Maintain FCEV rebates at current levels through the next five years of the program along with the development of infrastructure to incent the deployment of FCEVs.

 

Education, Marketing, Outreach

1. Connecticut should continue to leverage opportunities to support and participate in the regional DCDE campaign and the Destination Electric Program to build upon and increase consumer awareness in the state and the region.
2. DEEP will work with OEMs to explore additional marketing opportunities for the EVs available for sale in Connecticut and the region.
3. As part of PURA’s ZEV Docket, utility investment in marketing and education should be considered to support full utilization of any utility investment in EV charging infrastructure.
4. The EDCs should provide data associated with charging use to help municipalities and private industries deploy infrastructure in priority areas.

 

Volkswagen EVSE

These recommendations are framed based on the ongoing and significant investments by Electrify America and the potential for PURA to develop a regulatory framework that could impact EVSE deployment, and may require adjustment as the regulatory process advances. Connecticut’s VW Mitigation Trust EVSE funds ($8.4 million) could be allocated in the following ways to support widespread electrification, including:

1. Direct funding of state and municipal EVSE to support light duty government EV deployment targets specified in Public Act 19-117;
2. Grants for Level 2 workplace charging; next to home charging, which will account for 60-80 percent of all charging, the second most prevalent charging location will be at the workplace and will reassure early EV adopters;
3. Grants for publicly-accessible Level 2 charging to provide reasonably cost-effective and highly visible charging infrastructure that supports use patterns of current EV drivers, while also strengthening the perception that the state’s charging network is sufficiently robust to eliminate range concerns;
4. Grants for MUDs, which could also include innovative solutions for MUDs such as charging hubs, community-based EV sharing, valet, or mobile charging. As part of a make-ready program, the utilities are well-positioned to also offer energy efficiency measures to MUDs that could reduce the cost associated with electric system upgrades necessary to support EVSE;
5. Grants for hydrogen fueling infrastructure and regional corridor development; and

Reserving a residual amount of funding to address gaps in the EV fast-charging network not filled through a utility program, Electrify America build-out, or other EVSE provider efforts.

 

Abbreviations:

AC – alternating current

ACT – Advanced Clean Trucks Regulations

ADA – Americans with Disabilities Act

AFLEET – Alternative Fuel Life-Cycle Environmental and

Economic Transportation

ATV – alternative technology vehicle

BAU – business as usual

BESH – Basic Electric Service Hourly

BEV – battery electric vehicle

BNEF – Bloomberg New Energy Finance

CAA – Clean Air Act

CAFE – Corporate Average Fuel Economy

CALGreen – California Green Building Standards Code CARA – Connecticut Automotive Retailers Association CARB – California Air Resources Board

CHEAPR – Connecticut Hydrogen and Electric Automobile

Purchase Rebate

CO2 – carbon dioxide

C-PACE – Commercial Property Assessed Clean Energy CSE – Center for Sustainable Energy

CT – Connecticut

CVRP – California Clean Vehicle Rebate Project

DAS – Connecticut Department of Administrative

Services

DCDE – Drive Change. Drive Electric.

DCFC – direct current fast charger/charging

DEEP – Connecticut Department of Energy and

Environmental Protection

DER – distributed energy resource

DMV – Connecticut Department of Motor Vehicles

DOE – U.S. Department of Energy

DOT – Connecticut Department of Transportation

EDC – electric distribution company

EPA – U.S. Environmental Protection Agency

EV – electric vehicle

EVSE – electric vehicle supply equipment

FCEV – fuel cell electric vehicle

FHWA – Federal Highway Administration

FTA – Federal Transit Administration

GBTA – Greater Bridgeport Transit Authority

GC3 – Governor’s Council on Climate Change

GHG – greenhouse gas

GIS – geographic information system

GMP – Green Mountain Power

GPS – global positioning system

GREET – Greenhouse gases, Regulation Emissions, and

Energy use in Transportation

GWSA – Global Warming Solutions Act

HOV – high occupancy vehicle

ICC – International Code Council

ICE – internal combustion engine

IECC – International Energy Conservation Code

kWh – kilowatt hour

LED – light-emitting diode

LMI – low- and moderate-income

Low-No – Low- or No-Emission Grant program

MOR-EV – Massachusetts Offers Rebates for EVs MSRP – manufacturer suggested retail price

MUD – multi-unit dwelling

MY – model year

NAAQS – National Ambient Air Quality Standards NDEW – National Drive Electric Week

NESCAUM – Northeast States for Coordinated Air Use

Management

NHEC – New Hampshire Electric Co-op

NHTSA – National Highway Traffic Safety Administration NOx – nitrogen oxides

NREL – National Renewable Energy Laboratory NYSERDA – New York State Energy Research and

Development Authority

O&M – operation and maintenance

OCPI – Open Charge Point Interface

OCPP – Open Charge Point Protocol

OEM – original equipment manufacturer

OpenADR – Open Automated Demand Response

OSCP – Open Smart Charge Protocol

PG&E – Pacific Gas and Electric Company

PHEV – plug-in hybrid electric vehicle

PM-2.5 – particulate matter 2.5

PUC – public utility commission

PURA – Public Utilities Regulatory Authority

RMI – Rocky Mountain Institute

SDG&E – San Diego Gas and Electric Company

SIR – Savings-to-investment ratio

SO2 – sulfur dioxide

SUV – sport utility vehicle

TOD – transit-oriented development

TCI – Transportation and Climate Initiative

TOU – time-of-use

UC Davis – University of California Davis

V2B – vehicle-to-building

V2G – vehicle-to-grid

VIN – vehicle identification number

VOC – volatile organic compound

VMT – vehicle miles traveled

VW – Volkswagen

ZEV – zero emission vehicle

ZEV MOU – Zero-Emission Vehicle Memorandum of Undertanding

EVs = Clean Air

“If I could wave my magic wand and we all had electric cars tomorrow, I think this is what the air would look like,” said Ronald Cohen, a professor of atmospheric chemistry at UC Berkeley who has been studying the effects of the stay-at-home orders on air quality, as reported recently in the LA Times.

The Electric Vehicle Roadmap prepared by the Connecticut Department of Energy and Environmental Protection (DEEP) has been recently released. For all the research and policy thought that went into it, and there is quite a lot, the report reads with a striking lack of urgency and overlooks opportunities to start making immediate progress.

It is tragic that it took a pandemic and its collateral economic damage for us to breathe clean air. CT air quality is often poor as detailed in the Roadmap (p. 12). Worse, preliminary findings from a study conducted at Harvard Medical School indicate that breathing polluted air increases COVID lethality.

As bad as what we are currently enduring may be, it presents an opportunity for us to make changes. If we make the right choices, we can always have clean air, respond to the climate crisis, and create new green jobs. But this requires action. The recommendations in the Roadmap are mostly of a tentative or preliminary nature. These are a few examples.

Demand Charges

If we are to have enough public charging to mitigate range anxiety, we need more public DCFC (fast chargers), particularly along the Interstates. It isn’t happening because utility demand charges, which weren’t developed with EVs in mind, make commercial installations economically unviable. Note the “out of order” level 3 chargers on I-95 and the Merritt Parkway (our information is that out or order = turned off).

Demand charges are extra fees imposed if electricity usage exceeds a certain threshold. The purpose is to pay for the infrastructure needed to support peak usage periods and it affects commercial customers. The fees can be substantial.

Pacific Gas and electric in California presented a rate design solution to the regulatory board in 2018 that would use a subscription formula to avert demand charges. The California Energy Commission released an extensive study of how to think about demand charges in an EV world in April 2019.

In contrast, this is the recommendation in the Roadmap: “DEEP recommends exploration of a sliding scale tariff approach for both Eversource and UI that is responsive to DCFC station utilization and EV market penetration.”

There is currently a temporary three-year demand charge waiver in place in CT. We’re one year into it. Few seem to be aware of it. Regardless, a temporary waiver isn’t going to accomplish anything due to the risk of stranded assets. The CT Public Utilities Regulatory Agency has recently issued an RFP for Program Design Proposals with a deadline of July 31. In other words, we’re just getting started.

Time of Use

Time of Use pricing (TOU) is an important consideration both for making EV “refueling” cost-efficient as well as for grid optimization. If you have ever visited this Eversource page, you will see how little CT consumers have to work with. Or if you have tried the energy savings calculator on cutmybill.com, the limitation of only using normative data makes it of little use.

Utilities in Vermont, California, New York, and Massachusetts have implemented residential incentive programs that may include paying for a networked level 2 EV charger or moving the charging to a lower rate for off-peak times. It not only saves the customer money; it saves the utility money as well due to avoidance of adding capacity. Con-Edison in New York has an incentive that works with a device that accesses the vehicle’s telemetry and awards rebates for charging that occurs during off-peak times (even outside of Con-Ed territory).

That said, this is a complex and utility-specific topic. It involves considerations of whole-house or EV only. The latter requires either sub-metering or a networked level 2 charger. The recommendations in the Roadmap on page 68 are, “…explore the potential for an active managed charging program that incents EV drivers to charge during off-peak periods.” “…current TOU rate tariffs should be optimized…” “DEEP will continue to monitor…programs in other jurisdictions…” DEEP alone can’t implement TOU. The utilities must do it. The regulators need to approve it. We would have preferred to have seen more specific recommendations.

State Fleet

CT maintains a fleet of about 3,500 vehicles. The Roadmap recommends, “DAS (Department of Administrative Services) should develop a detailed light-duty fleet transition plan that outlines annual EV procurement targets for the state fleet, beginning with a 5 percent target of eligible state vehicles in 2020…” We assume “eligible” means mainly sedans, since that is the bulk of currently available EVs.

By way of contrast, New York City has replaced a third of its fleet of sedans with EVs as of 2019 and is targeting having 4,000 on the road by 2025. They report a savings of $550 per year per vehicle in fuel and maintenance for an EV sedan relative to its internal combustion engine (ICE) counterpart. And, by the way, they installed 568 charging stations and counting to support this fleet, 65 of which are solar-powered. Finally, the city plans to cut its fleet by 1,000 vehicles as part of an effort to reduce on-road miles traveled. Based on the experience of NY and others, including some municipalities in the state, CT can move much more quickly with low risk.

Heavy-Duty Vehicle Vouchers

As noted in the Roadmap, California and New York have implemented voucher incentive programs to offset the acquisition cost of clean heavy-duty vehicles. CA has used this program to fund the deployment of over 4,000 such vehicles. The Roadmap: “DEEP will continue to monitor the effectiveness of freight truck voucher incentive programs in accelerating the adoption of freight trucks.”

Transit Buses

The Roadmap addresses buses: “on and after January 1, 2030, at least thirty percent of all buses purchased by the state shall be zero-emission buses.” If “at least thirty percent” equals 40% for the sake of argument, that means that the fleet would be 33% electrified by 2040.

New York City plans for its entire transit bus fleet to be zero-emission by 2040.

Purchase Incentives

CT has an EV purchase incentive called CHEAPR. Funding was renewed by the legislature last year at $3 million annually for 5 years beginning with 2020. The incentive plan in New Jersey funds $10 million per year, which translates to 50% higher per capita. And CHEAPR is pacing 75% under budget for this year due to restrictive parameters imposed in October 2019. The MSRP cap should be raised and the rebate levels re-evaluated.

The enabling legislation for the new CHEAPR funding also authorizes an incentive for used EVs with an income cap. Good idea, as there are more than twice as many used vehicles sold each year relative to new vehicles, and it would make EVs more accessible to car-dependent lower-income households. The Roadmap recommends contracting with a program administrator. It is fine to go outside for needed expertise. We just don’t understand why it wasn’t done a year ago when the legislation was passed.

Direct Sales – MIA

A glaring omission is direct sales. This refers to what has been known informally as “the Tesla bill,” which would allow Tesla to open stores in CT. (It goes beyond Tesla as there are other EV startups looking at this model). This is a politically fraught topic, but what is most disappointing is the way that politics seems to have influenced what is supposed to be a comprehensive policy document. Doing away with the antiquated dealer franchise laws wouldn’t cost the state a penny (it would generate revenue) and would accelerate EV sales immediately.

As of January 1, 2020, there were 11,677 EVs registered in CT. The Multistate ZEV (Zero Emission Vehicle) Action Plan that the state has signed onto calls for about 500,000 registered EVs by 2030.

Many of the subject areas covered in the Roadmap involve more than just DEEP. However, other states have already implemented pilot studies or EV-friendly policies. They’ve run the numbers, and they see that moving to EVs lowers pollution, saves money, and brings benefits to the grid. We can learn from them while simultaneously moving forward. CT is behind the curve, yet this Roadmap takes the scenic route.

CT Joins Multistate Lawsuit Against Attempt to Dismantle Obama CAFE Standards

As was widely reported in the press yesterday, Connecticut is one of 22 states and the District of Columbia that filed a lawsuit to block the Trump Administration’s attempt to dismantle the Obama CAFE fuel efficiency standards. This links to the press release from Attorney General Tong’s office.

There are three parts to this legal action as listed in material from AG’s office:

1.            A petition for reconsideration pending with the EPA;

2.            California v. Chao, Docket No. 1:19-cv-02826-KBJ in the U.S. District Court for the District of Columbia; and

3.            California v. Wheeler, Docket No. 19-1239 in the U.S. Court of Appeals for the District of Columbia Circuit, which petitioned for review of SAFE Rule Part 1.

The administration’s rulemaking seeks not only to pull back to a lower MPG standard (and the dirtier air and higher fuel costs for consumers that go with it), it also seeks to block California and other states from following a separate, more stringent standard, which is what the landscape looked like prior to President Obama negotiating the Clean Car Standards with the industry. That was the crux of the compromise: the industry agreed to boost MPG and in return they got standardization. Point number 3, which refers to a “review of SAFE Rule Part 1” addresses the California Clean Act Waiver and the ability of the CARB states to preserve it if the Obama EPA regulations are rolled back.

The 2016 federal mid-term review found that the carmakers had exceeded the minimum requirements to that point and recommended continuing with the second phase through 2025 when the standard tops out at 54.5 MPG for passenger cars and light-duty trucks.

This blog is supportive of the action being taken by AG Tong and the other states. The Obama CAFE rules were not EV-specific, but more aggressively transitioning to zero-emission electric vehicles is the way to most effectively meet (and exceed) the standards.

DEEP EV Roadmap Released

The final version of the long-awaited Roadmap was publicly released a few weeks ago. For those of you who are in the weeds with EV policy, at 104 pages, plus 358 footnotes, and an appendix, this is the doc for you!

The report is divided into 16 sections and covers the waterfront in terms of all of the policy areas that could be actioned to support more rapid EV adoption. These include optimizing for grid impact; infrastructure; the role of utilities; incentives; fleets; light, medium, and heavy-duty vehicles; building codes; environmental justice; and others. The large volume of research that went into this provides useful background information and, importantly, descriptions of experiences from other states, particularly with respect to incentives and utilities (or EDCs, for electric distribution companies, in the argot of the report).

We will be diving into some of the sections covered in the report in more detail, but these are some top of mind thoughts.

We have a long way to go. There are 11,677 registered EVs in the state as of January 1, 2020, but the Multi-state ZEV Action Plan that CT has signed onto calls for about 150,000 EVs by 2025 and 500,000 by 2030. ZEV in this context refers to battery electric vehicles (BEV), plug-in hybrid vehicles(PHEV, and fuel-cell electric vehicles (FCEV).

We are behind the curve in many respects when it comes to enacting EV-friendly policy. Even the phrasing of the recommendations is often in very preliminary language. For example, “DEEP will explore pilot programs for EVSE deployment at MUDs.” Many states have pushed further than CT has. The flip side of this is that CT can learn from them. There just needs to be some urgency about doing this.

The Roadmap notes that the “travel provision” in the ZEV plan was closed in 2018. This allowed manufacturers to earn compliance credits in other states for vehicles sold in California. The closing of this provision is intended to yield a greater number of EV models for sale in CT and the other states in the Northeast.

There are two things that could be done tomorrow (more or less) to increase EV sales that come at no cost.

The first is a glaring omission from the Roadmap, which makes no mention of permitting direct sales, more than likely a landmine upon which they did not want to tread. This refers to the years’ long effort by Tesla to open stores in CT, and the campaign by the legacy automakers and dealers, successful to date, to stop them through the use of the decades-old franchise laws. As has been noted by this blog numerous times, Tesla sells more EVs than all of the other automakers combined, and they could sell more if they were able to open stores and additional service centers.

Also, as has been noted by this blog on numerous occasions, but worth repeating, EV Club of CT is not a Tesla club. We want to see everyone selling EVs, and we wish the other automakers were as effective on the showroom floor as they are with their lobbying. We just call it as we see it.

In order for direct sales to happen, there needs to be legislation. Past attempts to craft a legislative compromise ended up with language that was narrowly tailored so that the carve-out would only apply to Tesla. We feel the world is changing and that the marketplace should flourish with new ideas. There should be provision for new EV companies, including but not limited, to Tesla, and new means of vehicle ownership (e.g. subscription). New entrants are poised to come online in the next year or two.

The other item that could be done forthwith is adjusting the CHEAPR parameters. The most recent set of changes is causing CHEAPR to pace about 75% under a budget that isn’t that large to begin with. There has been language on its website for months stating there could be changes in 2020. The legislature also authorized a rebate for used EVs. The Roadmap recommends contracting with an experienced program administrator to develop and implement such a program, which makes it sound a long way off. More on this in a future post.

Funding

There are various funding-related issues discussed in the report, such as the different funding mechanisms that have been used for incentives and the VW Settlement funds, of which $55 million-plus is being allocated to CT. Also part of the VW settlement is the installation of charging infrastructure under the moniker of ElectrifyAmerica. Of particular importance is the Transportation Climate Initiative (TCI), a major multistate cap and invest initiative to curb tailpipe emissions, which will yield funds (no specific number or date available as yet), some of which can be invested to support EV adoption efforts.

We encourage everyone to read the Roadmap and share comments with the club.

Utility Demand Charges Keep Level 3 Charging Stations Dark

We have quite a few posts addressing range-anxiety in its various forms. Even though most EVs have enough range to get you through your typical day, we all have occasions where we drive to a destination that exceeds the range of the vehicle. Without the certainty of being able to charge en-route, there is the danger of the battery turning into a very heavy brick. This possible low frequency, but high impact, event is enough to give pause for many folks considering an EV purchase.

A particular CT flavor of this can be found at rest areas on I-95 and the Merritt Parkway. For example, the I-95 southbound rest area in Darien and the Merritt Parkway northbound rest area in Greenwich have CCS and CHAdeMo level 3 chargers that aren’t working. (Presumably, this is the case at other rest areas that we haven’t been to). These charging stations are not broken. They are just turned off.

The reason is simple: demand charges.

What are demand charges

Utilities build out their infrastructure to handle anticipated peak demand. Demand charges are what pay for that. For non-residential classes of clients, the utility imposes demand charges based on their peak power usage and they are substantial. Whereas a residential user pays a cost per kilowatt-hour charge typically of approximately 17 – 20 cents, demand charges could be over $13 per kWh, plus a higher distribution fee. If you would like to see for yourself, here is the (complicated) rate structure used by Eversource.

Demand charges have been around for around 100 years, since the early expansion of electric service throughout the country. Aside from paying for infrastructure expansion, they are intended to spread demand into non-peak usage times in order to lessen the need for that expensive infrastructure.

Electric vehicle charging stations obviously draw current, especially the level 3 DC fast chargers that are needed along the Interstates to facilitate a long drive. The power-draw required to obtain an 80% charge in 15 – 30 minutes is sufficiently high (especially if multiple chargers are in simultaneous use) that the threshold for demand charges may kick-in. Our information is that the companies that run the food and gas service at the rest areas did not install the chargers, and it was a shock (electricity makes for way too easy puns) to them when they saw what demand charges were doing to their electric bill. So they turned them off.

Why Demand Charges for EVs Require Rethinking

While demand charges have served a purpose, it is time to rethink how these are handled with respect to EVs for a few reasons.

• Lack of charging infrastructure is a major barrier to EV adoption, and EVs are an important factor in mitigating climate change. In this sense, an inability to charge undercuts a social good.
• Utilities are the new fuel stations. They stand to reap a tremendous amount of business with widespread EV adoption. With EV charger demand charges, they are working against themselves.
• EVs will stimulate use in off-peak hours. Most charging, over 80%, is done at home, and most of this is done at night. In other words, EVs bring load-management benefits to the utilities. If there were a more robust time-of-use rate card available in CT, this would be even more true. Also, at a presentation done at DEEP in January 2019, Dana Lowell of M.J. Bradley Associates stated that the excessive (for want of a better term) net revenue resulting from EVs in this heavily regulated industry would be returned to the ratepayers. In the EV nirvana of 2 million EVs registered in the state, he estimated it would amount to $150 annually per household.
• This is speculative at this point, and a little off-topic, but it is technically possible for EV batteries to be bi-directional, also

  

  referred to as V2G (vehicle to grid). At times of peak demand, the energy residing in charged EV batteries could be tapped to fulfill demand, and then be recharged when demand subsides. The part of this that is on point is that there needs to be a lot of battery capacity out there to make this a viable strategy. A pilot study intended to test the bi-directional technology, underwritten by Con-Edison, is being run in Westchester County with electric school buses.

The bottom line is that EVs come with more ramifications with respect to the grid, and more opportunities for society as a whole, than a factory or commercial building. Other states are further along than CT in bringing innovation to approaching this dilemma.

To be sure, demand charges are just a single piece of the larger EV policy puzzle. It is a subset of what is referred to as “rate-design.” DEEP produced a 71-page “Draft EV Roadmap” that does a good job of covering the waterfront in terms of all related policy areas, though the language in this document, released in October 2019, is worded in terms of evaluation or investigation. In other words, there is still a long way to go. The section on demand charges is on page 44.

Tesla Chargers

There are Tesla chargers on the Interstates and these do work. That is because Tesla takes responsibility for them. They may be carrying a contingent liability, but their forward-thinking decision to install their own charging network and not wait for the rest of the world to catch up means that Tesla drivers have a wider array of charging options.

Waiver

There is an Eversource program to grant a demand charge waiver for independently metered charging stations that are open to the public, but that the waiver is temporary. It substitutes average per kWh charges. We don’t have a sense that this has been promoted aggressively. The waiver was for 3 years, but the clock has been ticking and it is currently closer to 2 years. A temporary waiver doesn’t really accomplish much unless there is something in place to address the underlying problem when it expires.

There are options other than an outright waiver to address this. We reached out to Eversource and were advised that the Public Utility Regulatory Authority will review the rate after the 3 year period ends and decide if changes are needed to the rate structure.

Interesting Approaches to EV Incentives in Neighboring States

This blog has published a number of articles about the recent changes in the CHEAPR program and how they have impacted rebates. Our feeling is that these changes were misguided and have sub-optimized the program’s effectiveness. We were told by DEEP that there was a concern about depleting funds in Q4 2019. We respect the concern but still feel that it was not managed well. And it has gone away for the near-term with the replenishment authorized by HB 7205, though the earlier levels have not been restored as of this update in late February 2020.

The changes in the MSRP cap from $50,000 to $42,000, along with reductions in the size of the rebates, caused a steep falloff in the number of rebates and total dollar amount rebated, such that they are pacing well under the current allocation.  The vehicle most impacted was the Tesla Model 3, though there were significant declines among the Chevy Bolt and Nissan Leaf as well.

As of this writing, we still await an announcement with respect to used EVs. A used EV incentive was authorized in HB 7205, but DEEP, which has been in the process of standing up a new board for CHEAPR, has not yet acted, nor posted anything on their website about when it might. When it does, this post will be updated.

Impact on Efficiency

All state incentive programs tinker with incentive levels and rules. Technology changes, and, of course, funding streams vary in size. Focusing on the former, the point of changing the parameters to keep up with the technology is intended to incentivize a longer electric range equating to lower emissions. Unfortunately, recent changes in CHEAPR have had the opposite effect. From the period January 4 to October 2, 2019, the weighted average electric range of incentivized EVs was 219 miles. Post incentive change, October 28 to December 31, 2019, this number declined to 176 miles. This happened because the changes hit BEVs much harder than PHEVs. This calculation does not normalize for incentive levels which were slashed across the board, and which would cause the dollar amount per electric mile to decline even though BEV rebates and efficiency got crushed.

So what are the highlights in New Jersey, New York, and Massachusetts?

Beginning with max MSRP, all of these states have caps that are at least as high as CT used to have.

NJ – $55,000

NY – $60,000

MA – $50,000

NY has a little extra spin, which is that, even though the base level incentives don’t apply over the cap, the state still offers a $500 rebate for any EV with a cost higher than $60,000.

Efficiency

New Jersey goes at efficiency head-on. The rebate is directly tied to the range: $25 per mile, up to $5000. (That’s 200 miles for those who don’t have calculators handy.) It is the most generous of the incentives in this region at the top end and it doesn’t get more linear than that.

MA has made ineligible PHEVs with a range of under 25 miles. This seems like a sensible adjustment at this point in our EVolution. There is also an incentive for used EVs. It is offered through the TMLP and MGED utilities and only applies to their territories. There is no gradation, just a $900 incentive with a purchase price cap of $15,000. The price cap was set relatively low because the used EV incentive is intended to target less affluent buyers. It was felt that this cap is low enough that they don’t have to get involved with burdensome income-verification procedures.

Dealership Data

A distinguishing feature of NY is that they publish rebates by dealership. That is a great idea! The dealership landscape is still fraught for EVs. The recent Sierra Club EV Shopper Study reported that 74% of dealers do not have a single EV on their lot. Our club did a lot of the fieldwork (dealer visits) for the Sierra Club in CT, and some interviewers reported that even where dealers are selling EVs, the salespeople would push them toward ICE vehicles. That said, some dealerships do make the effort to sell EVs, and we try to support them. We have people come to us for dealer recommendations, and we help them when we can, but data such as this show objectively and comprehensively which dealerships are walking the walk.

We think that raising the MSRP cap should be the top priority. That, along with adopting a rebate scale that better incentives efficiency, along with providing dealer transparency, would be a big improvement.

UPDATE: MARCH 1, 2020

This is a notice that has been posted on the CHEAPR website, so perhaps they are acting on one or more of these points.