SB-4 Passed by Legislature Restricts Incentive
The part of the EV charging incentive that applies to single family residences was restricted in the just concluded legislative session. It is now only available to income-limited households or census tracts. This is an excerpt from the bill:
“The bill requires PURA to further limit expenses for EV charging
stations and customer wiring upgrades by limiting eligibility for
incentives under residential single-family customer programs to
residents who (1) live in a concentrated poverty census tract (a U.S.
census tract where at least 30% of households have incomes below the
federal poverty level (FPL)) or (2) have incomes at or below 300% of FPL.
In 2025, for a household of three, the FPL is $26,650 and 300% of FPL is
$79,950.”
This goes into effect October 1, 2025.
Note: there were always higher levels of incentives for income-limited communities for multi-family residential and for commercial, something we support.
About Last Summer
These incentives were developed by the Public Utilities Regulatory Authority and are administered through Eversource and United Illuminating. The program began in 2021.
The incentives have been successful by and large, and have mostly gone unremarked. But then last summer happened. Due to a required, temporary adjustment driven mainly by the power contract for the Millstone Nuclear Plant and the recoupment for the pandemic shutdown moratorium, the Combined Public Benefits Charge (CPBC) increased significantly. These charges began last summer. The larger one, by far, is Millstone and that is now over. But since the charges are billed on a per kWh basis, and last summer, particularly July, was hot, many ratepayers got sticker shock when they saw their utility bill. Heavy use of air conditioning increased power usage, and the CPBC in many cases exceeded $100 per month. It made tempers hotter than the temperatures.
The CPBC became the whipping boy for all the wrong reasons. If you are interested in a good explanation of what is (or was) in there and why much of it is valuable, this is a very good video from Andy Bauer of the CT Energy Network, Terrie Eickel of the Interreligious Eco-Justice Network, Bernard Pelletier of PACE, and Charles Rothenberger of Save the Sound. It’s long, over an hour, but worthwhile.
There are a lot of good things that have been supported by this charge, including energy efficiency measures, renewables, and, yes, the EV charging incentives. The EV incentives cost ratepayers .0037 cents per kWh, and they help pay for the installation of residential and commercial charging stations, as well as, importantly, a managed charging program. Managed charging means that EV owners are incentivized to charge their EVs during off-peak times. This is why one of the disinformation attacks on EVs, that they’ll crash the grid, is disingenuous. EVs need to charge, but not all electrons are created equal. What stresses the grid is meeting peak demand. By load-shifting, we can moderate those peaks. It’s a strategy that is applicable in numerous areas.
SB-4
Nevertheless, the CPBC became a political football and part of the focus of a large bill which, in part, seeks to lower electric bills. To do this, some of what is in the CPBC, specifically the hardship protection measures and the EV charging incentive will be bonded and paid for from the general fund. The bill authorizes up to $250 million in general obligation (GO) bonds for hardship protection and up to $50 million for the EV incentive. Both of these funds cover the 2026 and 2027 fiscal years. With the EV incentive in particular, the bill seeks to limit the expenses of the program after 2026 to $20 million per year.
Demand Response
The language in the bill references charging hardware and wiring upgrades. It is generally supportive of demand response programs but does not call out the EV demand response program specifically. We are assuming it continues but will confirm this.
Constancy
If you have to plan, for example if you run a business, certainty or at least predictability is decidedly a plus. The Inflation Reduction Act (IRA) was specifically designed with this in mind, hence its 10-year term. The EV charging incentive program is a 9-year program.
In the case of federal policy, with the distinct possibility of the unraveling of the IRA and a tax on EVs, coupled with seemingly arbitrary tariffs that are constantly changing and trade deals that are not materializing, this has affected business investment.
This is consistent with FRED data (Federal Reserve). First Manufacturing Construction May 2021 through January 2025, and secondly, Future Capital Expenditures 2025 to date.
Closing Thoughts
There are multiple EV headwinds from the federal government, damage to the Tesla brand, supply chain disruptions stemming from the trade war with China, and hedging by the legacy manufacturers. The state adding yet another is unwelcome.
EV charging incentives are now out of the CPBC. Aside from the exclusion of most single family homes, the bonding covers two years. What happens after that is not yet known. In other words, a charge of less than 4 tenths of a cent per kWh is now a bonded expense with GO bonds with a 20-year term. And the state could choose to stop issuing the bonds after 2027, thus shortening the original window envisioned for the program. If you want to see its impact on your electric bill, we suggest you buy a microscope.
The biggest criticism we have heard about the program is that the commercial incentives get bottlenecked, in particular because space in the queue is claimed by projects that aren’t ready. There is no pre-vetting. If the program ends up getting shortened, this could be exacerbated.
There were several toxic anti-EV bills introduced this session (SB-647, SB-1353, HB-5544). We covered them here. They mostly didn’t go anywhere, though arguably the provision that passed in SB-4 is a watered down version of what was included in 647 and 1353.