Utility construction of EV charging infrastructure brief

What is the debate over utility versus private ownership of EV charging infrastructure?

As EV manufacturing grows, so does the need for chargers. So far, the private sector, federal government, and utilities have invested about $13 billion, $6 billion, and $2 billion, respectively, in charging infrastructure. While both private companies and utilities own charging infrastructure across the US, states are questioning whether utility ownership negatively impacts ratepayers, businesses, and the local workforce. While utilities claim to protect against preferential and profit-driven charger siting, companies worry that utility monopolies over charging infrastructure stifle competition, hinder charger deployment, and increase electric bills.

Why does it matter?

EV charger buildout may appear to impact only a small subset of the population (as EVs currently only account for about 1% of US-registered vehicles), but policies governing deployment have a much broader impact. While utilities are uniquely suited to build in rural and low-income areas, jurisdictions that allow regulated monopolies to compete in the EV charging market pose risks to businesses and ratepayers.

What are the risks of utility ownership of EV charging infrastructure?

Utility monopolies over EV charging infrastructure:

• Raise utility bills for consumers

  • Even those who do not own EVs- many utilities are regulated monopolies, meaning that they are guaranteed a rate of return (typically about 9-11%) by a utility regulator. Utilities are thus authorized to raise rates on all customers in their territory—regardless of whether customers own EVs—to recover costs associated with construction, operation, maintenance, and even complex legal processes to secure land rights.

• Limit competition -

  • Utilities can use ratepayer money to build EV chargers, get priority access to interconnection processes, reallocate costs in rate proceedings, and implement demand charges for businesses with EV chargers. They can thus undercut private companies that are not guaranteed cost recovery on their investments. Industry groups and businesses have already noted that utility control over charging infrastructure deters investment by local companies looking to install chargers on their property.

• Delay charger deployment due to workforce constraints - EV charger deployment (and upgrades) can take years. A growing body of research cites the declining utility workforce for EV infrastructure as a leading cause of interconnection delays and slow permitting and easement processes. Even if utilities upped recruitment, these efforts would likely neither keep pace with EV deployment nor prove the most efficient use of personnel resources. Private companies specialized in charging infrastructure provide an alternative workforce solution while allowing utilities to focus on the tasks for which they are uniquely suited, such as interconnection.

• Complicate deployment of NEVI chargers - the National Electric Vehicle Infrastructure (NEVI) Formula Program covers up to 80% of EV charger project costs. However, eligibility depends on several factors—including that charging stations 1) are privately owned; 2) charge by the kWh; and 3) exist in “Alternative Fuel Corridors” (APCs). Some states—such as WI and NE—only allow utilities to sell electricity directly, forcing operators to charge by the minute (rather than kWh). Furthermore, because most AFCs exist along highway corridors, utilities must engage in potentially costly land acquisition processes that can impact ratepayers.

What is the solution?

States can encourage free-market competition, ensure equitable access to EV chargers, and keep charging prices reasonable by: 

• Limiting utility buildout of EV chargers to specific circumstances

• While private ownership of EV chargers is beneficial from both a public access and cost perspective in most situations, there are specific scenarios in which utilities are better suited. Because of their guaranteed rate of return on infrastructure investments, it makes sense for utilities to build EV chargers in regions where profits would be limited by slower uptake, such as rural and low-income areas. The state of Georgia, for example, allows only one utility – Georgia Power – to build charging infrastructure in rural and remote areas, and only after private companies have declined to build it themselves.  

• Regulating the resale of electricity

• Although some states have updated their regulations, many either 1) do not allow for the resale of electricity (i.e. Florida); 2) have no safeguards in place to prevent utilities from charging exorbitantly high rates for electricity resale; or 3) regulate EV charging operators as utilities, obligating them to charge by-the-minute instead of by-the-kWh. State efforts to 1) exempt charging stations from regulation as public utilities and 2) direct public utilities commissions to standardize the resale rate for electricity can improve cost transparency for customers and retailers.

• Encouraging utilities to participate in the ‘make-ready’ side of charging

• While competition benefits the charger installation industry specifically, utilities are uniquely suited to perform the upgrades necessary to prepare the grid for the transition to EVs. Upgrades and expansion of generating assets—including distributed generation—transmission and distribution wires, and transformers—especially those situated near charging installations—are especially important to ensuring the success of an EV charger buildout.