Four steps Colorado’s utilities need to take to prepare for SB77

In Colorado’s recently-passed electric transportation legislation, SB77, the legislature declared the importance of electric vehicle adoption, and that utilities should act to facilitate access to electric vehicle charging, especially in low income and disadvantaged communities. 

SB77 is intended to drive further development of electric vehicle charging in the state. It gives new responsibilities to Colorado’s investor-owned utilities–Xcel Energy and Black Hills Energy–as well as municipal utilities serving load outside the city limits, such as Colorado Springs Utilities.

The legislation allows utilities to recover the costs of investments that facilitate vehicle charging, if they act consistently with legislative and regulatory direction. That could include the cost of chargers themselves–but need not. 

By May 15, and every third year thereafter–each utility must request the Colorado Public Utilities Commission’s (PUC’s) approval for a transportation electrification program. The program can include utility investments in or incentives for vehicle chargers and supporting infrastructure, as well as customer education and even usage incentives for electric vehicles.

There is certainly no guarantee that utilities will develop vehicle chargers themselves. The legislation calls for utilities to “facilitate the deployment of customer-owned or utility-owned charging infrastructure,” and the customer could be a privately-owned charging station. Colorado already has a specific provision allowing non-utility charging stations to resell electricity to EVs (unlike Texas and a number of other states).

It may be tempting for a utility to invest in electric vehicle charging stations for the sake of a regulated profit but there is a good chance the PUC will not permit that. Third parties interested in providing charging services (especially high-speed high-voltage DC charging) or in selling chargers to businesses and homeowners would object to charger investments in a utility transportation plan, on the grounds that public charging should be competitive rather than a regulated monopoly service. SB77 itself says the elements of the utility plan should be “reasonably expected to stimulate innovation, competition, and increased consumer choices in electric vehicle charging.” There are other things a utility should aim at in preference to creating a chain of profitable charging stations.

Colorado utilities planning their electrification programs should concentrate on four main areas:

Building utility infrastructure “to the curb” or “to the last pole” that will permit private parties to interconnect for charging. If charging is to be a truly competitive business, then those new competitors need access to appropriate volumes of electricity, in as many diverse locations as gas stations. The utilities need to make sure that their circuits are capable of handling charging loads as soon as those loads appear.

Ensuring that the local electricity distribution system is robust enough to handle the increased energy and operational demands that will be placed on it. Electric vehicle chargers, especially DC Fast Chargers, will require high power levels in areas that may not have been designed to deliver them. The pattern of charging load and its variation will be different from the patterns for which the grid has been designed and operated. Finally, as solar power also grows, Colorado may begin experience a midday “duck curve” and late-day load upticks (as in California or Hawaii) which electric vehicles hooking up to chargers at the end of the day can exacerbate.

Creating community charging facilities. There is one application for which utilities have been encouraged to invest in chargers even where regulators and the public have been particularly skeptical of utilities (e.g., California, Illinois)–community charging. Many homeowners can put solar on their roofs and install their own chargers, allowing them to charge their vehicles overnight in the convenience of their own homes. This option is not available to renters who don’t own their homes, or to low-income customers or those in underserved communities. Charger access for these customer groups is specifically called out as a goal of SB77 and if a competitive version of home charging is not available to these customers a “community” version should be an appropriate utility investment.

Designing appropriate resale rates, and billing options. Rates for sales to charging stations have to recover the unique costs of reliably serving them based on relevant usage metrics. An alternative option would be for the actual electricity sale to be made by the utility at a regulated rate, with an additional charge from the station owner for the charging service; the utility could present both charges on a consolidated bill.

SB77 places both responsibilities and opportunities in front of Colorado utilities. Utilities nationwide are concerned about their ability to fund their operational responsibilities in the face of flat or declining usage and increasing costs. Vehicle charging represents the chance to match increasing costs with growing electricity demand that can pay for those costs, if utilities get their plans right.

Author: Jonathan Jacobs is an energy and utilities expert at PA Consulting, an innovation and transformation consultancy. Jonathan has spent the last two decades working in the electricity industry, on both the regulated and unregulated sides, and has a deep understanding of power contracting and resource planning as well as electricity market design.

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