In many jurisdictions, the current rate structure for electrical service discourages the development of high-performing DC fast chargers for electric vehicles. Electricity bills in those jurisdictions include charges for the total amount of electricity consumed in the monthly billing cycle, but also impose an additional charge – called a “demand charge” – keyed to the maximum amount of electricity used in any given 15 minute (or one hour) period during the billing cycle.
Problems arise with the application of this concept to DC fast charging stations. At this early stage in development of the EV market such stations may sit idle for most of the day, only to draw significant power for short periods while electric vehicles are recharged. As a result, demand charges imposing significant costs dominate the bills paid by operators of such stations — even though they may not sell significant amounts of overall power over the course of a billing cycle. As a result, high performing DC fast charging generally tends not to be a profitable business.
The model law that accompanies this memorandum would address this issue. Under the model law, each regulated electric company would be required to submit to the PUC a proposed tariff designed to facilitate DC fast charging for EVs. The submission would be required to evaluate the costs and benefits of alternative rate designs under multiple scenarios of EV adoption. The PUC would be required to provide notice and the opportunity for public comment, and thereafter approve, modify or reject the proposal. In the event of rejection, the electric company would be required to submit a modified proposal addressing the reasons for rejection. Within thirty days of PUC approval the tariff would be made available to consumers. Thereafter, the electric company would be permitted to seek modifications to the approved tariff, but only once in any three year period.
A number of jurisdictions are focusing on the difficulties posed by the application of demand charges to direct current fast chargers. The model law draws heavily from the language of bills addressing this problem that either are pending or have been recently enacted by legislatures around the country.