While the federal government continues to spend billions of dollars to subsidize local and state governments in their efforts to expand the electric vehicle (EV) charging network, unfair utility practices have actively discouraged the private sector from doing the same. Fortunately, Texas lawmakers introduced legislation (Senate Bill 1002) to even the playing field when it comes to owning and operating EV charging stations.
The commitment to install and maintain a charging station is a major leap for many small businesses. DC fast charging stations can cost hundreds of thousands of dollars and take years to recoup the installation cost.
While many of these costs are transparent on the frontend, business owners are often unaware that their charging stations incur demand charges from their utilities. These charges are added to a ratepayer’s monthly bill every time their energy use spikes. Given the need by charging stations to draw a large amount of power in a relatively short period of time, they can incur a demand charge nearly every time they’re in use.
As a result, a major investment in a business' future can become an enormous financial burden after demand charges render EV charging stations unprofitable.
What’s worse is utilities have an unfair advantage in the EV charging sector, given that they sell electricity below the market value, subsidized by their ratepayers. Despite the electric grid becoming increasingly unreliable across the country, utilities have become accustomed to using customer dollars to fund the installation and operation of charging stations. Considering many ratepayers don’t own an EV and therefore can’t actually use a charging station, one would think their funds would be better spent modernizing and crafting a more resilient power grid.
SB 1002 would end these practices by preventing Texas utilities from subsidizing their own EV charging stations with captive ratepayer funds. This legislation would also create a framework that not only promotes a quick deployment of EV charging stations, but healthy competition in the industry so the private sector can participate.
Free market competition has been critical in driving innovation and progress throughout American history, and there’s no reason it shouldn’t benefit the transition to EVs.
Private businesses have a constant incentive to keep their charging stations operable so they continue to serve their customers' needs and drive up their own profits. Meanwhile, public utilities are often incentivized to install charging stations, but have no market pressure to maintain or keep those stations operable. According to a recent J.D. Power survey, one in every five respondents didn’t charge at a public charging station last year, with over 70 percent of those EV owners citing malfunctioning or out-of-service stations as the reason for not charging.
While utilities will continue to play a pivotal role in the broader transition to EVs and a more reliable power grid, it is vital that lawmakers clear the way for the private sector to participate. States like Alaska and Massachusetts have already implemented new policies to ensure utilities revise their rate structures to reduce or eliminate demand charges for EV charging stations. It’s time for the Lone Star State to do the same and pass SB 1002, bringing free market competition to the EV charging space.
Matt Mackowiak is the president of Potomac Strategy Group, a Republican consultant, a former Bush administration official, a Bush-Cheney re-election campaign veteran and a former press secretary to two U.S. Senators.