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Ohio May Place Electric Vehicle Charging Costs onto Customers

A proposed bill would institute a sales tax rebate for the purchase of new electric vehicles. However, it may also allow companies to charge customers for the costs of building charging stations.

(TNS) — Ohio state lawmakers are debating legislation that would subsidize big utility companies’ plans to build a network of company-owned electric-vehicle charging stations while passing the costs of building them along to customers, whether they use them or not.

Senate Bill 307, sponsored by Republican Sen. Michael Rulli of the Youngstown area, is more broadly meant to promote electric vehicles’ manufacturing and use in Ohio, including near Youngstown, which local leaders are trying to rebrand as the “Voltage Valley.” Among other provisions, it would create a state task force to develop an electric vehicle plan, create a $2,000 sales tax rebate on the purchase of new electric vehicles and set aside millions of dollars in grants to help auto suppliers transition from traditional, gas-fueled vehicles to electric ones.

Rulli, who didn’t respond to interview requests, wants to position the state to ride the expected electric vehicle wave as many companies make plans to stop making gas-fueled cars within the next 20 years. Auto manufacturers have pledged to invest $330 billion in electric vehicle production by 2025, Rulli said earlier this year during testimony to a Senate committee considering whether to advance the bill, which has bipartisan support.

“Companies are making decisions on where the next generation of auto manufacturing jobs will be. I want that to be right here in the Buckeye State,” Rulli said.

But it’s the provision that would subsidize utility companies’ plans to build vehicle-charging stations, which could be the rough equivalent of gas stations of the future, that’s prompted the most pushback. American Electric Power, which previously got state approval to charge customers for a $10 million pilot program meant to spur the development of charging stations, has been the most vocal in pushing for the new subsidy.

The idea is pitting utilities, which make a significant portion of their profit by building physical infrastructure, against consumer groups and gas companies trying to get into the vehicle-charging business themselves.

“EV charging should be a competitive service,” Michael Haugh with the Ohio Consumers’ Counsel, a state agency representing consumers, said in committee testimony to state lawmakers earlier this month. “Just as in the early 1900s, when privately owned gas stations started popping up to serve motorists, the competitive market will meet the needs of EV owners without forcing Ohio utility customers to subsidize it.”

Backers of the bill, including the Ohio Chamber of Commerce, the Ohio Environmental Council and unions representing utility workers, say that power companies have a unique role in preparing the state for the electric-vehicle transition. Besides preparing the power grid for the extra demand that could come with increased vehicle charging, thanks to their business model, backers say utilities also can build charging stations, which cost $100,000 each, in places that private companies likely won’t target, like in poorer and more rural areas.

A concern about the rise in electric vehicles is the inequality that could result if charging stations get built in wealthier areas. There currently are 2,269 higher speed “level 2″ and “DC Fast” charges in Ohio, according to the U.S. Department of Energy.

Kelley, with Drive Electric Ohio, said they tend to concentrate in higher traffic areas like downtowns, shopping centers and more developed highway exits.

“We very much do not want there to be any kind of leveraging of the monopoly that utilities have on electric service to choke out the market for competitive charging,” said Brendan Kelly, director of Drive Ohio, an advocacy group that supports the bill. “But there’s going to be a gap in charging if we don’t do something to make sure we see the equitable distribution of chargers. And so that’s where utility ownership can play a helpful role in this electrification of transportation.”

Under the bill, utilities like AEP, FirstEnergy and Duke Energy could charge customers for their electric vehicle transition plans through a special charge called a rider. The Public Utilities Commission of Ohio, the state regulatory agency whose members are appointed by the governor, would be tasked with deciding whether the plan meets the criteria spelled out in the bill, including making sure that utilities’ plans minimize costs and promote a neutral competitive environment.

“No other entity goes through that gauntlet,” Michael Dion, an AEP executive, said during recent testimony while describing the state regulatory process. “No other entity has that obligation.”

But consumer groups like the Ohio Consumers’ Counsel are especially skeptical because of the state’s poor record of oversight when it comes to making sure riders get spent on their intended purpose. The Ohio Supreme Court in 2019 infamously threw out a “grid modernization” rider the PUCO approved for FirstEnergy, the scandal-ridden, Akron-based company, saying the state failed to require the company to spend the money on actual power grid upgrades. An internal audit the company ordered after it got embroiled in a corruption scandal found no evidence the charge, which raised $168 million a year, actually got spent on grid modernization.

“This provision would expose customers to new costs from the riders that would finance electric car charging stations – while providing little to no guardrails to prevent excessive increases in Ohioans’ power bills,” Rachael Carl, managing director of public policy services for the Ohio Manufacturers Association, said during committee testimony earlier this month.

AEP has already started dabbling in building electric-vehicle charging stations. Under a pilot program the PUCO approved in 2018, the company spent $10 million on rebates and incentives, charging the costs to customers, meant to encourage the development of up to 375 charging stations, the Columbus Dispatch reported.

AES Ohio, formerly known as Dayton Power & Light, recently got state approval to start its own rebate program.

But while the pilot program was meant to encourage charging stations owned by developers, businesses and non-profit organizations, AEP is gearing up to build a company-owned network of charging stations off the highway, targeted at electric-vehicle owners making long drives.

As part of that plan, AEP is taking a leading role in a group of utilities calling itself the National Electric Highway Coalition, sponsored by a national association of electricity providers. Since its founding last year, the group has expanded to more than 60 members, including all of Ohio’s major power providers: AES Ohio (formerly known as Dayton Power & Light), FirstEnergy, and Duke Energy.

Dion, the AEP executive, told state lawmakers during committee testimony on SB307 that the group is coordinating to build electric charging stations as efficiently as possible.

AEP argues that increased use of electric vehicles could benefit customers even if they don’t own an electric vehicle, assuming that people charge their vehicles at home overnight when power demand is lower. It would mean a more efficient use of the power system, which is built to provide enough power for peak usage during the day and possibly lower overall electricity rates.

“As the need increases for fueling the next generation on of vehicles being produced by the automotive industry, utilities will be responsible for helping meet this demand, whether it’s the development of fast charging networks or managing local power grids to all people to efficiently charge overnight,” said Scott Blake, an AEP spokesman. “As these networks are developed, utility involvement is critical to keep costs reasonable and ensure efficient use of existing ratepayer investments in the grid.”

But Stephen Hightower, the chief operating officer of Hightower Petroleum, a gas-distribution business based in the Cincinnati area, told state lawmakers that AEP’s proposed charging stations could hinder his company’s own plans to branch into the charging business.

Building a single station costs $100,000, Hightower said, and without federal subsidies, it will be hard or impossible to recoup that investment.

But another challenge, he said, is the prospect of competing with charging stations subsidized by utilities, which have a state-guaranteed monopoly.

“We’re not resisting this change,” he told state lawmakers. “We’re embracing it. But as we work through this, as we begin initially, let’s get this right upfront so that it will encourage participants in the market.”

©2022 Advance Local Media LLC. Distributed by Tribune Content Agency, LLC.
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