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Why Promoting Private Sector Investment in Electronic Vehicle Charging Market is Key

As Democrats debate their $2 trillion infrastructure package, there has already been a lot of discussion about provisions aimed at promoting EVs. I know Democratic leaders like Speaker Pelosi will ensure that these policies will effectively encourage the adoption of EVs, and one way to do that is to ensure free and fair competition in the EV charger market.

Published

6 years ago

May 8, 2021

Mia Lane

The Biden Administration has expressed that one of their priorities is to facilitate more use of electric vehicles (EVs). Transportation Secretary Pete Buttigieg has said that “to meet the climate crisis, we must put millions of new electric vehicles on America’s roads.”

The Democratic Party is in agreement that EVs are a big part of the future of our transportation system and will be a huge component of their upcoming infrastructure package. But in the rush to move to electric cars, it is critical that Democratic leaders like House Speaker Nancy Pelosi ensure policies will be effective at aiding in the transition to EVs without putting the burden of this shift on already underserved communities.

One policy to avoid, for example, can be seen right here in California, where the California Public Utilities Commission approved utility companies to increase the rates on current customers to pay for the construction and operation of EV infrastructure.

Given that EVs are also not an economically viable option for most Americans, the people who will benefit most from these charging stations are those who can afford the EVs’ more expensive sticker price – which is wealthier Americans. On average, an EV costs nearly $20,000 more upfront than gas-powered vehicles. Yet the people who will be most burdened by an increase on their monthly electric bill to cover the cost for these EV chargers are already struggling families. Low-income families should not have to shoulder additional burdens for addressing climate change, particularly since wealthier people produce more carbon pollution.

And while utility companies have tried to downplay the increased costs on ratepayers, the utilities’ EV infrastructure projects have already run exceedingly over budget – meaning they have to charge their customers even more. For example, the public utility commission authorized $45 million for the first phase of “Power Your Drive,” which was a program established for utilities to build EV chargers. But by the time phase, one was complete, San Diego Gas & Electric (SDG&E) had spent $70.2 million — 55.5 percent more than authorized.

The fact that these utility companies went so over budget highlights another flaw with this policy. Because utilities can pass the costs of building and operating EV chargers onto those who already use their services, it is impossible for the private sector to compete against them. SDG&E running 50 percent over budget would mean lost market share and profits in the private sector. That is why private funds incentivize efficiency and cost savings.

Utilities using their current customers as piggy banks that they can dip into whenever needed removes the incentive to keep costs down, while also making it impossible for the private sector to compete in the EV charging market. And chasing away private sector investment will hamper the development and deployment of charging stations. That can’t be emphasized enough – going the SDG&E route will mean fewer charging stations and fewer EVs on the road, as well as higher costs for low-income consumers. It is truly a lose-lose proposition.

It is obvious that the private sector is key to fueling our current transportation sector, and competition keeps prices as low as possible for consumers. Free market competition and private sector investment would also help the EV charging market thrive if elected officials will let it.

Jaime Patino is a city councilman in Union City, CA, and represents the city on the Board of Directors of East Bay Community Energy.