How SDG&E wants to power the electric vehicle market

An ambitious electric vehicle (EV) proposal that San Diego Gas & Electric (SDG&E) had been trying to fast-track with California regulators has been sent on a detour instead.

The California Public Utilities Commission (PUC), heeding calls for caution over who will finance and own charging stations in the state, combined its review of SDG&E's $103 million electric vehicle-grid integration (VGI) application with the state's Alternative-Fueled Vehicle (AFV) rulemaking process. A decision on the utility's plan will now have to wait until after the commission makes an initial finding on the appropriateness of utilities owning charging stations. 

SDG&E initially wanted to fast-track the pilot, and suggested that a decision be issued in mid-November. A phase-one decision on station ownership is expected by the end of the year.

But whatever happens in the proceedings, the market share for electric vehicles is growing fast—necessitating the widespread development of charging stations.

Already, the state has reached 100,000 plug-in car sales, and SDG&E said there have been 10,000 electric vehicles sold or leased in its territory since December 2010. But the state has a goal to put 1.5 million zero-emissions vehicles on the roads by 2025. In combining the two proceedings, the California PUC noted that "an integral part of meeting that goal is having sufficient [plug-in electric vehicle] charging available."

What's in the plan

Designed as a research initiative, SDG&E's plan is aimed at testing market response to a variable electric rate for vehicle charging.

The VGI pilot is an "innovative hourly time-variant rate and associated grid-beneficial charging infrastructure," SDG&E said, calling for authorization to develop 5,500 charging stations targeting multi-family dwellings and workplaces between 2015 and 2025. The VGI pilot would require approximately $59 million in capital costs and $44 million in operations and maintenance over the life of the project.

The proposal seeks new ways to open up the electric vehicle market, the utility said. 

The VGI Pilot Program is "also designed to provide increased opportunity and business growth for those industries that provide support services to EV customers," SDG&E said. The utility told regulators that while multi-unit dwellings (MUD) make up about half of residential units in the greater San Diego area, a survey earlier this year showed that 88% of responding EV drivers live in a single-family detached home, 93% own their own homes and 46% had access to workplace charging stations.

"This demonstrates that prospective EV customers who could benefit from MUD and workplace charging sites may be currently underserved," the utility said. 

SDG&E's pilot charging rate will incorporate several components: 

  • a variable commodity component based on the California Independent System Operator day-ahead hourly price
  • a dynamic pricing signal via a tariff mechanism for the recovery of commodity capacity costs 
  • a dynamic pricing signal designed to recover distribution circuit peak costs and address local capacity concerns

The utility would develop a mobile app and web site allowing customers to set their vehicle charging preferences, responding to signals from the pilot rate, and the resulting data would be an "opportunity to examine its effects on charging behavior and grid utilization," SDG&E said.

Reaction to the proposal

The proposal has received support from environmental groups who see alternative fuel vehicles as a way to cut emissions from traditional cars.

The Natural Resources Defense Council (NRDC) filed comments praising the utility, and called the proposal "a substantial effort to test and demonstrate the utility system benefits associated with transportation electrification done intelligently."

The proposal demonstrates how "a significant barrier to PEV adoption for those who reside in multi-unit dwellings could be removed," NRDC added. "Likewise, the application aims to test the viability of smart charging as a form of energy storage and a means to integrate increasing levels of variable renewable generation."

The Environmental Defense Fund (EDF) noted that the proposal could also help with grid stability, smoothing demand peaks by encouraging customers to charge vehicles at more efficient times.

Putting more EVs on the road will boost demand, EDF noted, but "if managed correctly, this demand increase could contribute to greater grid stability, by, for example, soaking up excess solar during peak photovoltaic generation periods or using EVs as part of a storage-based reliability strategy linked to demand response tariffs."

Just how big is a pilot?

In consolidating SDG&E's proposal with the state's AFV proceeding, the PUC called into question the "pilot" aspect of the plan, pointing out that more than $100 million would be spent across the decade-long plan.

"SDG&E’s request represents a significant infrastructure investment incremental to the distribution infrastructure costs and programs recently authorized in SDG&E’s 2013 GRC [general rate case]," Administrative Law Judge Irene Moosen wrote. "It is also on par with the size of a fully developed utility program, not an initial experimental pilot."

The application proposed to implement the new program and collect the costs in rates until 2037, Moosen noted. Those factors—alongside the station ownership question—mean SDG&E's proposal goes beyond a typical pilot program, the judge determined.

SDG&E's application is "on par with a full program business model, rather than an initial, research-oriented test project," Moosen said. "These factors require the Commission to allow adequate time to meaningfully assess the reasonableness of a request of this length, cost and complexity. "

The Utility Reform Network (TURN) said the judge's decision was the right one. The ratepayer watchdog had filed comments suggesting that the proceeding be suspended pending a decision in the AFV track. If SDG&E wanted to move ahead imminently, it said, then a $2 to $5 million project would be more appropriate.

In an industry where technology is rapidly changing and improving, TURN staff attorney Elise Torres said, locking in a 10-year program would be unfair to ratepayers who could then be saddled with less-efficient technology. "We just want to make sure the right type of infrastructure is being installed," Torres said. 

"If utilities go out and spend a lot of money installing a certain kind of charger, and in five years it turns out that's not the best kind of charger … we're going to have ratepayers paying for these costs for a long time," she added.

As for the issue of who will own the charging stations, TURN has no official position on utility ownership of the charging stations, Torres said.

TURN does "support a competitive marketplace, and would like to see different, private EV charging companies figuring this out, too," she added. "TURN doesn't want investor-owned utility involvement to have a negative impact on the private charging station market."

"We're glad to see more thought is going to be given to the issue before SDG&E is allowed to move on with such a big pilot," Torres said. "More information is needed at this point, especially given the long-term impacts of utility’s owning the infrastructure."

SDG&E responds

Despite the regulatory delays and the rejection of the project's pilot status, SDG&E seems confident it will one day own and operate electric vehicle charging stations. In particular, the utility views the CPUC's decision to consolidate its review of the utility's application with the AFV rulemaking process as a sign that regulators are looking at its proposal favorably. 

The decision "has provided greater clarity and set a specific timetable for deciding the EVGI application," the utility said in a statement. "The ruling also acknowledges that there is 'considerable interest and support by the parties for SDG&E’s application.'"

"The decision shows that the CPUC intends to analyze the proposal’s concrete benefits in a timely manner," SDG&E said.