Dive Brief:
- The Minnesota Public Utilities Commission March 24 unanimously voted against Xcel Energy's plan to have ratepayers fund $150 million in electric car and bus rebates because of concerns about the agency's lack of statutory authority to allow utilities to spend customer funds on EV incentives. The state attorney general warned about the lack of authority, adding that charging ratepayers for EV rebates would increase the utility bills of struggling customers, in particular.
- Xcel and others are looking to legislation to fund incentives. Clean air and environmental justice advocates agreed the utility should help fund rebates for transit and school buses but called for most of the incentives for electric vehicles to be directed to low-income customers.
- While Xcel's EV rebate proposal was rejected, the company's $5 million charging station plan across rural Minnesota got the green light. The 21 chargers slated for rural areas are expected to help address range concerns.
Dive Insight:
There is no disagreement that EV rebates are critical to advancing the electrification of large and small vehicles to lower climate pollution. The debate, however, is over who pays for them, who benefits, the size of the rebate package, and if offered by utilities, the amount of return.
Xcel had proposed to ratebase $100 million in rebates for electric buses and $50 million for light-duty vehicles.
"Direct incentives are the best way to encourage" EV purchases, Matthew Harris, Xcel's lead assistant general counsel, told the PUC at the end of last week.
"EV rebates are an important part of the landscape to support transportation electrification," agreed Anjali Bains, representing the Clean Energy Groups (CEG), a coalition made up of Fresh Energy, the Sierra Club, Union of Concerned Scientists and Plug In America.
Xcel proposed rebates of up to $2,500 for a new EV. CEG and the American Lung Association wanted most of the funds to go to less well-off customers. CEG proposed a phased-in rebate, starting with $42 million, with most divvied up among low-income households, non-profits, local government and small businesses.
But in rejecting Xcel's proposal, the Minnesota Public Utilities Commission agreed with the state attorney general that it lacked the statutory authority to allow utilities to spend customer funds on EV rebates.
For clean air advocates who support utilities offering rebates, the PUC decision was a setback, but not a major one.
"It would have been beneficial obviously to encourage increased use of EVs," said Jon Hunter, American Lung Association senior director of clean air. But transit and school bus electrification have the benefit of being able to tap into considerable federal funding approved in the bipartisan infrastructure law, he added.
"There is a place for Xcel to step in and fund electric transit and school buses," said Bains.
After the vote, Minnesota Pollution Control Agency (MPCA) spokesperson Lauren Lewandowski said in an email that the decision "does not change the trajectory of EV adoption in Minnesota."
The PUC did approve Xcel's plan to spend $5 million to install 21 fast-charging public stations across the state over the next three years to ease concerns about a lack of chargers outside the Twin Cities.
"This proposal will help give Minnesotans more confidence that they will make it to work or to the grocery store and home while driving an EV," said Commissioner Valerie Means.
In addition, Governor Tim Walz, D, and the MPCA will soon propose legislation providing $13.8 million for EV charging networks, which is expected to unlock $68 million in new federal EV funding.
"This funding, along with the state's new clean car standards, will advance the state's goal of reaching 20% electric vehicle use by 2030," Lewandowski said.
Advancing EV rebates through legislation
Like the MPCA, Xcel and clean air advocates' focus has turned to legislatively-approved funding options to increase EV adoption. EV uptake is slower in the state than in neighboring Colorado because Xcel and other utilities there are able to bill ratepayers for rebates and the state also offers EV incentives, unlike Minnesota, according to Hunter.
"The Commission provided good feedback on rebates at the hearing and there are legislation discussions happening that could provide a path forward," Xcel spokesperson Matt Lindstrom said in an email.
CEG is working to get a clean fuel standard passed that would create a funding pool from the trading of credits between clean fuel producers and dirty ones, said Bains, who is also Fresh Energy's lead director of energy access and equity.
Fresh Energy also is pushing a bill that would tap into surplus general funds for EV incentives.
Drive Electric Minnesota, a coalition including Xcel, the American Lung Association and Alliance for Transportation Electrification, among other partners, said earlier this month that it backs "legislation making it clear that investments by investor-owned electric utilities, along with continued private investment in EV charging infrastructure and promotion, benefit vehicle owners and utility customers."
Few, however, expect major legislative advances on the EV funding front this year, principally because of the upcoming gubernatorial and legislative elections.
The Lung Association's Hunter told Utility Dive he hopes for progress on "some funding items, but major policy advances may be challenging."
