Edison Tells Investors EV Charging is Big Business

12 Apr 2017

One of California’s biggest electric utilities is banking on a growing number of electric vehicles on the state’s highways to provide  a business growth opportunity over the coming decade.

In an April 12 briefing for investment banks, Southern California Edison executives outlined a growing need for both grid modernization to meet electric vehicle charging demand and for more public charging stations as promising a healthy enhancement of the utility’s rate base through 2030.

Edison International President Pedro Pizzaro said infrastructure investments needed to meet the state’s carbon reduction goals—particularly charging stations for electric vehicles—will create about $1 billion in rate base growth potential for the company’s regulated utility, Southern California Edison. That amount, he said, goes beyond what’s proposed in the utility’s current 2018 general rate case proposal and could be “longer-term.”

The growth opportunity is being fueled by a higher estimate of the number of electric vehicles that ultimately will be needed to achieve the state’s 40 percent greenhouse gas reduction goal by 2030, explained utility executives.

“We expect the state will need to at least double the 4.2 million plug-in electric vehicles identified in the scoping plan update” released recently by the California Air Resources Board, said Kevin Payne, Edison chief executive officer. The scoping plan update is the agency’s blueprint for cutting carbon emissions.

Specifically, SCE initially projected that 100,000 level 2 chargers and 10,000 fast chargers would be needed to meet electric vehicle charging demand in its service territory given the state’s electric vehicle goal. Now it sees a need to possibly double that number of charging stations in its service territory.

“Our original assumption was that SCE would invest in one-third of the needed [charging] infrastructure,” said Caroline Choi, senior vice president of regulatory affairs for the utility.

That’s why Edison planned to file an application in the coming year with the California Public Utilities Commission asking for permission to invest in 30,000 new charging stations. Those would come on top of the commission’s previous permission for the utility to spend $22 million to install up to 1,500 charging stations.

However, Choi said the utility has found that it costs more than initially expected for the chargers, so it projects it will only be able to install 1,000 of them with the $22 million. That’s about $22,000 per charger, so if SCE eventually installs 60,000 chargers it would create $1.32 billion in rate base growth for the utility.

Up until now, though, the CPUC has limited the role of investor-owned utilities in installing and operating charging infrastructure in order to keep the door open to third-party competitors in the emerging electric vehicle charging business.

That could change under AB 1184, a bill sponsored by Assemblymember Philip Ting (D-San Francisco). Ting’s bill would expand the role and scope of utilities in electric vehicle charging by creating a utility-administered “California Electric Vehicle Initiative” overseen by the CPUC. Details are still being worked out.

Meanwhile, given the uncertain outcome of the legislation and other rapidly changing factors in the state’s drive to electrify transportation, the utility is still planning next year to seek CPUC permission to install just 30,000 charging stations, said Choi.

However, she added, that “it seems clear . . . that we’ll end up investing in a much higher number.”

Edison executives pointed to numbers that makes the case looks much the same up and down the state for utilities. Overall, the company estimates at least 500,000 level 2 public charging stations will be needed and another 50,000 fast chargers.

Therefore, the state’s other two investor-owned utilities also could see major growth opportunities as the number of plug-in cars in the state grows.

—William J. Kelly

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