Fact Check: California Already Has Utility Rates Designed for Plug-in Electric Vehicles


Both the Los Angeles Times and New York Times recently published articles based on a Purdue University report which concludes that driving on electricity won’t save Californians as much gas money as expected.  This comes as quite a shock to many folks in the state, including actual electric vehicle owners, who are already enjoying driving right past gas stations.  The headlines in the media and the Purdue University study largely ignore three important facts:

1.  A Vehicle's Features Affect its Purchase Price

Anyone who has bought a car knows how the extras add up.  The Purdue study compares a well-equipped Chevy Volt plug-in hybrid, with many features including Bluetooth, premium sound, navigation, and alloy wheels, to a base model Chevy Cobalt and a base model Toyota Prius.  Adding features similar to those which are standard on the Volt increases the price tags of the Cobalt and Prius about $4,000 and $9,000 respectively.  Failing to do so makes for an apples-to-oranges comparison instead of a true cost-of-ownership analysis.

2. Automakers Warranty Their Battery Systems

    The study assumes Volt drivers will shoulder a $12,000 battery replacement expense.  Both Chevy and Nissan (who makes the all-electric “Leaf”) warranty their batteries for 100,000 miles and expect them to last much longer.  While the study rightly assumes battery costs will decline overtime, it neglects the fact that, should a battery actually need replacement, the automaker is likely to pick up the tab.

    3.  Californians Can and Will Choose Rates Designed for Electric Vehicles

    The Purdue study raises a theoretical problem, but fails to acknowledge California has largely addressed the issue. The authors correctly point to the fact that normal California rates are tiered, designed on the simple principle that the more electricity your household uses, the more you should pay for each unit of electricity.  If you were to charge your electric car under these normal rates, your household would end up facing higher prices.

    Thankfully, however, California already has rates designed with electric vehicles in mind, which consumers are largely expected to choose.  California’s five largest utilities (Southern California Edison, San Diego Gas & Electric, Pacific Gas & Electric, Los Angeles Water & Power, and the Sacramento Municipal Utility District), who collectively serve the vast majority of the state, all have electric vehicle rate options meant to reward those who charge their cars responsibly with the opportunity to do so when electricity is cheapest.  These rates are not just experiments; most have been in place for at least a decade. 

    California’s utilities have been planning for the arrival of electric vehicles for some time and have teams dedicated to helping customers who decide to drive on electricity.  For example, Southern California Edison offers a video that explains the three steps to “Get Plug-In Ready,” featuring a hipster named “Max” (no relation to the author, I promise).  Their customers can also take advantage of an online rate calculator to determine which rate is best for them.

    Sacramento Municipal Utility District also provides its customers with online information to help them charge on special electric vehicle rates when electricity is cheapest, as explained in the figure below (hint: you want to charge when it’s yellow/green, not when it’s orange):


    If you call your utility and switch to an electric-vehicle rate, drive your car during the day, and plug it in at night while you’re sleeping, you’ll charge when the costs of delivering electricity are the cheapest.   While driving on that electricity, you will cut your transportation fuel costs at least in half, dramatically reduce your carbon pollution, and be freed from dependence on gas stations and oil. 

    We’re in agreement with the authors of the Purdue study that if utility rates designed to encourage energy efficiency were to dampen the market for electric vehicles, it would be an unhappy result.  The decision to switch to an electric vehicle is, in fact, one of the single biggest energy efficiency choices you can make.  Unfortunately the study focuses on PG&E’s normal rates and largely ignores the rest of the state.  It’s true that PG&E’s electric vehicle rates are tiered, but PG&E already has plans to replace those rates with non-tiered options.  Every other major utility in the state already has non-tiered electric vehicle rates available to its customers.  The good news is that the author’s recommendation that California get ready for electric vehicles has largely been implemented.  If you want to buy one of the many electric cars that are currently, or soon-to-be in showrooms across the state, there’s no need to wait.