Utility Regulators Help Michigan’s Auto Industry Electrify

For over 100 years, Michigan has remained the country’s undisputed automotive capitol. As the home of the Big Three (Ford, General Motors, and Fiat-Chrysler) and a nation-leading 70,000 jobs in clean transportation technology, it’s no wonder that the industry is a point of pride for many Michiganders. Now, with mass-market electric vehicles (EVs) like the Chevrolet Bolt EV and the Tesla Model 3 under production, the auto industry is faced with a challenge and an opportunity to collaborate with another big player—the electric industry.

Recognizing the critical role the electric utilities it regulates will play in fueling the EV market, the Michigan Public Service Commission (MPSC) and the Michigan Agency for Energy (MAE) are co-sponsoring a technical conference on August 9th with automakers, utilities, charging station companies, and other stake holders to discuss how Michigan’s utility industry can help the state carry its automotive history into the future of electrified transport.

I’ll be speaking on a panel at the conference focused on “The Role of Regulation and Government in Creating Effective Policy.” As noted in this NRDC issue brief, which lays out guiding principles to inform utility programs, we need effective policies to ensure we realize the benefits of an increased role for the electric industry:

The electrification of the transportation sector is not only a key pathway by which to meet air quality and climate goals, but also a singular opportunity for the electric industry. The United States spends more than $436 billion annually on gasoline and diesel. Diverting a portion of that expenditure to the electric sector can spread the costs of the transmission and distribution grid over more sales, putting downward pressure on the price of electricity while also providing consumers relief from volatile gasoline and diesel prices.

If done correctly, utility programs could spur EV growth in Michigan to the benefit of all residents—regardless of whether they own an EV. NRDC and our partners at Sierra Club and Ecology Center commissioned a report by MJ Bradley & Associates to analyze how benefits to Michiganders scale up as EV adoption increases. By extrapolating upon a Bloomberg New Energy Finance EV growth forecast, MJ Bradley & Associates estimates that by 2050:

  • The number of EVs in Michigan will grow from roughly 1 million in 2030 to 5.4 million in 2050—up from roughly 13,000 today;
  • Michigan utility customers can expect to save $2.6 billion cumulatively on their electric bills from managed EV charging;
  • Michigan drivers can expect to save $23.1 billion cumulatively through reduced fueling and maintenance costs; and
  • Michigan residents will realize $5.7 cumulatively in benefits from reduced greenhouse gas emissions.

The study also examines how benefits to utility customers change as new electric demand from EVs shifts. The results suggest that when EV drivers have the incentive to charge late in the evening when the grid is less stressed—as opposed to plugging in right after work when everyone’s gadgets are turned on—the monetary benefits to all utility customers nearly double.

There’s no doubt that Michigan remains the center of the automotive world today. But when about 400,000 people put down $1,000 deposits for Tesla’s Model 3 last April, it did not go unnoticed in the Motor City. The Michigan Public Service Commission technical conference presents an opportunity to affirm the state’s leadership role in automotive innovation, in partnership with the electric industry. By providing a clear regulatory pathway for utility participation in the EV space, the Commission can spur investments needed to support widespread transportation electrification that benefits all Michiganders.

About the Authors

Max Baumhefner

Attorney, Clean Vehicles and Fuels, Energy & Transportation program

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