While electric vehicles have big promise, devising a cost-efficient home-charging system has been elusive.
Xcel Energy discovered that the hard way after adopting a discount rate for electric vehicles in 2015, only to find that other costs were scaring consumers away.
So Xcel is rolling out a new pilot program it hopes will juice interest in electric vehicles. It features a "smart" charger, which doesn't require a customer to install a second electrical meter, a potentially costly venture.
The Minnesota Public Utilities Commission on Thursday approved the pilot program.
"I think this is critically important," Commissioner Matt Schuerger said at the PUC meeting. "Electric vehicles are coming, and we need to have a pathway into this and evolve with it."
Electric vehicles (EVs) are still just a sliver of new car sales, though forecasts call for them to make up 20 percent of new automobile registrations by 2030. Xcel estimates there could be more than 300,000 electric vehicles in its Minnesota service area by 2030, five times more than are registered in the state today.
Electricity as a fuel is relatively cheap, costing about the equivalent of $1 per gallon of gas. But building a vehicle-charging system is a classic chicken-and-egg problem for companies and consumers. When do the financial benefits justify the costs?
In 2015, the PUC approved lower electric rates for people who charge plug-in vehicles in their garages at night. State law had mandated such rates during "off-peak" periods, when demand for electricity is lowest and supply is plentiful — particularly from wind turbines. Xcel is the nation's leading provider of wind-powered electricity.
Minneapolis-based Xcel, the state's largest utility, set its late-night EV rate at a 40 percent discount to its normal rate. Still, only 150 customers are currently participating in Xcel's discount rate program, and there are about 5,700 electric vehicles in Xcel's service territory.
"The upfront costs associated with [the new EV rate] were a significant barrier to entry for a number of customers," Ryan Long, an Xcel attorney, told the PUC.
With Xcel's discount rate, customers must get a second meter, which they pay for in monthly charges. In addition, there are upfront costs needed to adapt a residence for a second meter. They can range from $200 to $2,000, depending on a home's layout and the quality of its current electric system.
"We weren't able to determine what the true cost was for taking the [discounted] service," Kevin Schwain, leader of Xcel's electric vehicle program, said in an interview with the Star Tribune.
That means most customers with electric vehicles paid Xcel's higher standard electric rate rather than mess with the installation of a second meter.
Xcel's new pilot program, which will be limited to 100 customers, eliminates the potentially expensive hassles of installing a second meter. The program also kicks in a 240-volt "level 2" charger that has metering ability.
Most electric cars come with a "level one" 120-volt charger. But a 240-volt charger, which requires the type of outlet often used for large appliances, can provide up to 25 miles per hour of charging — six times more per hour than a 120-volt machine.
"We predict more and more customers will opt for a 240-volt charger," Schwain said.
Electric car users can buy a 240-volt charger on the internet for around $600. But Xcel said it's offering a "one-stop" solution: the charger itself, but also an integrated service including metering (provided by a third-party vendor).
Electric vehicle advocates have praised Xcel's pilot program, but blanched at the company's initial monthly charge estimates. So did the PUC staff. However, Xcel on Thursday said that through negotiations with vendors, it has now cut those charges by 30 percent from original estimates.
Andrew Twite, a senior policy associate at the St. Paul research and advocacy group Fresh Energy, said Xcel would be one of the first U.S. utilities to roll out smart-charger technology in an electric vehicle program. "We are really supportive of the concept."
"The pilot is intentionally very small," he added, "but I don't think Xcel will have trouble lining up 100 customers for it."