Xcel accelerating electric vehicle programs, proposing up to $150M in Minnesota auto rebates

Xcel Energy's electric-vehicle offensive in Minnesota includes spending up to $150 million on vehicle rebates and bolstering efforts to provide in-home and public charging systems.

The company's residential charging program recently won regulatory approval to move from pilot stage to a permanent offering, though its public electric-vehicle (EV) initiatives are moving slower than expected.

The vehicle-rebate proposal was disclosed in a recent filing with Minnesota Public Utilities Commission (PUC), which would have to approve any such plan.

Minneapolis-based Xcel, the state's biggest electricity provider, said its projections put 1.5 million electric vehicles on the road in its service areas by 2030 — making up about 20% of all automobiles and light trucks.

The company didn't have a breakdown by the eight states it serves. But a regulatory filing in June indicates that by 2030, Xcel forecasts 376,000 EVs in Minnesota in a "high-growth" scenario.

"If we can get 1.5 million EVs on the road in our service territories, customers will save $1 billion a year and we will significantly reduce carbon emission," said Xcel CEO Ben Fowke in an interview.

Electric-car fueling costs are the equivalent of $1 per gallon of gas on average, and 60 to 70 cents per gallon for Xcel's residential late-night charging programs.

Challenges to EV adoption are manifold. Home charging systems must be cost-efficient. Public charging stations, in their infancy, will be critical for curing "range anxiety" — fear of running out of juice.

Then there's the issue of electric-vehicle availability. "Right now, it's not a seamless process for a customer buying an EV," Fowke said.

While automakers are pouring hundreds of millions of dollars into EV research and development, traditional dealerships don't seem to be in a rush to peddle electric vehicles.

A report last November from the Sierra Club, an environmental group, concluded that 74% of U.S. auto dealerships weren't selling EVs, and most of those who did were not prominently displaying them.

Finally, there's the affordability problem, though EV advocates say that even at today's high prices the cars will pay for themselves over time because they're cheaper to run.

By contrast, the entry-level price for a 2020 Chevrolet Malibu, a midsize sedan unlike the compact Bolt, is $22,140. An entry-level Chevrolet Blazer costs $28,800.

In June, Xcel proposed rebates for private vehicles and transit operators. The program would cost $100 million-$150 million, according to a PUC filing.

The rebates are part of a larger plan to accelerate $3 billion in Xcel investments — primarily on renewable energy projects. The PUC in May requested such plans from the state's electric and gas utilities, asking them how they could "assist in Minnesota's economic recovery from the COVID-19 pandemic."

Xcel is proposing rebates of up to $2,500 per electric automobile or light truck (for customers who participate in one of Xcel's EV charging programs); and rebates of up to $500,000 per bus and related equipment, the PUC filing said.

"Rebates on cars are an excellent way to spur EV adoption," said Anjali Bains, a senior policy associate at St. Paul-based Fresh Energy, a clean-power research and advocacy group.

Details are light on Xcel's rebate proposal, though Xcel said they will be forthcoming. Xcel said it would seek recovery of the program's costs from ratepayers, while also trying to mitigate a full-pass. The PUC must approve any such plan.

"If Xcel is planning on a rate base rebate program, I have not heard of another utility doing that," Bains said.

Fowke said that EV-related costs to ratepayers will eventually be recouped and more: Electricity sales will rise as more vehicles hit the road. "It is an economically driven program — all customers will benefit."

If electric vehicles pan out — and utilities meet their own carbon-free energy goals — there would be climate benefits for all, too.

Currently, Xcel produces 46% of its electricity in the Upper Midwest from coal and gas, split equally between the two. So, current EV drivers could be partly drawing on carbon-emitting power just as if they were driving a gasoline-fueled vehicle.

Separate from the rebate proposal, the PUC last year approved $25 million in Xcel spending on public charging programs.

More than $14 million of that money will flow to charging infrastructure for vehicle fleets operated by the state of Minnesota and the city of Minneapolis, along with Metro Transit's new electric buses.

The bus-charging venture is up and running. But otherwise, negotiations for the EV fleet program have gone slower than expected, Xcel said in a June filing with the PUC.

The same goes for Xcel's public charging pilot program. It would consist of a network of charging stations in a partnership with the nonprofit Hourcar and the cities of Minneapolis and St. Paul.

Xcel's pilot program for in-home charging, approved by the PUC in 2018, has been a success, Bains said.

The PUC in May approved a permanent expansion of the pilot, which Xcel intends to launch in January. The residential program focuses on "off-peak" charging — during the wee hours when electricity prices are cheap, drawing heavily on wind.

Xcel said it expects next month to release an off-peak charging plan for residents of apartments.