Xcel Energy's proposal to roll out about 730 electric vehicle fast chargers would make Minnesota home to the largest utility-owned charging system in the country.

The Minneapolis-based utility, the state's largest, sees the plan as a catalyst to jump-start the tepid electric vehicle market in Minnesota.

But key questions are fueling opposition to the proposal: Should a utility own a network that big, and should ratepayers foot the $192 million cost?

The gas station and EV charging industries say no. The Minnesota Department of Commerce roundly opposes the plan as well. And consumers have chimed in, with over 50 writing to Minnesota utility regulators — almost all of them opposed.

"This is unacceptable, as I am not an owner of an EV and should not be obligated to pay for their infrastructure," Bob Vohnoutka of Eden Prairie wrote in comments to the Minnesota Public Utilities Commission (PUC). "If Xcel Energy wants to build EV charging stations, they can pay for them."

Opponents also say Xcel's market power as a monopoly utility would crowd out private investment, ultimately slowing EV growth.

"Other utilities around the country have proposed to [fund through ratepayers] a relatively modest number of chargers — 20 to 30 — but what Xcel is doing is beyond the pale," said David Fialkov, head of Americans for Affordable Clean Energy, which represents truck stops and gas stations including those in Minnesota owned by Circle K (Holiday stores), Casey's and Kwik Trip.

"Xcel is proposing to force its ratepayers to pay for more fast chargers than any other utility in the country, and it is going to have a serious impact on the willingness of private companies to invest in the state of Minnesota," he said.

But Xcel says its charger network would spur more EV adoption, which in turn would create demand for even more chargers. "It is going to generate investment in additional chargers in our state," said Nadia El Mallakh, Xcel's vice president for clean transportation and strategic partnerships.

And all ratepayers would benefit, El Mallakh said, because carbon dioxide emissions would decline.

"It is going to generate investment in additional chargers in our state," she said.

Chargers needed to support EVs

Chargers pose a great chicken-and-egg conundrum. While more than 80% of charging is done at home, drivers still face "range anxiety" — the fear of being stalled on the road due to a dearth of public chargers.

But during the early adoption phase of EVs, building out chargers is economically tricky: Costs are high and profits low. More EVs would solve the problem — but there need to be more chargers to foster more EV sales.

In August, Xcel proposed a network of public fast chargers as the cornerstone of a larger $333 million ratepayer-funded plan aimed at boosting EV adoption. It also includes $63 million for chargers at multi-family homes and $22 million to support electric school bus adoption.

The PUC will decide this year how much of Xcel's proposal becomes reality. Separately, the commission will be hashing out Xcel's proposal for a general rate increase of 15.4%, or $498 million, over three years.

State goals far from met

State policy goals aimed at reducing carbon dioxide emissions call for EVs to make up 20% of Minnesota's passenger vehicle fleet by 2030.

Today, they comprise only one-half percent, and the current rate of EV adoption falls short of hitting the 2030 goal, according to a 2021 an analysis by the Minnesota Department of Transportation (MnDOT).

The state has about 300 EV fast-charging ports — chargers usually have two ports — and electric vehicle maker Tesla owns about two-thirds of them. Tesla, which opposes Xcel's public charger plan, also has about a 70% share of Minnesota's EV market, the company said in a PUC filing.

Tesla's chargers are currently for Tesla drivers only, though the company reportedly plans on opening some to the public.

MnDOT does not have an estimate as to how many fast-charging ports are needed to meet the 2030 goal; Xcel estimates 5,100 for its service territory and 8,300 for the state. Xcel proposes to own and operate 1,470 new fast-charging ports.

They would be located in urban and rural areas, including at retailers — grocery stores and convenience stores, for instance. Xcel would not pay retailers a hosting fee, but the chargers would boost customer traffic, El Mallakh said.

Xcel expects that its 730 chargers would be rolled out through 2026, meeting about 45% of Minnesota's charging needs. But even 45% is too much, charging companies say.

"A competitive market with a 45% market share occupied by a regulated utility is not a competitive market at all," Jigar Shah, head of energy services at Electrify America, said in a PUC filing. Electrify America, owned by Volkswagen, has 16 fast chargers in Minnesota.

The Minnesota Commerce Department, which represents ratepayers before the PUC, concluded that Xcel's proposal may hurt the EV charging market.

"Xcel's current proposal may create significant barriers for potential market participants, creating a perpetual need for Xcel to keep building more public chargers in the future," Adway De, a Commerce Department rates analyst, said in a PUC filing.

De also concluded that Xcel may have "significantly overestimated" public charging needs and failed to show that its plan is the least costly or "most reasonable" path to meeting the state's 2030 EV goals.

Xcel says its proposal fair to consumers

Xcel says its EV charging network would cost $166 million to build and would require an additional $27 million from ratepayers for operations and maintenance through 2026. The chargers would be added to Xcel's rate base, providing a guaranteed return on investment.

The company argues in PUC filings that it would not have undue market power because as a regulated utility, its charger prices must be approved by the PUC.

"Unlike a private firm that can choose to raise its prices in response to market conditions, [Xcel] would not have the flexibility to do so," Erich Muehlegger, a California economics professor commissioned by Xcel, said in a PUC filing.

Xcel is proposing a two-tiered rate plan with lower charging prices for its own customers.

For Xcel customers, prices during peak power demand would be 70% to 81% lower than for non-customers. The off-peak price for customers would be only 10 % of that for non-customers. The lower rate is equivalent to the rate Xcel's customers pay for home charging.

Xcel also says the lower rate will help its customers who want an electric vehicle but who can't install a charger at home — renters or low-income drivers, for instance. The result: equitable access to low-cost charging, Xcel says.

EV charging companies say the lower rate for Xcel's own customers would only enhance the utility's competitive advantage.

"The company proposes to sell energy for EV charging to [its customers] for less than competitive [fast-charger] station operators can buy it from the company," James Bride, a consultant for Electrify America, said in a PUC filing.

"Contrary to assertions by [Xcel], the ability to charge prices below cost for a sustained period of time is a form of market power," he added.

Xcel also wants to apply two-tiered prices to 21 company-owned fast chargers in rural Minnesota that were approved by the PUC a year ago and are scheduled to come online this year. Those chargers are expected to cost $5 million.

At the same time, the PUC rejected an Xcel plan for ratepayer-funded rebates to buyers of EVs and electric school bus. It would have cost tens of millions of dollars.

The PUC has scheduled two online meetings — for Monday and Wednesday — to hear public comments on Xcel's new $333 million EV proposal, including its fast-charger plans.