Driving an EV: The Promise and Hazards

PACE is honored to feature guest commentary by Commissioner Chuck Eaton, of the Georgia Public Service Commission. 

I love technology and innovation and consider myself an early adopter. I could not wait to get an Apple Watch, and I purchased a Chevy Volt back in 2012 after extensive analysis. As an energy regulator in Georgia, I see both the upside and downside with electric vehicles.

Here’s what I mean.

Let’s start with the grid – one of my daily concerns. Electric cars actually help our grid in Georgia. Our Commission worked with the power company to create a special time-of-use electric rate just for EV owners. These customers, by shifting usage during the night time hours, help our system run more efficiently and save themselves money.

In fact, a surveyed group of 1,000 of these EV drivers show that they shifted 11 percent of their energy usage to the overnight hours when the grid has excess supply. Furthermore, by shifting to off-peak, these customers reduced their annual bill by $180. What we learned – they were waiting until 11:00 pm, when the super-off-peak rate starts, to do laundry and crank the AC down.

The local economy gets a boost from the purchase or lease of an EV too. According to a GreenLink Group analysis of information from GDOT, USDOT, the Energy Information Administration, and the Bureau of Labor Statistics, every 1 percent of petroleum-based miles traveled in Georgia displaced by an electric vehicle means approximately $109 million remains in the state annually. To break it down by vehicle, each pure electric vehicle purchased keeps $1,455 annually in the state by fueling with electricity.

On a hot summer day, smog is visible to everyone in Atlanta; luckily, electric vehicles improve air quality. Even though a car may actually be running on coal or natural gas, today’s fossil plants are very clean. Many studies show the overall positive environmental impact of zero tailpipe emissions.

On the negative side, we have all heard about range anxiety. That’s why I went with the Chevy Volt instead of the popular Nissan LEAF. My VOLT has a gas generator that keeps me going when my range is low. Unfortunately, the cars, despite federal and state tax credits, are still financial losers for manufacturers because of economies of scale.

If UBS is right, it will take quite a while for this to change. Their lab report predicts that by 2025, only about 5.1 percent of US car sales will be electric (fully or partial). The same report predicts Europe at 30.6 percent, China at 15.5 percent, and Japan at 13.3 percent.

Still, both British Petroleum and Shell are investing in electric vehicle infrastructure. The change is coming, but slowly, as the data seems to indicate. When it does come, we’ll need batteries and lots of them. In the UBS scenario, EV penetration would require 14 Tesla “Gigafactories” to meet cell demand. With that kind of volume, most people believe that we’ll see battery chemistry break-throughs bringing the price even lower. A similar phenomenon has happened with solar cells and panels.

Meanwhile, companies like UPS are figuring this out as well and adding electric delivery trucks to their fleet in locations where it makes sense. Atlanta has its first EV taxis, and Atlanta’s Dentons law firm is has created a new, groundbreaking AV practice group.

All in all, Electric Vehicles are having an impact, and working together, we need to get ready for larger impacts in the future.


Springing Forward on Fuel Diversity

With spring come spending bills, and this year Congress has the chance to support energy diversity across the board. In the FY18 omnibus, and a series (hope springs eternal) of appropriation bills for FY 2019. There are also talks of a fix-it tax package. In short, there are many opportunities for lawmakers to support a robust, diverse fuel mix now and in the future.

Rep. Larry Bucshon, M.D. (R-IN) has introduced legislation, the “Electricity Reliability and Fuel Security Act” that seeks to establish a 30 percent tax credit, for only a five-year period, for the fixed operation and maintenance expenses of some coal plants.

In various remarks this week, Rep. Bucshon notes that since 2010, 599 coal plants in 43 states, totaling almost 108,000 MW have either been named to retire or have already been shuttered. That’s over one-third of the U.S. coal fleet.

Tax policy certainly isn’t the only reason these plants are going, going, gone; slowed demand plays a part, as does the rise of natural gas and renewable alternatives. However, in energy, as in any other form of business, tax policy can make or break a plant’s viability. The renewables industry knows this well, having received tax benefits for 40 years, which it relentlessly fights to keep.

Rep. Bucshon’s bill highlights what many consumers and government leaders perceive about the electricity markets. If too many coal plants disappear, the U.S. could be in for a series of unwelcome surprises caused by extreme weather events, natural gas price increases, or delays in technologies needed to renewables contribute more, and more reliably, to the generation mix.

While the Buchson effort will likely draw some stiff opposition from the determined, permanent coal opposition, it shouldn’t. The bill, with its five-year term for tax supports, is aimed at keeping some plants around and useful for a short time horizon while electricity and environmental stakeholders continue to work toward a future with more renewable and clean energy.

We’ll all get there together faster with less arguing about fuel sources and more purposeful conversations about developing a full range of resources and technologies. In that spirit, PACE also took note of a letter to appropriators this week, from a group of renewable trade associations asking to maintain critical programs, especially at the well-renowned DOE labs, that are helping explore and perfect innovative electricity technologies. PACE agrees with these advocates; it is “… a particularly poor time to reduce research and development in energy.”

As spring draws closer and memories of the Bomb Cyclone fade, PACE will continue to update you on how Congress can leap forward on strengthening fuel diversity.


Show-Me State Legislators Show Value of Hedging

Later this week, PACE will offer testimony to the Missouri House of Representatives Utilities Committee highlighting why natural gas hedging helps assure consumer electricity prices are stable and predictable.

In February, PACE testified to a key committee of the Missouri Senate. Our goal was and is supporting a pair of resolutions (Senate Concurrent Resolution 43 and House Concurrent Resolution 87) introduced earlier in the session by Sen. Brian Munzlinger and Rep. Rusty Black.

Each resolution urges the Missouri Public Service Commission to continue allowing the state’s electric utilities to prudently hedge natural gas contracts, through financial means or by taking an ownership stake in fuel reserves.

The Senate version of the resolution passed the chamber’s Rules, Joint Rules, Resolutions & Ethics Committee unanimously on March 6th.

While regulators and legislators should feel empowered to ask questions about natural gas prices and how utilities use hedging to mitigate price risk, PACE wants to clarify for these and other stakeholders that low prices now do not justify abandoning hedging programs.

Many lawmakers, especially in states with term limits, may not have been in office during the early- to mid- 2000s when natural gas commodity prices rose sharply and proved to be extremely volatile.

While sustained low commodity prices for natural gas are a blessing, utilities and consumers should be allowed to prepare for the day when market forces (what comes down must eventually go up) take effect.

Prices could rise and become more volatile due to increased environmental regulations across the energy sector, or as U.S. natural gas exports rise. As more sectors (transportation, manufacturing) electrify, domestic natural gas usage may rise.

In speaking with lawmakers, PACE also has provided some basic definitions of hedging, recognizing it’s a familiar practice to those engaged in agriculture, but can seem mysterious at first blush. Hedging is essentially a contract that locks in a certain amount of a needed resource at a later date for a set price. The cost of hedging comes with the payment for that extra assurance. The goal isn’t the absolute lowest price over time, but rather the intersection of a predictable and low price for as many time periods as possible.

PACE efforts in Missouri continue our advocacy on hedging issues, first captured in our March 2017 briefing paper. You can learn more at