June 13, 2023
Jocelyn G. Boyd, Esquire
Chief Clerk & Administrator
Public Service Commission of South Carolina
101 Executive Center Drive, Suite 100
Columbia, South Carolina 29210
RE: Joint Application of Duke Energy Carolinas, LLC and Duke Energy Progress, LLC for Approval of Electric Vehicle Supply Equipment Program Docket No. 2022-158-E
Dear Ms. Boyd:
On behalf of the South Carolina Small Business Chamber of Commerce (SCSBCC) please accept this letter in opposition to the above referenced application of Duke Energy Carolinas, LLC and Duke Energy Progress, LLC (collectively, “Duke Energy”) for approval of a program to promote electric vehicle (EV) adoption by Duke Energy customers in South Carolina.
Below are our arguments against approval of this program.
First, just as we stated in our comments in our March 7, 2023, letter of support of the settlement in Docket No. 2022-369-E between the South Carolina Office of Regulatory Staff (ORS) and Dominion Energy South Carolina,
The SCSBCC fully supports the effort to ramp up the number of EV Charging Facilities in South Carolina. This is critical for all consumers, including small businesses, to purchase or lease EVs both for the financial benefit of reducing transportation costs as well as promoting a healthier, less carbon-intensive environment, the latter being important for addressing sea level rise that threatens our coastal small business tourism economy.
Duke Energy’s witness, Mr. Jay W. Oliver, explicitly states that the purpose of its Electric Vehicle Supply Equipment (EVSE) Program is to grow the EV market in South Carolina,
…the true benefit of the EVSE Program is that it will accelerate the development of the SC EV market by partially reducing the upfront costs of EV ownership which is a prominent barrier to customer adoption. (Rebuttal Testimony of Jay W. Oliver, Page 16)
Duke Energy is simply wrong in its pronouncement that a “prominent barrier” to customer’s purchasing EVs is the cost of charging stations for their use where they live.
Level 2 EV Charges that are 5-7 times faster than simply charging from a standard electrical outlet where one lives can be purchased for as little as $173. Of course, while a Level 2 charger is faster, charging via a standard electrical outlet will provide about 60 miles of battery driving (a further distance than the average commute to and from work) after 12 hours of charging (the likely average time an EV sits in a garage or driveway overnight).
It is no wonder that a decision to purchase an EV has nothing to do with the cost of charging at home.
According to new data from J.D. Power, this steady increase in the percentage of consumers who say they are “very unlikely” to consider an EV for their next vehicle purchase reflects persistent concerns about charging infrastructure and vehicle pricing.
Digging deeper into the primary barriers to EV purchase consideration, we find remarkable stability in the top reasons consumers provide for sticking with internal combustion engine (ICE) vehicles. Lack of public charging infrastructure and price have been the top two concerns for the past 10 months, along with related issues involving range anxiety, time required to charge and power outage and grid concerns. (EV Divide Grows in U.S. as More New-Vehicle Shoppers Dig in Their Heels on Internal Combustion, May 1, 2023)
The statistics in South Carolina underscore consumer’s concern about lack of public charging station infrastructure. There are approximately a little more than 1,000 public charging stations (2023) in our state for our 3.9 million licensed drivers and 1.9 million vehicles (2021).
The biggest fear of South Carolina consumers, who have the financial resources to purchase an EV and the interest, is about driving an EV on long-distance trips and not being able to find a reliable public charger to allow them to return home safely. Full stop.
Thus, Duke Energy’s proposal to make at-home EV Charging stations more affordable to address a “prominent barrier” to the growth of the EV market in our state is disingenuous. The more realistic purpose of Duke Energy’s proposal is to create long-term profit with an unneeded program.
As pointed out above, a new EV owner can easily afford to purchase an EVSE from existing sources (or simply have it included in the cost of the vehicle from the dealership).
However, a continuous, professional and inexpensive marketing program by Duke Energy will yield results over the years for its EVSE rental program. Duke Energy projects 95 residential customers for the program in 2024 if approved and adding only 175 additional by 2028.
Because it can be expected that few customers (residential and commercial) will not renew at the end of their 4-7 years lease, the slow addition of new rental customers will be a good revenue source for Duke Energy. With a guaranteed profit for each customer, ORS witness Ron Nelson has given testimony that,
If enrollments approached the numbers of new EVSE projected through 2035 under Companies’ MRC program, customers would be contributing over $75M to the Companies’ return on rate base.” (Surrebuttal Testimony of Ron Nelson, page 16)
The Duke Energy EVSC rental program does not address the actual “prominent barrier” to EV adoption in South Carolina. The “true benefit” of the very low risk program is to establish a perpetual profit program, which is not in the best interest of the customer nor local small business economies which will have up to $75 million in consumer spending transferred to the utility.
Our second argument against the Duke Energy EVSE proposal is that it violates the objective we stated in our comments contained in our March 7, 2023, letter of support of the settlement in Docket No. 2022-369-E between ORS and Dominion Energy South Carolina.
The cost of any EVSE utility program must not be put in the rate base which has the potential to socialize the program’s costs and requires all customers to subsidize the program even though only a small number of customers will directly benefit.
Duke Energy devotes much testimony to this issue of cost shifting.
The utility’s claim that it will secure all the cost of its EVSE rental program within a new rate class are more aspirational than factual.
As Mr. Ron Nelson states in his Surrebuttal testimony,
Unless all costs are directly assigned—which the Companies admit would not be practical—cost shifts are an unavoidable part of ratemaking. (Surrebuttal Testimony of Ron Nelson, page 4)
Duke Energy simply cannot assign all costs that go to support the proposed EVSE rental program (ex. the utility’s non-EVSE maintenance equipment, administrative staff time, marketing, etc) to the new rate class. All Duke Energy customers will thus be subsidizing the program to some extent which will more than harm small businesses which notoriously are at the upper end of parity compared to other classes in rate design.
Ultimately, Duke Energy points to its regulated status as the guarantee that there will be no cost shifting. However, the cost of a forensic audit by the ORS to determine if any cost shifting has occurred will be socialized to all taxpayers in the state. It will also consume ORS staff time and budget thus taking both from evaluating utility programs that are actual public needs.
Our third argument against the Duke Energy EVSE proposal is that it is unfair competition for businesses that are already fulfilling the public’s (residential and commercial) need for EVSE and its financing.
Private businesses will not be able to compete against Duke Energy in the retail price of its EVSE because of the heavy discount the utility will receive on large quantity purchases.
Private businesses will actually pay higher financing costs for EVSE purchases compared to Duke Energy due to the company’s financial strength from being a regulated monopoly with a government guarantee of profit.
Private businesses will not be able to compete with Duke Energy’s marketing. The utility will be able to use existing communications with its customers thus making marketing costs negligible while being able to reach all potential customers for its EVSE rental program. Private businesses will have higher marketing costs, that will add to the cost of each EVSE, and reach far fewer customers.
Private businesses might actually have a hard time purchasing the EVSE they need because Duke Energy’s large purchases could cause a shortage in the marketplace.
For all these reasons, Duke Energy’s rental program will severely undercut private businesses already in the residential and commercial marketplace.
Duke Energy maintains that it is “facilitating the market, not competing with it” and that it’s EVSE rental program will enable “the success of market players.” (Rebuttal Testimony of Jay W. Oliver, page 13)
We urge the SC Public Service Commission not to approve the Duke Energy EVSE rental program.
The program is unneeded and fails to address the actual “prominent barrier” to EV adoption in South Carolina while siphoning off consumer dollars from local economies.
The program will be subsidized by all Duke Energy customers as well as all South Carolina taxpayers.
The program is unfair competition for existing private businesses.
A bill in the SC Senate (S.684) makes an effort to addresses our opposition to Duke Energy’s EVSE rental program. That bill would require electric utilities that want to provide EV charging stations to the public to do so via a “separate, unregulated entity.” While not all of our concerns about the Duke Energy EVSE rental program are addressed, the bill is an effort to create a more level playing field for the EV charging station market.
Sincerely,
Frank Knapp Jr.
President & CEO