Viewpoint: EV transition requires a competitive market, investment
The reconciliation package offers Democrats in Congress a once-in-a-lifetime chance to meet the country’s emission reduction goals. One of the many initiatives that may be included in this legislation is a plan to further invest in, overhaul, and electrify the country’s transportation sector. The incredible size of this undertaking has captured the attention of many Americans, and many wonder how we as a country can successfully transition to electric vehicles (EVs) and implement the infrastructure needed to charge them? The answer is a competitive marketplace and a commitment to support private sector investment.
Delaware has already engaged in several initiatives to begin overhauling our state’s transportation infrastructure. For example, the Clean Transportation Incentive Program, which was just extended this summer by the Delaware Department of Natural Resources and Environmental Control, is a program that provides rebates for the purchase or lease of EVs. However, growing the amount of EVs on the road is only sustainable if the accompanying charging infrastructure is also built. Unfortunately, in Delaware, we currently have less than five electric charging outlets per 10,000 vehicles. So, it is indisputable that as a state, we would benefit heavily from extensive investment in charging infrastructure.
However, lawmakers in Washington must ensure that implementing this new infrastructure does not exclude small, locally owned fuel stops. Many states across the country have begun allowing utilities to corner the EV charging market. In fact, Delaware made this exact decision last summer, when our Public Service Commission approved a proposal by Delmarva Power to expand public EV charging infrastructure. The idea of utilizing utility companies to expand EV charging options as a monopoly provider is a mistake. Instead, so that consumers get the best prices and service, they should ensure that local businesses are able to fairly compete in this emerging market.
Many independently owned fuel stops understand that they must begin transitioning to service and fuel EVs. However, these small businesses struggle to afford the high costs associated with the installation and operation of an EV charger. Utilities, however, can offset these upfront costs at the expense of their ratepayers by increasing the monthly cost of electricity. Utility companies also have an edge on the competition as a result of the monopoly they have over the sale of electricity. This monopoly allows utilities to control the cost of electricity for the same fuel stops they are competing against in the EV charging market.
But perhaps the most egregious barrier to fair competition comes in the form of demand charges. Utilities impose these charges as a way to ensure that the peak demand of the grid can be met. These charges are levied against commercial customers and are calculated based on the maximum amount of power that they consume during a determined period.
These demand charges drastically affect the ability of small businesses to compete in this market because EV chargers substantially spike power consumption during their use. As a result, fuel stop owners are hit with demand charges that end up accounting for a substantial portion of their operating costs and even exceed the revenue that the EV chargers generate. If these charges continue to be utilized in this manner, small businesses will have no hope of operating profitable EV chargers.
As our country electrifies our transportation system, independently owned fuel stops must be allowed to compete in this new frontier. Luckily, Delaware is represented by lawmakers like chairman of the Senate Committee on Environment and Public Works, Sen. Tom Carper. I am hopeful that Carper will understand the need to promote fair competition in this emerging market, and will work to ensure that local fuel stops here in Delaware are not put out of business due to anti-competitive practices like demand charges.
Stephanie Preece is a CPA, small business owner and a local philanthropist.