A look at today’s electric vehicle (EV) landscape reveals a contradictory picture.

On the one hand, skies are clearing as air pollutant emissions from an on-road transportation decline in response to COVID-19 — offering a glimpse into what a zero-emissions transportation future could offer cities struggling with air quality issues. New state regulations and federal legislation under consideration promise to accelerate the commercialization of zero-emission technologies across a variety of vehicle platforms and keep transportation sector emissions down. 

On the other hand, the global pandemic has dampened the outlook for EVs this year: Wood Mackenzie expects global annual EV sales to drop 43 percent in 2020. Meanwhile, Bloomberg NEF anticipates an 18 percent decline in passenger vehicle sales before ramping back up in 2021. Automakers have been postponing or even canceling plans to unveil new passenger EV models as they navigate a period of depressed demand for new vehicles.

In spite of the challenges ahead, many states are continuing to explore how investor-owned utilities (IOUs) can support bold climate and clean energy goals by enabling EV adoption. Electric utilities are natural partners in efforts to facilitate the deployment of EV charging infrastructure; develop electric rates that encourage EV charging when it’s beneficial for the grid; and implement education and outreach efforts that simplify customers’ transition to EVs. 

New York has a relatively supportive policy environment for EVs compared to other states.

While each state has taken a unique approach to defining utilities’ role in these efforts, results could have profound and universal impacts on EV charging infrastructure investment, utility business models and, ultimately, the states’ emissions reduction goals.

With numerous first-generation utility EV programs underway or complete, utility regulators in New York and California are in the process of setting the "rules of the road" for large-scale utility transportation electrification investments in transportation electrification in their respective jurisdictions.

New York: the push for a statewide EV program

New York has a relatively supportive policy environment for EVs compared to other states. The state administers popular incentive programs for light-duty as well as medium and heavy-duty vehicles. It has joined California and other states in requiring automakers to sell increasingly greater numbers of EVs. New York also has supported several initiatives to increase the availability of EV charging infrastructure, including the ambitious $250 million EVolve NY initiative. However, until recently, utility support for EVs was largely dormant. 

In 2018, the New York State Department of Public Service (DPS) initiated a generic proceeding to evaluate utilities’ role in preparing for and supporting EV adoption. This January, DPS announced an unprecedented proposal (automatic download) to have the investor-owned utilities implement a nearly $600 million EV charger incentive program over the next five years that includes the installation of charging stations needed to meet New York’s 2025 goal of 850,000 passenger EVs on state roads.

While the intent behind DPS’ proposal was in service of meeting state climate and clean energy objectives, the Joint Utilities of New York found that the proposal could be improved (automatic download) to better meet the needs of their unique service territories, including greater program flexibility to deploy charging infrastructure cost-effectively; going beyond the light-duty vehicle segment and support charging infrastructure investments for medium and heavy-duty EVs; and reinforcement of utility EV education and outreach initiatives — similar to what the utilities already offer for other customer-facing clean energy programs.

The Joint Utilities were not alone in making these recommendations: Comments from diverse government, industry and nonprofit organizations bolstered the need to make DPS’ proposal simpler, more flexible and responsive to market needs. Given the broad agreement across these key issues, New York is well-positioned to jumpstart the EV market to benefit utility customers, the electricity system and the environment. 

California: a framework for long-term EV action

With about half of the nation’s 1.4 million light-duty EV sales and an array of supportive regulations, incentives and complementary initiatives, the Golden State is the country’s undisputed EV leader.

According to Senate Bill 350, the state’s investor-owned electric utilities have been required to file transportation electrification programs with the California Public Utilities Commission (CPUC) that support EV adoption. Since 2016, the CPUC has approved over $1 billion (automatic download) in utility transportation electrification investments covering a diverse range of market needs, including:

• Multi-unit dwelling (or multifamily) charging;
• Workplace charging;
• Public fast charging;
• Medium- and heavy-duty fleet charging; and
• Port and airport charging

In 2018 after early utility EV programs were underway, the CPUC established a proceeding to improve and streamline IOU transportation electrification planning needed to meet the state’s climate and clean energy goals over the next 10 years.

With about half of the nation’s 1.4 million light-duty EV sales and an array of supportive regulations, incentives and complementary initiatives, the Golden State is the country’s undisputed EV leader.

Shortly after DPS released its whitepaper proposal in New York, the CPUC issued its own Draft Transportation Electrification Framework (TEF). The TEF creates guide rails for future utility investment in transportation electrification and addresses a suite of related issues that range from program equity to EV charger communication standards.

The TEF also proposed a lengthy procedure for the submission of utility transportation electrification plans (TEPs) and subsequent utility EV program proposals — effectively limiting any full-scale utility EV program filings until the first quarter of 2023. Given that these filings often take a year to litigate at the CPUC and additional time to set up before they are ready for implementation, that easily could mean new "steel in the ground" from these programs wouldn’t occur until 2025. 

The state’s large IOUs, along with many other key stakeholders, pushed back on this concept, stating that the move would jeopardize California’s EV goals and contravene the objectives of Senate Bill 350. Instead, the IOUs recommended adopting a streamlined approach whereby the utilities would submit data-driven TEPs and EV program proposals concurrently — significantly reducing the amount of time needed to approve new programs and avoiding litigation of non-controversial program features. The commission plans to finalize the framework by the end of 2020.

A path forward

Despite their different regional dynamics, New York and California’s utility regulators shared several core similarities in their approach to transportation electrification planning.

Both regulators recognize the importance of utilities in achieving state EV goals, acknowledge the substantial benefits that EVs can provide to utility customers, seek to expand medium and heavy-duty electrification efforts, and encourage utilities to provide more information to other EV stakeholders. 

Beyond these forward-thinking states, utilities across the country are assessing how they can proactively accelerate and accommodate future EV adoption to the benefit of all utility customers, the grid and the environment.

Beyond these forward-thinking states, utilities across the country are assessing how they can proactively accelerate and accommodate future EV adoption to the benefit of all utility customers, the grid and the environment.

To achieve this, utilities and regulators should establish open and regular dialogue on transportation electrification to develop an understanding of key EV regulatory issues. They have an immediate opportunity to learn from actions taken in other jurisdictions and establish a streamlined, transparent process for approval of utility EV program proposals. Here’s where they could start:

• Focus on the benefits while minding costs. Utilities’ EV programs are premised on broad utility customer, grid and environmental benefit. Explaining and quantifying these benefits can improve the case for transportation electrification. Program costs also must be considered and optimized; however, the merits of a utility’s EV program need not be solely dependent on program cost if it contributes to other environmental, distributed energy resource or public interest objectives established by utility regulators.
• Take a portfolio approach. There is no "one-size-fits-all" approach to EV charging infrastructure. Given the array of vehicle and market segments that are ripe for electrification, utilities have taken a portfolio approach to EVs — developing programs that address charging needs in various market segments while providing additional support in underserved segments such as multi-unit dwellings or heavy-duty fleets.
• Incorporate equity. Transportation electrification can provide benefits to all customers, and utilities make it real by developing programs that focus on the needs of underserved or vulnerable communities. Infrastructure carve-outs, transit electrification, targeted technical assistance and other complementary efforts can work to support transportation electrification for all.
• Leverage outside funding where possible. Stacking other available incentives for EV charging infrastructure can reduce costs for program participants and lower costs for all utility customers. These incentives may be particularly important for fleet customers looking to go electric.
• Make charging "smart." Regulators should take advantage of the "smarts" found in EVs and EV chargers by encouraging programs that incorporate load management to benefit the grid. Time-varying electricity rates and demand response are just two examples of smart charging that can enhance electricity system flexibility and reliability.
• Don’t forget education and outreach. Utilities are uniquely positioned to educate customers on the benefits of electric fuel and increase program uptake. Greater flexibility to market and pursue partnerships with auto dealerships, community organizations and other key stakeholders ultimately will increase the benefits associated with utility EV programs.
• Bake in reporting and data collection. EV program implementation creates new opportunities for regulators to gain insights on charging dynamics, develop best practices and shape future program design. For these reasons, utilities have been regularly collecting and socializing data on program performance.
• Create pathways to expand program offerings. Both utilities and regulators are realizing that EV programs are not a one-off exercise but rather a sustained effort to meet evolving customer and grid needs. Regulators should establish avenues for utilities to expand and modify future EV programs — creating a more nimble regulatory environment for the approval of critical utility EV investments. It may be increasingly common for utilities to implement several complementary EV programs simultaneously, as is the case in New York and California.

EVs undoubtedly face near-term hurdles as government and industry players navigate immediate public health and economic challenges. However, now is not the time to pump the brakes on transportation electrification. With careful planning, utilities and their regulators can strategically advance beneficial investments that serve as a foundation for a long-term EV growth.