The growth of electric vehicles should be a big moneymaking opportunity for utilities. Hundreds of thousands of vehicles needing electricity at home, at work, and on the highway could potentially add billions in revenue to the industry. But who should be in charge of the chargers? Should automakers like Tesla Motors build their own? Are gas stations interested in getting into the charging business? Or should utilities be involved?
Utilities are testing out the idea of owning the electric vehicle charging infrastructure and rate-basing their cost, or spreading it among all of their customers over a period of time. If you're a utility, it's a great idea, but regulators don't think utilities owning charging stations is a good idea... at least not yet.
California deals a blow to PG&E
PG&E Corporation (NYSE:PCG) was one of the first to try to get electric car chargers rate-based with California regulators, and it didn't go well. As the utility sees it, to meet Gov. Jerry Brown's goal of having 1.5 million EVs on the road by 2025, PG&E should build chargers and charge its customers for them. This would ensure a critical mass of chargers that the state needs.
The company proposed building 25,100 charging stations in PG&E territory for a cost of $654 million. Each customer would then pay about $0.70 per month between 2018 and 2022 to pay for the installations.
But why would millions of customers who don't own electric vehicles want to pay $42 over the five years of the program for a charger they would never use?
Regulators agreed with consumer advocate groups who argued that all customers shouldn't have to share costs, and even said that utilities may not be the most cost-effective way to build chargers. It's tough to argue against that stance.
Charging infrastructure isn't the problem
Part of what works against PG&E, and utilities building chargers in general, is that charging infrastructure isn't a major problem within the U.S. According to the U.S. Department of Energy, there are 10,000 commercial EV charging stations across the country, with 26,681 outlets. And California has the largest network of any state. More chargers are needed, but who should pay for them?
Tesla Motors is building out its own supercharger network for the Model S and now Model X. It also sells chargers for the home and will work with most charging stations for public use. ChargePoint and PlugShare are also building out infrastructures of available chargers that charge customers for usage. NRG Energy even tried building chargers that could be used with a subscription.
It doesn't seem like there's a lack of chargers or a lack of new ideas on charging business models. For now, though, utilities are getting shut out of that market and it's a lost opportunity for them.
Utilities trying their hand at charging
PG&E will get to test the ownership concept after getting approval for a 2,510-charging-station network. But it remains to be seen if it will be allowed to build chargers in large numbers and charge them to its utility customers.
With threats coming from rooftop solar and energy efficiency, utilities are looking at EV chargers as a way to add assets to their books and charge customers for them long term. It's a great idea if you're a utility, but so far, it hasn't been for regulators or customers, who have plenty of charging options.
Travis Hoium has no position in any stocks mentioned. The Motley Fool owns and recommends Tesla Motors. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.