Fox APP
Page 1 of 51
Table of Contents Table of Contents................................................................................................................ 2 Acknowledgements............................................................................................................. 4 Executive Summary ............................................................................................................ 5 Chapter 1: Introduction ....................................................................................................... 7 Overview of the Report................................................................................................... 7 Client and Policy Problem Overview ............................................................................. 8 California Public Utilities Commission ...................................................................... 8 Hybrid Gasoline/Electric Vehicles ............................................................................. 8 Policy Problem and Significance ................................................................................ 9 Scope of the Report....................................................................................................... 10 Focus on Three California Electric Utilities ............................................................. 10 Focus on Customers with Plug-In Access to Household Electricity ........................ 11 Data Limitations and Assumptions........................................................................... 11 Use of the Term “Meter� .......................................................................................... 11 Chapter 2: Background Information ................................................................................. 13 California Electricity Regulations................................................................................. 13 Renewable Portfolio Standard .................................................................................. 13 California Greenhouse Gas Emissions and AB 32 ................................................... 14 California Electricity Demand and Pricing................................................................... 15 Basic Electricity Units .............................................................................................. 15 California Electricity Demand Patterns .................................................................... 15 Electricity Rate Plans................................................................................................ 17 Smart Metering Initiative.......................................................................................... 19 Potential Intermittent-Service Rate Plan for PHEVs .................................................... 21 Possible Battery Charging Control Options.............................................................. 21 Fixed Rate or Dynamic Pricing................................................................................. 22 Appropriate Devices for Intermittent Electricity Service ......................................... 23 Chapter 3: Policy Options................................................................................................. 24 Policy Option #1 ........................................................................................................... 24 Policy Option #2 ........................................................................................................... 25 Policy Option #3 ........................................................................................................... 25 Policy Option #4 ........................................................................................................... 26 Chapter 4: Criteria for Evaluating Electricity Pricing Policy Options ............................. 27 Legality ......................................................................................................................... 27 Politically and Technically Feasible ............................................................................. 27 Simple Enough for Consumers to Use Effectively ....................................................... 28 Financial Impact............................................................................................................ 28 Greenhouse Gas Emissions Impact............................................................................... 29 Final Policy Selection ................................................................................................... 29 Chapter 5: Data Analysis .................................................................................................. 30 Chapter 6: Analytical Results ........................................................................................... 31 Legality ......................................................................................................................... 31 Politically and Technically Feasible ............................................................................. 31 Simple Enough for Consumers to Use Effectively ....................................................... 32 Fox APP
Page 2 of 51
Financial Impact............................................................................................................ 33 Greenhouse Gas Emissions Impact............................................................................... 36 Policy Selection ............................................................................................................ 38 Chapter 7: Recommendations ........................................................................................... 39 Chapter 8: Conclusion....................................................................................................... 42 Appendix........................................................................................................................... 44
DISCLAIMER: This report was prepared in partial fulfillment of the requirements for the Master in Public Policy degree in the Department of Public Policy at the University of California, Los Angeles. It was prepared at the direction of the Department and of Judith IklĂŠ for the California Public Utilities Commission as a policy client. The views expressed herein are those of the author and not necessarily those of the Department, the UCLA School of Public Affairs, UCLA as a whole, or the client.
Fox APP
Page 3 of 51
Acknowledgements I would like to thank my faculty advisor, Professor Mark Peterson, for his expert guidance, excellent suggestions, and instructive feedback. I would also like to thank my peer reviewers, Helen Beckon Kerstein, Sarah Shoff, and Masahiro Nagira for their insights and constructive criticism. The contributions from all four of these individuals prompted continual improvement of this document. I am very grateful for their kind and diligent assistance. I would like to thank the California Public Utilities Commission and the Commission staff that worked with me during this project. I am glad for the opportunity to work on an interesting and important topic. It has been a great experience. I am especially grateful for the assistance provided by Judith IklĂŠ, my primary contact at the Commission for this project. I must also thank the Renewables Portfolio Standard team at the Commission for letting me intern with them last summer. So many aspects of this report have been influenced by the knowledge and experience I gained from working with Amy, Anne, Cheryl, Jaclyn, Paul, Sara, and Simon. The graphic images on pages one, three, and four of this report are courtesy of and copyrighted by the State of California.
Fox APP
Page 4 of 51
Executive Summary The California Public Utilities Commission (CPUC) is the state agency that regulates investor-owned electric utilities, comprising about 80% of California’s electricity service.1 The CPUC has authority to determine a wide range of electricity-sector policies, such as setting all electricity rates and metering regulations for regulated utilities. The CPUC has a mandate to ensure that customers have consistent access to safe and reliable electricity service at reasonable rates while protecting customers and the environment. Auto manufacturers have announced that plug-in hybrid electric vehicles may be commercially available in 2010.2 Hybrid vehicles are very popular in California. In 2007, over 26% of new hybrid vehicles in the country were registered in California.3 If plug-in electric vehicles become popular in California, the increased electricity demand could overwhelm state electricity supply capacity. Insufficient capacity could lead to substantial increases in electricity rates and rolling blackouts, similar to the situation during the 2001 electricity crisis. To address responsibly the potential increase in electric demand, my primary contact at the CPUC, Judith Iklé, has requested information about potential plug-in vehicle electricity demand levels over the next 20 years and policy recommendations to help the state absorb the increased demand in ways that meet California’s public policy goals. These goals include reducing energy costs for residents, increasing the supply of renewable energy to the grid, and decreasing greenhouse gas emissions. This report provides data and policy recommendations to inform and advise CPUC decision makers. The recommendations focus on meeting the needs of customers who will be able to park their plug-in electric vehicle(s) in a location with access to their household electricity service. The report also discusses, to a lesser extent, ways for the CPUC and other entities to address the needs of plug-in vehicle drivers who are unable to connect to their household electricity service. The report contains the following findings: • Plug-in electric travel can be substantially less expensive than gasoline-powered travel—sometimes costing as little as $0.38 to $1.77 with current California rates for the amount of electricity equivalent to one gallon of gasoline.4
1
Statistics for 2007 from the California Energy Consumption Database, Energy Consumption Data Management System, California Energy Commission, http://www.ecdms.energy.ca.gov/Elecbyutil.asp, accessed February 2, 2009. 2 Ben Stewart, “2010 Toyota Prius Plug-in Hybrid Prototype: Next-Gen Test Drive,” Popular Mechanics, October 22, 2007, http://www.popularmechanics.com/automotive/new_cars/4227944.html, accessed January 30, 2009. 3 Associated Press, “Hybrid Sales, Led by Prius, up 38 Percent,” April 21, 2008, http://www.msnbc.msn.com/id/24230209/, accessed March 3, 2009. 4 Cf. Appendix Table AT8 Row (G).
Fox APP
Page 5 of 51
• • •
Plug-in electric vehicle travel in California causes the emission of 80% less greenhouse gas per mile than gasoline-powered travel.5 Plug-in electric travel may comprise 10% of all California vehicle miles traveled in 2020 and 40% of all vehicle miles traveled in 2030.6 Plug-in electric travel in California may consume 5 million MWh in 2015, 14 million MWh in 2020, and 72 million MWh in 2030—the latter amount is approximately one-third of total current statewide demand.7
As indicated by the title of this document, “Five Birds with One Stone,” the report shows that plug-in electric vehicle travel can have five major benefits for California: 1. Decreased motor vehicle air pollution 2. Decreased overall greenhouse gas emissions 3. Decreased overall energy costs 4. Decreased dependence on foreign oil 5. Increased ability for utilities to utilize intermittent renewable sources of energy To achieve these benefits for California in ways that are consistent with the CPUC’s mission, the report provides the following recommendations for the CPUC: 1. Implement an intermittent-service rate plan for plug-in vehicle owners. 2. Prepare for moderately increased electricity demand due to plug-in vehicles, amounting to one-third of current demand by 2030. 3. Develop programs and information campaigns, such as informing consumers about the cost of electricity equivalent to a gallon of gasoline, to help encourage consumer migration to plug-in electric travel. 4. Encourage and support businesses and other agencies trying to provide inexpensive electricity access for electric vehicle owners who do not have access to their home electricity service where they park their vehicle. 5. Provide educational information to businesses and other institutions about the cost of letting motorists charge vehicles on their premises during peak-demand periods. 6. Provide educational information to businesses and other institutions about how to prevent motorists from recharging vehicle batteries on their premises during peakdemand periods. 7. Develop programs to increase the total amount of household devices that can be cycled off during peak-demand periods, such as air conditioners, clothes dryers, and water heaters.
5
Cf. Appendix Table AT7 Row (H). Cf. Appendix Table AT6. 7 Cf. Appendix Tables AT1 and AT6. 6
Fox APP
Page 6 of 51
Chapter 1: Introduction California produces 13% of the United States’ Gross Domestic Product, approximately $1.7 trillion, ranking it as the sixth-largest economy in the world in 2004.8 As the largest state in the country, California is home to 36.5 million people--12% of all U.S. residents.9 With a large population and economy, changes in the behavior of a small percentage of consumers can have a large aggregate impact for the state. For example, California motorists drove 280 billion miles in 2000, and consumed over 20 billion gallons of gasoline and diesel fuel in 2007.10 If 20% of California motor vehicle travel in 2030 were fueled by electricity instead of gasoline, the additional electric demand would exceed the amount currently consumed in the entire city of Los Angeles.11 California public agencies, such as the California Public Utilities Commission (CPUC), must respond effectively to shifts in consumer resource demands in order to maintain a safe and economically vibrant place to live and work. I was commissioned by my primary contact at the CPUC, Judith Iklé, to provide analysis and policy recommendations to help the CPUC prepare for a potential increase in electricity consumption due to electric-powered vehicle travel.
Overview of the Report The rest of the “Introduction” chapter of this report briefly describes my client, sets the scope of this study, and provides a brief overview of the policy problem and the major organizations involved in creating and implementing a set of policy solutions. Due to the complexity of the task, I limit the scope of this analysis in order to generate more targeted recommendations and to facilitate assessment of the policy options. Specifically, the report is focused on providing recommendations that will affect plug-in vehicle owners who have access to their home electricity service where they park their vehicle. Next, the “Background” chapter provides more detailed supporting information about various factors that will play a role in determining what policy options are available. Then, the “Policy Options” chapter sets forth four potential policies that I analyze in the later chapters of the report. The next chapter, “Criteria for Evaluating Electricity Pricing Policy Options,” specifies the metrics I use to determine which of the policy options I recommend for implementation. The “Data Analysis Results” chapter outlines the data 8
California Legislative Analyst’s Office, “Cal Facts 2004: California’s Economy and Budget in Perspective,” http://www.lao.ca.gov/2004/cal_facts/2004_calfacts_econ.htm, accessed February 15, 2009. 9 United States Census Bureau, “State & County Quick Facts: California 2006,” http://quickfacts.census.gov/qfd/states/06000.html, accessed February 15, 2009. 10 Cf. Appendix Table AT3; Energy Information Agency, “California Quick Facts,” 2009, http://tonto.eia.doe.gov/state/state_energy_profiles.cfm?sid=CA, accessed March 16, 2009. 11 Cf. Appendix Tables AT1 and AT5.
Fox APP
Page 7 of 51
sources I use in the report and the major quantitative findings that guide my policy analysis. The “Analytical Results” chapter evaluates each of the policy options against the criteria specified in the “Criteria for Evaluating Electricity Pricing Policy Options” chapter. Then, I provide a set of suggested actions to the CPUC in the “Recommendations” chapter. Finally, I discuss the overall implications of plug-in vehicle use and how it may affect California in the “Conclusion” chapter. I also provide an appendix with data tables and calculations at the end of the report.
Client and Policy Problem Overview California Public Utilities Commission The California Public Utilities Commission is the state agency that regulates electric utilities. While certain utilities, such as those owned by municipalities, are exempt from CPUC oversight, utilities under CPUC jurisdiction provide about 80% of California’s residential electricity supply.12 The CPUC has authority from the California Constitution and laws enacted by the legislature to determine a wide range of electricity-sector policies, such as setting all electricity rates and metering regulations for regulated utilities.
Hybrid Gasoline/Electric Vehicles Conventional motor vehicles rely on gasoline- or diesel-powered internal combustion engines for all of their power. In recent years, auto manufacturers have altered that equation by adding electric motors to vehicle engines. Although designs vary, the general concept is for these hybrid gasoline/electric vehicles (HEV) to charge batteries intermittently by recapturing wasted power from the engine or brakes. This power can be used later to propel the vehicle forward, with or without the assistance of the internal combustion engine. The efficiency gains from hybrid vehicles, combined with air quality concerns, volatile petroleum prices, and efforts to wean motorists from petroleum dependence, have prompted the development of hybrid vehicles that can recharge their batteries with power from an electric outlet. Some enthusiasts have modified existing hybrid vehicles to add a plug and additional battery capacity.13 Auto manufacturers have announced plug-in 12
Statistics for 2007 from the California Energy Consumption Database, Energy Consumption Data Management System, California Energy Commission, http://www.ecdms.energy.ca.gov/Elecbyutil.asp, accessed February 2, 2009. 13 Matthew L. Wald, “Closing the Power Gap Between a Hybrid’s Supply and Demand,” New York Times, January 13, 2008, http://www.nytimes.com/2008/01/13/automobiles/13ULTRA.html, accessed January 30, 2009; Carrie Kahn, “California Company Develops Plug-In Hybrid,” National Public Radio, April 7, 2008, http://www.npr.org/templates/story/story.php?storyId=89424919, accessed January 30, 2009.
Fox APP
Page 8 of 51
hybrid electric vehicle (PHEV) models that may be available in 2010.14 If PHEV motorists charge their vehicles before driving, they may be able to travel 10-40 miles on battery power before the gasoline engine turns on, depending on the battery capacity of their vehicles.15 For comparison purposes, the average vehicle in the United States traveled about 25 miles per day in 2001.16 Many motorists could substantially decrease their gasoline consumption with a PHEV. The superior efficiency of electric motors could also yield a significant savings for motorists. Depending on a customer’s electric rates, the amount of electricity required to travel the same distance as a gallon of gasoline may cost as little as $0.38.17 If consumers begin to switch to PHEVs, the CPUC and California utilities will need to be prepared for the increased demand for electricity. Because electricity generation often involves the emission of greenhouse gases, it is also important for California to understand what effect PHEVs will have on statewide greenhouse gas emissions.
Policy Problem and Significance The CPUC anticipates that plug-in hybrid electric vehicles will begin to comprise a significant, but unknown, portion of the automobile market share within the next two decades. Therefore, my primary contact at the CPUC, Judith Iklé, has asked me to provide the CPUC with predictions about the amount of electric-powered travel and the corresponding electricity demand increases and statewide greenhouse gas emissions changes through 2030 as a result of the expected conversion. In addition to this information, Ms. Iklé also requests that I make policy recommendations to the CPUC designed to help the Commission respond to this shift in demand in a way that reduces the resulting financial and greenhouse gas emission impacts. CPUC staff members have suggested that electric metering and rate regulations could form part of a policy solution. For example, if the electric grid and utility power plants are capable of handling the extra demand, and electric-powered travel has beneficial air quality and greenhouse gas impacts for the state, then perhaps the CPUC could encourage more electric-powered travel by providing lower electricity rates for vehicles.
14
Ben Stewart, “2010 Toyota Prius Plug-in Hybrid Prototype: Next-Gen Test Drive,” Popular Mechanics, October 22, 2007, http://www.popularmechanics.com/automotive/new_cars/4227944.html, accessed January 30, 2009. 15 Electric Power Research Institute and Natural Resources Defense Council, “Environmental Assessment of Plug-In Hybrid Electric Vehicles,” July 2007, http://mydocs.epri.com/docs/public/000000000001015325.pdf, accessed January 19, 2009. 16 U.S. Department of Energy, “Transportation Energy Data Book,” Chapter 8: Table 8.12, http://cta.ornl.gov/data/tedb27/Spreadsheets/Table8_12.xls, accessed March 16, 2009. 17 Cf. “Analytical Results” chapter of this document.
Fox APP
Page 9 of 51
Hybrids have been very popular in California. In 2007, over 26% of all new hybridvehicle registrations nationwide were in California.18 If PHEVs become very popular, this could cause a substantial increase in demand for electricity. Since electricity generation typically produces greenhouse gas emissions, increased electricity consumption could increase statewide greenhouse gas emissions. If the CPUC does not address the anticipated shift in resource use appropriately, the increased demand for electricity could result in unnecessarily expensive upgrades to the state electricity infrastructure, adverse levels of greenhouse gas emissions, and insufficient electricity supply. During the electricity crisis in 2001, California experienced an insufficient electricity supply that resulted in substantial increases in electricity rates and rolling blackouts. The CPUC wants to plan proactively for the increased demand to avoid these potential problems. For this project, my primary contact is Judith Iklé, Program/Branch Manager for the Procurement, Renewables & Climate Strategy Branch of the CPUC’s Energy Division.
Scope of the Report Predicting the development of technology and modifications in the behavior of 38 million people are complicated tasks that make it difficult to develop policies to address those changes. I limit the scope of this analysis in order to generate more precise findings for the CPUC and to facilitate assessment of policy options relevant to the client. As a result, my analysis is targeted to specific utilities and specific types of utility customers. In addition, my findings are based on a set of available data and therefore contain the degree of uncertainty associated with those data.
Focus on Three California Electric Utilities Three of the CPUC-regulated utilities serve over 97% of the total electricity load under CPUC’s jurisdiction.19 These investor-owned utilities are Pacific Gas & Electric (PG&E), San Diego Gas and Electric (SDG&E), and Southern California Edison (SCE). As a result of their dominance, this report will focus on these three utilities.
18
Associated Press, “Hybrid Sales, Led by Prius, up 38 Percent,” April 21, 2008, http://www.msnbc.msn.com/id/24230209/, accessed March 3, 2009. 19 U.S. Census Bureau, Statistics for California from the 2005-2007 American Community Survey 3-Year Estimates, http://factfinder.census.gov/servlet/ADPTable?_bm=y&-geo_id=04000US06&qr_name=ACS_2007_3YR_G00_DP3YR4&-ds_name=ACS_2007_3YR_G00_&-_lang=en&-_sse=on, accessed February 26, 2009.
Fox APP
Page 10 of 51
Focus on Customers with Plug-In Access to Household Electricity Californians live in a variety of housing situations. Fifty-eight percent of Californians live in owner-occupied housing and seventy-eight percent of residents live in housing structures composed of four or fewer units.20 Ninety-two percent of residents live in households that have access to a motor vehicle.21 Residents with motor vehicles garage those vehicles in a variety of ways. Some owners park one or more of their vehicles in a garage or elsewhere on their property. Some owners park one or more of their vehicles on the street or in other areas not located on their property. This report makes recommendations focused on meeting the needs of customers who will be able to park their plug-in electric vehicle(s) in a location with access to their household electricity service—whether this access exists currently or can be created in the future, such as by adding outlets near vehicle parking spots. The report will also, to a lesser extent, discuss ways for the CPUC and other entities to address the needs of plug-in electric vehicle owners who will be unable to park in a location with access to their household electric service.
Data Limitations and Assumptions For this report I rely heavily on data from other sources. For example, my calculations for electric-powered vehicle miles traveled and greenhouse gas emissions for vehicle travel are based in part on data from the Electric Power Research Institute and Natural Resources Defense Council study, “Environmental Assessment of Plug-In Hybrid Electric Vehicles.”22 While the EPRI/NRDC study presents findings that are very similar to other reputable studies I have seen, their projections of future events are inherently uncertain. As such, I do not take their results as definitive prophecy. The reader should view my results through a similar lens. This report offers informed predictions of future events within a range of error. The exact magnitude of my predictions is less important than the general trend they present.
Use of the Term “Meter” I use the term “meter” extensively throughout this report. When I use this term, I am referring to a device that monitors the amount of electricity flowing from the utility and being consumed by a ratepayer. In some instances, this meter will also be able to control the flow of electricity to the customer, i.e. the utility can shut off the flow of energy and turn it back on by issuing commands to the meter. Additionally, this meter will have a simple user interface that allows the user to select different options for electricity
20
Ibid. Ibid. 22 Electric Power Research Institute and Natural Resources Defense Council, “Environmental Assessment of Plug-In Hybrid Electric Vehicles,” July 2007, http://mydocs.epri.com/docs/public/000000000001015325.pdf, accessed January 19, 2009. 21
Fox APP
Page 11 of 51
delivery. I am using the term “meter” for the sake of simplicity and because it is an easily understood concept for laypeople. For some regulatory purposes, the CPUC uses the term “meter” in a much more extensive way—as a device that measures energy delivered to a customer, requires a certain type of connection to the utility, has certain laws and regulations associated with it, etc. The intent of these two paragraphs is to clarify for the reader exactly what I mean when I use the term “meter.” If the CPUC implements my recommendations, it may avoid confusion amongst their staff by replacing “meter” with any alternative, technical term of their choice during their rulemaking process.
Fox APP
Page 12 of 51
Chapter 2: Background Information This chapter presents important factors, including relevant regulations, current consumer demand behavior, and developments in technology, that affect the feasibility and success of any potential policy recommendations.
California Electricity Regulations In attempts to balance a number of policy goals, such as ensuring safe, affordable, and reliable access to energy while maintaining environmental quality, California closely regulates the electricity sector. While laws may not always have their intended effect, they shape the scope of possible policy responses and influence the effectiveness of policy options. Regulations pertaining to renewable energy and greenhouse gas emissions will factor into my policy recommendations because they dictate the nature of a certain portion of the electricity supply (i.e. from renewable, often intermittent sources of energy) and constrain the generation of much of the rest of the supply (i.e. the majority portion produced from fossil fuels).
Renewable Portfolio Standard The Renewables Portfolio Standard (RPS) was established in 2002 when then-Governor Davis signed SB 1078 into law.23 This law required utilities under the CPUC’s jurisdiction to generate 20% of their electricity by 2020 from certain renewable energy sources.24 This standard was later accelerated to 20% by 2010 via SB 107.25 Acceptable sources of energy under this law include biomass, small hydroelectric (under 20MW), geothermal, solar, wind, and ocean power.26 The CPUC is tasked with implementing and enforcing the RPS legislation.27 Governor Schwarzenegger has announced a new goal for the state: 33% renewables by 2020.28 However, the legislature has not yet codified this increased standard into law. California’s major investor-owned utilities—Pacific Gas & Electric (PG&E), Southern California Edison (SCE), and San Diego Gas & Electric (SDG&E)—are on track to achieve the 20% standard by 2013.29 Municipally owned 23
SB 1078, http://www.energy.ca.gov/portfolio/documents/SB1078.PDF, accessed February 2, 2009. Ibid. 25 SB 107, http://www.energy.ca.gov/portfolio/documents/sb_107_bill_20060926_chaptered.pdf, accessed February 2, 2009. 26 SB 1078, http://www.energy.ca.gov/portfolio/documents/SB1078.PDF, accessed February 2, 2009. 27 Ibid. 28 California Governor Arnold Schwarzenegger, Executive Order S-14-08, http://www.gov.ca.gov/executive-order/11072/, accessed February 2, 2009. 29 CPUC, Renewables Portfolio Standard Quarterly Report, July 2008, http://docs.cpuc.ca.gov/published/REPORT/85936.htm, accessed February 2, 2009. 24
Fox APP
Page 13 of 51
utilities, such as the Los Angeles Department of Water and Power, are not subject to the state RPS regulation or to CPUC oversight.30 However, some of these utilities outside of CPUC jurisdiction have self-imposed renewable energy goals.31
California Greenhouse Gas Emissions and AB 32 Certain greenhouse gases produce a larger heat-trapping effect than others. For example, emitting 1 million tons of nitrous oxide (N2O) has the same impact on climate change as emitting 310 million tons of carbon dioxide (CO2).32 People commonly refer to greenhouse gas emissions and carbon dioxide emissions interchangeably, since carbon dioxide is the most prevalent GHG. However, it is important to include the impact of all heat-trapping gases in climate change policy studies because other gases have substantially stronger heat-trapping potential. Throughout this report, I will refer to greenhouse gas emissions in terms carbon dioxide equivalent (CO2e) GHG emissions— the amount of CO2 with the same global warming potential as the mix of gases I am discussing. Governor Schwarzenegger signed AB 32 in 2006, a law that requires California to reduce greenhouse gas (GHG) emissions to 1990 levels by 2020.33 This goal corresponds to an emissions level of 427 metric tons of CO2e—a 25% decrease from the amount of GHG emissions expected without a change in state policy or consumer behavior.34 The governor also announced a separate goal of reductions to 80% below 1990 levels by 2050.35 The federal government has restricted California’s ability to regulate motor vehicle GHG emissions. While President Obama has asked the Environmental Protection Agency (EPA) to reconsider its decision to block California’s regulations, the EPA has no estimate of when that decision might be revisited.36 Recently, the EPA also declared that GHG pollution poses a potential health hazard, thereby requiring federal regulation under 30
SB 1078, http://www.energy.ca.gov/portfolio/documents/SB1078.PDF, accessed February 2, 2009. Los Angeles Mayor Antonio Villaraigosa, “Green LA: An Action Plan to Lead the Nation in Fighting Global Warming”, May 2007, http://business.lacity.org/GreenLA_CAP_2007.pdf, accessed February 10, 2009. 32 U.S. Environmental Protection Agency, “Greenhouse Gases and Global Warming,” April 2002, http://yosemite.epa.gov/oar/GlobalWarming.nsf/UniqueKeyLookup/SHSU5BUM9T/$File/ghg_gwp.pdf, accessed March 3, 2009. 33 AB 32, http://www.arb.ca.gov/cc/docs/ab32text.pdf, accessed February 2, 2009. 34 Ibid.; California Air Resources Board, “Key Events in the History of Air Quality in California,” January 2008, http://www.arb.ca.gov/html/brochure/history.htm, accessed January 22, 2009; California Energy Commission, “Inventory of California Greenhouse Gas Emissions and Sinks: 1990 to 2004,” December 2006, http://www.energy.ca.gov/2006publications/CEC-600-2006-013/CEC-600-2006-013-SF.PDF, accessed January 26, 2009. 35 California Governor Arnold Schwarzenegger, “Gov. Schwarzenegger Signs Landmark Legislation to Reduce Greenhouse Gas Emissions,” press release, September 27, 2006, http://gov.ca.gov/pressrelease/4111/, Accessed February 2, 2009. 36 Erin Voegele, “California Works to Reduce GHG Emissions,” Ethanol Producer Magazine, May 2009 issue, http://ethanolproducer.com/article.jsp?article_id=5573, accessed April 17, 2009. 31
Fox APP
Page 14 of 51
the Clean Air Act.37 The federal government has not yet decided whether state-level GHG regulations, like California’s AB32, will be preempted by federal rules. The California Air Resources Board (CARB) has been given the responsibility of implementing AB 32.38 Since California is currently prohibited from regulating motor vehicle GHG emissions, CARB’s GHG reduction plan relies heavily on emission decreases from fixed sources, such as electric power plants.39 CARB is expecting the electricity sector to account for 40% of the state’s overall reduction in emissions, even though only 25% of emissions occurred in the sector in 2004.40 By comparison, 38% of California’s GHG emissions came from the transportation sector.41 If the EPA decides to let California regulate tailpipe GHG emissions, CARB may shift the emissions reduction burden towards motor vehicles.
California Electricity Demand and Pricing Basic Electricity Units Electricity is measured in units called watts. Standard incandescent light bulbs typically consume 40 to 100 watts. A handheld hairdryer might use 750 to 2000 watts. One kilowatt equals 1,000 watts. Utility bills measure electricity consumption in kilowatthours. One kilowatt-hour, abbreviated as kWh, is the equivalent of using ten 100-watt light bulbs simultaneously for the period of one hour, or using a single 100-watt bulb for 10 hours. A megawatt-hour, abbreviated as MWh, is a larger measure of energy that equals 1,000 kWh.
California Electricity Demand Patterns California’s electricity demand patterns show a substantial increase during business hours, as shown by Figure 1.42 This pattern is even more strongly observed in the 37
Jessica Yellin, “Greenhouse Gases Pose Health Hazard,” CNN.com, April 17, 2009, http://www.cnn.com/2009/TECH/science/04/17/greenhouse.gas.hazard.epa/index.html, accessed April 17, 2009. 38 AB 32, http://www.arb.ca.gov/cc/docs/ab32text.pdf, accessed February 2, 2009. 39 CARB, “Climate Change Proposed Scoping Plan,” October 2008, http://www.arb.ca.gov/cc/scopingplan/document/psp.pdf, accessed February 2, 2009. 40 CPUC, “Final Opinion on Greenhouse Gas Regulatory Strategies,” http://docs.cpuc.ca.gov/PUBLISHED/AGENDA_DECISION/92288.htm, accessed February 10, 2009; California Climate Change Portal, http://www.climatechange.ca.gov/inventory/index.html, accessed February 2, 2009. 41 California Climate Change Portal, http://www.climatechange.ca.gov/inventory/index.html, accessed February 2, 2009. 42 Statistics for June 20, 2008 from the System Load database, California Independent System Operator, http://oasis.caiso.com/, accessed February 10, 2009.
Fox APP
Page 15 of 51
southern part of the state and during the summer due to more prevalent use of air conditioning.43 In general terms, utilities try to meet customer demand by generating power via the most inexpensive methods possible. Because utility-scale volumes of electricity cannot be stored in a cost effective manner, utilities must generate power at the moment of use. In periods of peak demand, this requires utilities to fire up their least fuelefficient and most expensive “peaker” power plants in order to avoid blackouts. Building and maintaining these infrequently operated “peaker” plants is expensive. To combat these costs, utilities have already conducted limited programs where customers (generally businesses) volunteer to reduce consumption on days of heavy demand in exchange for reduced electricity rates.44 SCE, SDG&E, and PG&E provide rate plans that charge higher amounts for electricity consumed during peak hours and significantly less expensive rates for off-peak consumption.45 CPUC staff members have already initiated proceedings to install advanced electricity metering devices and implement rate structures that provide a stronger positive correlation between the cost to the utility of generating electricity and the rate paid by consumers.
Average GW of Demand During Hour
Figure 1: California Electricity Demand for June 20, 2008 50 40 30 20 10 0 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 Hour of Day
43
California Energy Commission, Summer 2008 Electricity Supply and Demand Outlook, May 20, 2008, http://www.energy.ca.gov/2008publications/CEC-200-2008-003/CEC-200-2008-003.PDF, accessed January 30, 2009; CPUC, “How high is California’s electricity demand, and where does the power come from?,” http://www.cpuc.ca.gov/cfaqs/howhighiscaliforniaselectricitydemandandwheredoesthepowercomefrom.htm , accessed January 30, 2009. 44 Flex Your Power, “Demand Response: Commercial,” http://www.fypower.org/bpg/module.html?b=offices&m=Demand_Response, accessed January 30, 2009. 45 SCE, Residential Rates, http://www.sce.com/AboutSCE/Regulatory/tariffbooks/ratespricing/residentialrates.htm, accessed January 30, 2009; PG&E, Residential Rates, http://www.pge.com/tariffs/ERS.SHTML#ERS, accessed January 30, 2009; SDG&E, Residential Rates, http://www.sdge.com/regulatory/elec_residential.shtml, accessed January 30, 2009.
Fox APP
Page 16 of 51
As shown in Figure 1, California’s electricity demand nearly doubled during the course of June 20, 2008, from 24.6 GW at 4AM to 46.8 GW at 4PM.46 One GW = one billion watts—enough electricity to power 40 million 25-watt compact fluorescent light bulbs simultaneously.
Electricity Rate Plans The CPUC sets electricity rate plans in consultation with the utilities. The utility’s cost of delivering electricity varies based on the time of day, the day of the week, and the season of the year. In order to smooth out electricity demand levels and decrease total electricity generation costs, California utilities charge different rates for electricity at different times. This variability can make electricity rate plans complicated. Each of the major utilities has about a dozen different residential rate plans.47 Further, the CPUC provides price incentives for consumers to conserve their total amount of energy use while sheltering low-income and other disadvantaged customers from high energy costs.48 By providing a variety of rate plans, the CPUC attempts to meet consumer needs and achieve certain public policy goals. Utilities help consumers select a rate plan that the utility believes will result in the lowest cost for the consumer. There are three major varieties of residential rate plans. 1. Time of Use: The utility charges the customer one of two or three different rates for electricity depending on the time of day that the customer demands that electricity. Typical plans charge a low rate for “base” or “off-peak” electricity during low demand hours, such as 9 p.m. to noon, and a higher rate for peak demand hours. Some plans split the peak demand period into two levels of peak demand, such as 7 a.m. to noon and noon to 9 p.m., with the later period associated with more expensive rates. Peak rates can be several times more expensive than off-peak rates. This pricing structure reflects the higher cost of electricity generation during periods of peak demand. 2. Season of Use: The utility charges the customer one rate for demand during the “summer” period and a different rate for demand during the “winter” period. This 46
Statistics for June 20, 2008 from the System Load database, California Independent System Operator, http://oasis.caiso.com/, accessed February 10, 2009. 47 SDG&E, Residential Rates, http://www.sdge.com/regulatory/elec_residential.shtml, accessed February 17, 2009; SCE, Residential Rates, http://www.sce.com/residential/rates/, accessed February 17, 2009; PG&E, Residential Rates, http://www.pge.com/tariffs/ERS.SHTML#ERS, accessed February 17, 2009. 48 SCE, Schedule D-FERA, http://www.sce.com/NR/sc3/tm2/pdf/ce226-12.pdf, accessed March 16, 2009; SCE, Schedule D-CARE, http://www.sce.com/NR/sc3/tm2/pdf/ce93-12.pdf, accessed March 16, 2009; SCE, Schedule MB-E, http://www.sce.com/NR/sc3/tm2/pdf/ce182.pdf, accessed March 16, 2009; PG&E, Schedule EL-1, http://www.pge.com/tariffs/tm2/pdf/ELEC_SCHEDS_EL-1.pdf, accessed March 16, 2009; PG&E, Schedule E-FERA, http://www.pge.com/tariffs/tm2/pdf/ELEC_SCHEDS_E-FERA.pdf, accessed March 16, 2009; PG&E, “Medical Baseline Allowance,” http://www.pge.com/medicalbaseline/, accessed March 16, 2009; SDG&E, Schedule E-CARE, http://www.sdge.com/tm2/pdf/ELEC_ELEC-SCHEDS_ECARE.pdf, accessed March 16, 2009; SDG&E, Schedule E-FERA, http://www.sdge.com/tm2/pdf/ELEC_ELEC-SCHEDS_FERA.pdf, accessed March 16, 2009; SDG&E, “Medical Baseline Allowance,” http://www.sdge.com/documents/customer/baselineapplication.pdf, accessed March 16, 2009.
Fox APP
Page 17 of 51
pricing structure reflects the relatively higher cost of electricity generation during some times of the year than during other parts of the year. 3. Total Amount of Use (“Baseline”): The utility charges the customer higher rates for electricity as the customer’s cumulative demand for the month increases. Typical plans have five “tiers” of consumption set by the CPUC that reflect the average electric demand for the customer’s local area. The tiers are adjusted based on the climate (temperature and altitude) for the customer’s local area, the season, and the fuel source of the customer’s space-heating system.49 The first tier, called “baseline,” is intended to account for about 50% to 70% of average residential demand.50 Tiers 2, 3, 4, and 5 account for usage amounting to 101-130%, 131200%, 201-300%, and over 300% of the baseline allocation, respectively. Therefore, tiers 1 and 2 combined, totaling 130% of baseline, are intended to account for close to 100% of average residential demand. Electricity consumption within each tier is billed at the same rate. Higher-numbered tiers have more expensive rates than lower-numbered tiers. This pricing structure encourages conservation of energy while still providing basic levels of electricity at lower rates. Most of the utility rate plans incorporate one or more of these pricing structures. For example, PG&E charges customers with the Residential Time-Of-Use Schedule E-7 rate plan based on the tier, time of day, and season of use, as shown by Table 1.
Table 1: Dollars per kWh rate table for PG&E’s Residential Time-Of-Use Schedule E-7 rate plan.51
Season
Time-of-Use Period
Electricity Charge Tier 2
Tier 3
Tier 4
Tier 5
(101-130% of baseline)
(131-200% of baseline)
(201-300% of baseline)
(Over 300% of baseline)
Peak $0.29267
$0.30843
$0.42418
$0.53119
$0.58726
Part-Peak $0.14435
$0.16011
$0.27586
$0.38287
$0.43894
Off-Peak $0.08450
$0.10026
$0.21601
$0.32302
$0.37909
Part-Peak $0.10021
$0.11597
$0.23172
$0.33873
$0.39480
Off-Peak $0.08850
$0.10426
$0.22002
$0.32702
$0.38309
Tier 1 (Baseline)
Summer
Winter
49
CPUC, Electric and Gas Baselines, http://www.cpuc.ca.gov/PUC/energy/Electric+Rates/Baseline/baselineintro.htm, accessed February 17, 2009. 50 Ibid. 51 PG&E, Residential Time-Of-Use Schedule E-7, http://www.pge.com/tariffs/ResTOUCurrent.xls, accessed February 17, 2009.
Fox APP
Page 18 of 51
Additionally, utilities provide modified versions of these rate plans that take into account a customer’s financial status and any medically necessary equipment that significantly increases electricity consumption.52 In addition to the confusion that may be created by having many different electricity rates per kilowatt-hour on the same rate plan, consumers may not have a clear idea of how much electricity is in one kilowatt-hour. If ratepayers do not understand how much electricity an appliance consumes, they cannot make informed decisions about whether the cost of the energy is worth the benefit the appliance provides. Similarly, they cannot understand the difference in cost between using an appliance during a peak rate period and waiting until an off-peak time. All of these factors make it very difficult for ratepayers to make an informed decision about whether the extra cost of consuming more energy is worth the additional benefit they receive. Specifically, potential plug-in hybrid electric vehicle owners want a clear idea of what it will cost them to operate their vehicles. Consumers want to know this cost in terms of a familiar benchmark they can understand. Similar to miles per gallon ratings for gasolinepowered vehicles, PHEV models will come in a variety of sizes and engine efficiencies, which will affect their miles per kWh rating. Ideally, customers will be able to know the cost of driving a PHEV in terms of a “dollars per gallon equivalent” measure—how much it will cost to drive a PHEV the same distance that a gallon of gasoline would power a similar vehicle with an internal combustion engine. It is in the public interest for consumers to have this information easily available so they can make the best decisions for themselves. Therefore, the CPUC should inform consumers about the cost per gallon of gasoline equivalent for different types of vehicles under different electricity rate plans. This information could be included in customer utility bills and publicized in other ways.
Smart Metering Initiative The CPUC has a mandate to help keep rates low for the ratepayers.53 For regulated utilities, the cost of generating power is passed on directly to the consumers at large. Unfortunately, with the current metering system and rate structure, consumers generally do not know what the true cost of energy is at a given point in time. For example, it may cost the utility $5 to generate the power for a consumer to run the clothes dryer at 4 p.m. 52
SCE, Schedule D-FERA, http://www.sce.com/NR/sc3/tm2/pdf/ce226-12.pdf, accessed March 16, 2009; SCE, Schedule D-CARE, http://www.sce.com/NR/sc3/tm2/pdf/ce93-12.pdf, accessed March 16, 2009; SCE, Schedule MB-E, http://www.sce.com/NR/sc3/tm2/pdf/ce182.pdf, accessed March 16, 2009; PG&E, Schedule EL-1, http://www.pge.com/tariffs/tm2/pdf/ELEC_SCHEDS_EL-1.pdf, accessed March 16, 2009; PG&E, Schedule E-FERA, http://www.pge.com/tariffs/tm2/pdf/ELEC_SCHEDS_E-FERA.pdf, accessed March 16, 2009; PG&E, “Medical Baseline Allowance,” http://www.pge.com/medicalbaseline/, accessed March 16, 2009; SDG&E, Schedule E-CARE, http://www.sdge.com/tm2/pdf/ELEC_ELEC-SCHEDS_ECARE.pdf, accessed March 16, 2009; SDG&E, Schedule E-FERA, http://www.sdge.com/tm2/pdf/ELEC_ELEC-SCHEDS_FERA.pdf, accessed March 16, 2009; SDG&E, “Medical Baseline Allowance,” http://www.sdge.com/documents/customer/baselineapplication.pdf, accessed March 16, 2009. 53 CPUC’s Division of Ratepayer Advocates, DRA;s Mission, http://www.dra.ca.gov/dra/, accessed February 17, 2009.
Fox APP
Page 19 of 51
on a hot day in June, but only $2 to run the dryer at 10 a.m. that same day, even though both of these scenarios have the same cost to the consumer under an SCE time-of-use rate plan.54 However, the direct cost for this energy is not fully passed on to the specific customer that consumes the energy, and that consumer is not likely to even know what the real cost is. Instead, the energy cost is distributed amongst all utility customers. Economic theory indicates that if the real costs for electricity generation were passed directly to the customers consuming the energy, and the consumers were completely aware of those costs, then individuals would modify their behavior until they achieved an optimal balance between the value they place on electricity and its cost.55 To make the electricity sector more like an efficient market, the CPUC is working with the regulated utilities to install advanced or “smart” meters at consumer homes.56 These meters record the amount of energy used during each 15- to 60-minute interval and send the information to the utility through a wireless communication system.57 Customers will have the ability to monitor their electricity usage in real time and optimize their consumption for their rate plan.58 The CPUC may use this new technology to create dynamic pricing plans, passing the true cost of energy use onto consumers in real time. Google is already developing and testing a free software system that will help consumers manage their energy consumption in a dynamic pricing environment.59 SDG&E has started installing their new meters for all customers in their service territory and plans to complete the 2.3 million meter upgrades in 2011.60 The cost to install and maintain these new meters is $2.50 per month—similar to the cost of existing meters that are currently paid for by consumers.61 These advanced meters will enable the CPUC to establish rate plans that allow consumers to save money by modifying their consumption in response to price signals. Because PHEV batteries are designed to be charged intermittently, modulating PHEV charging by switching the current on or off in response to grid conditions is an ideal way for ratepayers to save money and help increase the efficiency of the electric grid, especially with the presence of electricity generators powered by intermittent renewable energy sources. For example, if PHEV batteries are recharging overnight at the same time the 54
SCE, Schedule TOU-D-1 Time-of-Use Domestic Rate Plan, http://www.sce.com/NR/sc3/tm2/pdf/ce8412.pdf, accessed January 30, 2009 55 Paul Krugman, Robin Wells, and Kathryn Graddy, “Economics,” Worth Publishers (April 6, 2007), ISBN 978-0716799566, Chapter 10. 56 CPUC’s Demand Response and Advanced Metering Proceeding, R.02.06.001, http://www.cpuc.ca.gov/PUC/energy/Demand+Response/R0206001.htm, accessed February 17, 2009. 57 Bruce V. Bigelow, “A New Meter Reader,” San Diego Union-Tribune, http://www.signonsandiego.com/uniontrib/20080718/news_1b18meters.html, accessed February 10, 2009. 58 SDG&E, “Building for Tomorrow,” http://www.sdge.com/smartmeter/buildingfortomorrow.shtml, accessed February 10, 2009. 59 Todd Woody, “Google Moves Onto the Smart Grid,” CNNMoney, http://greenwombat.blogs.fortune.cnn.com/2009/02/10/google-moves-on-to-the-smart-grid/, accessed February 11, 2009. 60 SDG&E, “Building for Tomorrow,” http://www.sdge.com/smartmeter/buildingfortomorrow.shtml, accessed February 10, 2009. 61 SDG&E, “Smart Meter Facts,” http://www.sdge.com/documents/smartmeter/SM-Fact_Sheet-Green.pdf, accessed February 10, 2009.
Fox APP
Page 20 of 51
wind is blowing at wind farms, then the full amount of renewable energy is utilized. If the wind stops blowing for a short period of time, then the cars could simultaneously stop charging during that period as well. The cars could resume charging when the wind picks up again. This coordination between supply and demand reduces the need for grid operators to keep expensive and more polluting conventional power plants standing by for intermittent use.62 Unlike other electric devices, such as light bulbs, televisions, computers, hair dryers, and ovens, the ability for PHEVs to modulate their power consumption conveniently and immediately is conducive to this cooperation between electricity supply and consumption levels.
Potential Intermittent-Service Rate Plan for PHEVs Modulating power consumption to match the supply of relatively inexpensive power requires the development of new rate plans and installation of advanced metering technology at customer homes. New meter designs could allow the meter to periodically alter the flow of electricity to its connected appliances. The utilities have already implemented intermittent-service programs that shut down residential air conditioners when electricity resources run low.63 In exchange for a reduced rate, customers could choose to allow the utility to modulate the flow of electricity to PHEVs. Utilities could monitor the amount of power available to the grid and the current demand for electricity. As power supplied from intermittent sources and customer demand levels fluctuate, the utility could increase or decrease the flow of energy to vehicles. This approach would allow the utilities to achieve high rates of efficiency, increase utilization of intermittent sources of energy, and decrease costs by requiring fewer “stand-by” power plants to meet sudden increases in demand. These cost savings could be passed along to the ratepayers through lower rates that are either fixed in advance or set dynamically based on current supply and demand conditions.
Possible Battery Charging Control Options To minimize the inconvenience of intermittent battery charging for PHEVs, utilities could provide customers with the ability to override utility control of the electricity flow. For the case of electric vehicle charging, customers could have the option to select one of two settings on the charging control device when they plug in their car:64 62
Michael Totty, “Smart Roads. Smart Bridges. Smart Grids.,” Wall Street Journal, February 17, 2009, http://online.wsj.com/article/SB123447510631779255.html, accessed February 17, 2009. 63 SCE, “Summer Discount Plan,” http://www.sce.com/summerdiscount, accessed February 22, 2009; SDG&E “Summer Saver Program,” http://www.summersaverprogram.com/index.html, accessed February 22, 2009. 64 One CPUC staff member suggested a third option: “Charge when the electricity is cheaper than an equivalent amount of gas.” I decided not to include this option because electricity may be less expensive than gasoline during all times of the day while still having substantial differences in its own cost. For example, the amount of electricity equivalent to a gallon of gasoline could range from $0.38 to $2.50
Fox APP
Page 21 of 51
•
•
Intermittent Service: o The utility charges the vehicle intermittently during a period of time specified by the user, and the utility makes sure that the vehicle is completely charged by the end of that time period. o Either the customer or utility could program the vehicle’s total battery capacity into the meter so the utility would be able to schedule delivery of the necessary amount of power. The battery capacity would only need to be programmed into the meter during installation and when the vehicle battery capacity changed. o Electricity is billed at the special intermittent-service rate established by the CPUC. Non-Intermittent Service: o The vehicle starts charging at the time specified by the user and continues uninterrupted until the battery is full. o Electricity is billed at the comparable time-of-use rate (the least expensive of the existing residential and existing electric car rates) because the customer is not accepting intermittent service.
Fixed Rate or Dynamic Pricing Setting a specific new rate for intermittent service would be relatively straightforward. For the fixed-rate pricing scenario, the CPUC could set an electric rate, in consultation with the utilities, for intermittent service. This rate could be less than the customer’s comparable time-of-use rate plan (the least expensive of the existing residential and existing electric car rates) in exchange for the customer accepting intermittent electricity service. Devising a dynamic-pricing scheme would be substantially more complicated. For the dynamic-pricing scenario, a customer’s rates could be guaranteed to not exceed the rates for that customer’s comparable time-of-use rate plan (the least expensive of the existing residential and existing electric car rates), regardless of the supply and demand situation at any given time. This assures customers that electricity service under this plan would never cost more than the existing time-of-use plan. On the contrary, customers could decrease their electric bills in exchange for accepting the possible inconvenience of intermittent service through either of the fixed-rate or dynamic-pricing approaches. The CPUC could choose to establish either the fixed-rate or dynamic-pricing rules to determine the rate that utilities could charge customers. The CPUC could produce these rules through the same staff-driven, open-comment procedures they currently use to set electricity rates and other policies. If the CPUC believes that dynamically changing rates is not worth the cost of administration, they could opt for the fixed-rate approach. during the course of the day when gasoline is priced at $3 per gallon. If a customer selected the ‘cheaper than gas’ option, the vehicle might recharge during the most expensive time of the day at a cost almost seven times greater than during off-peak hours.
Fox APP
Page 22 of 51
Appropriate Devices for Intermittent Electricity Service Under the intermittent-service approach, customers should only connect devices that respond favorably to an intermittent electricity supply. For example, devices such as computers, lighting, and televisions could not perform suitably under intermittent power conditions. PHEVs are ideal consumers of intermittent power, provided that they receive sufficient energy to recharge their batteries during the period of time they are parked. Additionally, utilities could receive much greater benefits from modulating PHEV power supply than from modulating electricity flow to devices like lighting and televisions because PHEVs consume much larger amounts of energy than those other devices.
Fox APP
Page 23 of 51
Chapter 3: Policy Options In this chapter I describe the electricity rate plan options that I will evaluate to produce my policy recommendations to the CPUC. During peak-demand periods the cost of electricity generation and the concentration of pollution emitted both increase. Therefore, it is important that all of my policy options provide a price signal for customers that encourages them to consume energy in a way that increases the efficiency of electricity generation. Given California’s environmental mandates, it is also desirable for my policy options to increase the ability for utilities to incorporate intermittent sources of energy and to decrease the amount of statewide greenhouse gas emissions. As a matter of practicality, it is also important to consider whether vehicle electricity consumption should be priced at a rate different than other household appliances, which would require a separate utility meter for the vehicle. These factors have prompted me to consider four major policy options, as shown by Table 2.
Table 2: A Summary of the Policy Options
Existing Rate Plans New, Intermittent-Service Rate Plan
One Meter Policy Option #1 Policy Option #4
Two Meters Policy Option #2 Policy Option #3
Policy Option #1 • A single meter for the house and vehicle • The meter uses an existing rate plan This option represents the status quo and does not require any regulatory change. Electricity used to charge car batteries would cost the same as electricity for any household appliance. Consumers would select their rate plan from any of the plans that currently exist. This option has the advantage of not requiring a separate meter installation or regulatory changes, and it is also a relatively simple solution. However, this option would likely increase total electricity consumption at periods of peak demand because it does not pass along the true cost of energy to the consumers at the time of consumption. Additionally, households with progressively priced rate plans—where the cost per kWh increases as the amount of electricity consumed per month increases— would add consumption at the most expensive electric rates to charge their vehicles, thereby reducing the financial incentive to use electric-powered travel. Alternatively, customers using rate plans adjusted for season and time of use would also miss out on potential savings from recharging their vehicle intermittently in correspondence with periods of very inexpensive electricity supply.
Fox APP
Page 24 of 51
Policy Option #2 • Two meters—one for the house and one for the vehicle • The vehicle meter uses an existing time-of-use rate plan that is separate from the house rate plan The option requires the installation of an additional electric meter. Customers are currently able to charge their vehicles by using a second electric meter for the vehicle that bills electricity consumption based on an existing rate plan that is unique to electric vehicle charging.65 However, this policy option requires a regulatory change to allow customers to select any existing time-of-use rate plan for their vehicle, which could potentially result in lower rates.66 This option is relatively simple because it uses existing rate plans. However, this option would likely increase total statewide electricity consumption at periods of peak demand because it does not pass along the true cost of energy to the consumers at the time of consumption. Customers would also miss out on potential savings from recharging their vehicle intermittently in correspondence with periods of inexpensive electricity supply.
Policy Option #3 • Two meters—one for the house and one for the vehicle • The vehicle meter uses a separate, new, intermittent-service rate plan This option requires a regulatory change, the development of new utility electric-flow control systems, and installation of a new electric meter. The new intermittent-service rate plan would allow customers to recharge their vehicles at the lowest possible cost. The CPUC could take input from stakeholders—including utilities, electric grid operators, customer advocates, environmentalists, and any other parties who would be affected by the decision—and determine whether to implement a fixed-rate plan or a dynamic-pricing approach. The new intermittent-service rate plan may be complicated for the CPUC and utilities to implement and challenging for consumers to understand. Additionally, some consumers may be uncomfortable with the idea of the utility having control over the customer’s electricity flow.
65
Cf, e.g., SCE’s Rule 16.2, http://www.sce.com/NR/sc3/tm2/pdf/Rule16.pdf, accessed February 21, 2009, and SCE’s Schedule TOU-EV-1, Domestic Time-Of-Use Electric Vehicle Charging rate plan, http://www.sce.com/NR/sc3/tm2/pdf/ce114-12.pdf, accessed February 21, 2009; PG&E, Schedule E-9, http://www.pge.com/tariffs/tm2/pdf/ELEC_SCHEDS_E-9.pdf, accessed February 21, 2009. PG&E’s Schedule E-9 says that rate plan is “required” for customers with a battery electric or plug-in electric vehicle. 66 Ibid.
Fox APP
Page 25 of 51
Policy Option #4 • A single meter for the house and vehicle • The meter uses a new, intermittent-service rate plan This option requires a regulatory change, the development of new utility control systems, and installation of a new electric meter. Unfortunately, intermittent service for an entire household is infeasible. As I pointed out previously, it is not reasonable for devices such as light bulbs, televisions, computers, ovens, and clocks to receive intermittent electricity service. Therefore, I will not give this option any further consideration.
Fox APP
Page 26 of 51
Chapter 4: Criteria for Evaluating Electricity Pricing Policy Options I use five criteria to evaluate each of the remaining three electricity-pricing policy options. In order to ensure that these criteria address the CPUC’s policy goals, I developed the criteria through discussions with the client. The rationale for including each criterion is described below. Each criterion has two or three possible categories. Each policy option will fall into one of the categories for each of the following five criteria: 1. Legality * Categories: Legal or Not Legal 2. Politically and Technically Feasible * Categories: Feasible, Not Feasible, or Uncertain Feasibility 3. Simple Enough for Consumers to Use Effectively * Categories: Not Too Complicated, Too Complicated, or Uncertain Level of Complication 4. Financial Impact * Categories: Positive, Negative, or Neutral 5. GHG Emissions Impact * Categories: Positive, Negative, or Neutral
Legality The most important criterion for evaluating whether to recommend any of the three policy options is that the policy, if enacted, could comply with state and federal law. There are many laws that affect the electricity sector, so there is a very real risk that otherwise attractive policy options may violate one or more statutes. In order to navigate this obstacle, I acquired a legal opinion from a CPUC staff attorney. Policy options that are not consistent with existing law are not recommended for adoption in this report. However, if a highly desirable option is not currently legal, I may recommend that the CPUC ask the legislature to legalize the policy as a long-term strategy.
Politically and Technically Feasible The political and technical feasibility of policy options are also important factors to consider. If a policy is too difficult or impossible to implement, then pursuing that policy could squander valuable resources, such as time and agency political capital. Wasting resources pursuing an infeasible policy could lead to no policy adoption at all. I have asked relevant professionals involved with implementing programs at the CPUC to provide their opinions about the potential feasibility of policy options. These professionals included an administrative law judge who oversees the Commission’s Fox APP
Page 27 of 51
Advanced Metering Initiative (i.e. “smart meters”) proceeding, a Division of Ratepayer Advocates official who works on electricity rate development, and staff members who work on renewable energy and greenhouse gas issues. In all, I presented my policy options to about 20 staff members.67 Based on their feedback, I assigned each policy option to one of these categories: “Feasible,” “Not Feasible,” or “Uncertain Feasibility.” If the experts agree an option is feasible, then I deem the option to be “Feasible.” If the experts disagree, then the option has “Uncertain Feasibility.” If the experts agree the option is not feasible, then I categorize the option as “Not Feasible.” I do not recommend “Not Feasible” or “Uncertain Feasibility” options for implementation.
Simple Enough for Consumers to Use Effectively Similar to feasibility, consumers must be able to understand and comply with the policy option. If a policy option is too complicated for the end users to operate appropriately, then it will likely not meet the policy goals. To assess this factor, I asked the same group of about 20 CPUC professionals whether they believed that each policy was too complicated for use by the median electricity consumer that they represent.68 Based on their feedback, I assigned each policy option to one of these categories: “Too Complicated,” “Not Too Complicated,” or “An Uncertain Level of Complication” to each policy option. If the experts agree an option is not too complicated, then I deem the option to be “Not Too Complicated.” If the experts disagree, then the option has “An Uncertain Level of Complication.” If the experts agree the option is too complicated, then I categorize the option as “Too Complicated.” I do not recommend “Too Complicated” or “An Uncertain Level of Complication” options for implementation.
Financial Impact Financial measures are also important factors to bear in mind when evaluating any policy option. It is necessary to determine the estimated costs for the ratepayers, the CPUC, and the utilities to implement and maintain the policy. In addition to increased costs, it is important to consider any cost savings that a policy could produce for all parties involved. California’s electric utility rates are structured to pass along approximately all of CPUC and utility costs to the ratepayers. Therefore, I evaluate all policy options in terms of their expected eventual cost to the consumers compared to what would otherwise occur without a change in law or policy. Subtracting the expected costs from the expected savings for the average ratepayer provides an overall financial impact estimate for the policy. An undesirable financial impact increases a consumer’s overall costs while a desirable impact decreases overall costs. A neutral financial impact has no 67
Presentation and discussion of the policy options and data analysis contained in this report that occurred at the CPUC in San Francisco on March 10, 2009. Approximately 20 CPUC staff members from relevant areas attended the discussion, invited by Judith Ikle, my primary contact at the CPUC. 68 Presentation and discussion of the policy options and data analysis contained in this report that occurred at the CPUC in San Francisco on March 10, 2009. Approximately 20 CPUC staff members from relevant areas attended the discussion, invited by Judith Ikle, my primary contact at the CPUC.
Fox APP
Page 28 of 51
impact on overall costs. I categorized policy options that have undesirable, neutral, and desirable financial impacts as “Negative,” “Neutral,” and “Positive,” respectively.
Greenhouse Gas Emissions Impact Finally, a policy’s impact on GHG emissions is also very important to the CPUC. As a result of AB 32, state agencies are looking for ways to help California achieve the GHG emission reduction mandate. I do not recommend a policy option for implementation if my GHG emissions prediction model estimates that it will increase GHG emissions—a “Negative” rating when compared to what would otherwise occur without a change in law or policy. I categorize policy options that are predicted to decrease emissions as “Positive” and options that are expected to maintain emissions at the current level as “Neutral” when compared to what would otherwise occur without a change in law or policy.
Final Policy Selection As a result of the specifications I provided for each of these criteria, any policy recommendation must be categorized as “Legal,” “Feasible,” “Not Too Complicated,” and not be categorized with a “Negative” GHG emissions impact. In order to further evaluate the policy options, I categorize the options that meet these requirements into four tiers, weighting GHG emissions and financial impact ratings equally: • • • • •
Tier 1 options have “Positive” GHG and “Positive” financial impact ratings. Tier 2 options have either “Positive” GHG and “Neutral” financial impact ratings or “Neutral” GHG and “Positive” financial impact ratings. Tier 3 options have “Neutral” GHG and “Neutral” financial impact ratings. Tier 4 options have “Positive” GHG and “Negative” financial impact ratings. Tier 5 options have “Neutral” GHG and “Negative” financial impact ratings.
Tier 1 policies are superior to those in Tier 2; Tier 2 policies are superior to those in Tier 3; Tier 3 policies are superior to those in Tier 4; and Tier 4 policies are superior to those in Tier 5. The policy that I recommend to the CPUC comes from the highest-ranking tier that contains one or more policy options. If more than one option is in that tier, I recommend that the CPUC implements its choice of one of the options in that tier.
Fox APP
Page 29 of 51
Chapter 5: Data Analysis In this chapter I present a set of the most important data analysis results from this study and an overview of the process I used to arrive at those figures. These and other findings provide the quantitative evidence that inform the policy analysis later in this report. The analysis is based on data from sources that include the CPUC, the California Energy Commission, the California Department of Transportation, the Environmental Protection Agency, the California Climate Registry, the Energy Information Administration, the Electric Power Research Institute, the Natural Resources Defense Council, Southern California Edison, Pacific Gas & Electric, and San Diego Gas & Electric. I used a subset of these sets of data to generate most of the report’s key findings. Specifically, I acquired GHG emissions and electricity production information for California utilities from the California Climate Registry in order to project the GHG intensity of future California electricity production. I gathered data from an Electric Power Research Institute and Natural Resources Defense Council study to estimate the amount of energy consumed by different kinds of automobiles, with figures for both electricity and gasoline, and the nationwide rate of adoption of plug-in vehicles. I scaled the rate of adoption figures by California’s relatively higher affinity for hybrid vehicles. I obtained California vehicle miles traveled estimates from the California Department of Transportation in order to project the total energy consumption due to that predicted level of statewide travel. I also acquired electricity rate plan information for California utilities to understand the various rate structures and calculate the cost of electric-powered travel. The central findings from the report are provided below. The full set of findings and the calculations and data sources used to generate each of the findings in the entire report are detailed in the Appendix. The report’s central findings are that: • Plug-in electric travel can be substantially less expensive than gasoline-powered travel—sometimes costing as little as $0.38 to $1.77 with current California electric vehicle rates for the amount of electricity equivalent to one gallon of gasoline.69 • Plug-in electric vehicle travel in California causes the emission of 80% less greenhouse gas per mile than gasoline-powered travel.70 • Plug-in electric travel may comprise 10% of all California vehicle miles traveled in 2020 and 40% of all vehicle miles traveled in 2030.71 • Plug-in electric travel in California may consume 5 million MWh in 2015, 14 million MWh in 2020, and 72 million MWh in 2030—the latter amount is approximately one-third of total current statewide demand.72
69
Cf. Appendix Table AT8 Row (G). Cf. Appendix Table AT7 Row (H). 71 Cf. Appendix Table AT6. 72 Cf. Appendix Tables AT1 and AT6. 70
Fox APP
Page 30 of 51
Chapter 6: Analytical Results In this chapter I evaluate each of the three remaining policy options in terms of the policy selection criteria I described in chapter four. To make this analysis easier to read, I refer to each of the policy options by number: Policy option #1 • A single meter for the house and vehicle • The meter uses an existing rate plan Policy option #2 • Two meters—one for the house and one for the vehicle • The vehicle meter uses an existing time-of-use rate plan that is separate from the house rate plan Policy option #3 • Two meters—one for the house and one for the vehicle • The vehicle meter uses a separate, new, intermittent-service rate plan Legality My primary contact at the CPUC, Judith Iklé, in consultation with a CPUC staff attorney, believes that all three policy options are currently legal.73 Policy option #1 is currently in effect, so the CPUC would not need to take any action to enact this policy. The CPUC has the authority to enact either of the other two policy options through a standard Commission proceeding—the CPUC rulemaking process.74
Politically and Technically Feasible As I described in the chapter four, I discussed the policy options with about 20 CPUC professionals, including the administrative law judge conducting the Advanced Metering Initiative proceeding at the CPUC. All of these CPUC staff members believe that all three policy options are politically and technically feasible.75 Therefore, I categorize all three policy options as “Feasible.” Policy option #1 is currently in effect, so the CPUC would not need to take any action to enact this policy. Policy option #2 requires only a slight modification to existing rate plan policy—adding the ability for customers to have a second electricity meter for their vehicle that uses any existing residential rate plan of the customer’s choice. 73
Email communication with Judith Iklé, March 4, 2009. Ibid. 75 Presentation and discussion of the policy options and data analysis contained in this report that occurred at the CPUC in San Francisco on March 10, 2009. Approximately 20 CPUC staff members from relevant areas attended the discussion, invited by Judith Ikle, my primary contact at the CPUC. 74
Fox APP
Page 31 of 51
Policy option #3 is also feasible, but would require more significant regulatory changes. Policy option #3 is similar to current utility programs that moderate electricity flow to air conditioners during peak-demand periods in the summer.76 The fixed-rate plan option for policy option #3 is also similar to existing rate plans. However, the new dynamic-pricing rate plan option for policy option #3 is unlike any other existing rate plan. Implementing the dynamic-pricing rate plan option for policy option #3 would require CPUC staff to spend a large amount of time designing appropriate and effective rules for the utilities.77 While considering implementation of this policy, the interested parties, including utilities, customers, and grid operators, “might reveal [a similar but alternative plan] that was easier to administer and could be adopted” instead.78 These factors indicate that the CPUC would prefer the fixed-rate plan design for policy option #3 because it is much less difficult for them to implement.
Simple Enough for Consumers to Use Effectively I also asked the approximately 20 CPUC staff members if they thought that the policy options were simple enough for consumers to use effectively. They all agreed that, while some options may be easier to use than others, all of the options were simple enough.79 Therefore, I categorize all three policy options as “Not Too Complicated.” They also discussed different modifications to the options that the CPUC might make during the regulatory process that could make the process even simpler for consumers. For example, one staff member suggested having a meter setting where the vehicle would automatically charge whenever electricity was less expensive than an equivalent amount of gasoline. I don’t think this is a particularly good idea, because there will be times that very expensive electricity during peak demand hours (say, $2.80 per gallon equivalent) will be less expensive than gasoline (say, $3 per gallon), but off-peak electricity will be only one-tenth of the cost of peak electricity (say, $0.28 per gallon equivalent). This may not be the most cost-cutting and energy-efficient idea, but it demonstrates that if the CPUC staff desire, they can make modifications to the policy options to decrease complexity. Additionally, another staff member suggested that a company like Google would probably produce applications that ran on a cell phone that would simplify the process for consumers.
76
SCE, Summer Discount Plan, http://www.sce.com/summerdiscount, accessed February 22, 2009; SDG&E Summer Saver Program, http://www.summersaverprogram.com/index.html, accessed February 22, 2009. 77 Email communication with Judith Iklé, March 4, 2009. 78 Ibid. 79 Presentation and discussion of the policy options and data analysis contained in this report that occurred at the CPUC in San Francisco on March 10, 2009. Approximately 20 CPUC staff members from relevant areas attended the discussion, invited by Judith Ikle, my primary contact at the CPUC.
Fox APP
Page 32 of 51
Financial Impact Consumers with a plug-in hybrid vehicle will have the choice of powering their car with either gasoline or electricity. Economic theory and common sense suggest that vehicle owners, as rational, cost-minimizing consumers, will typically select the least expensive energy source, after including transaction costs such as the inconvenience of obtaining the energy, if they have enough information to determine the cost of those commodities.80 Therefore, given that the CPUC would provide information to consumers about the electricity cost per gallon of gasoline equivalent for their vehicles, consumers should select the least expensive energy source. For example, if the total cost of acquiring offpeak electricity is lower than the total cost of the equivalent amount of gasoline, then consumers will likely rely on electricity. If the total cost of high-peak electricity is higher than the total cost of the equivalent amount of gasoline, then consumers will likely use gasoline or recharge their vehicles when electricity rates are lower. With the exception of certain peak rates, the current cost of electricity equivalent to a gallon of gasoline is less expensive than current and historical California gasoline prices ($2.29 per gallon as of February 16, 2009 and $3.09 averaged over the 3 year period ending February 16, 2009).81 The fact that, during most of the day, electricity is currently less expensive than gasoline is especially significant because gasoline prices are significantly depressed during the current global recession. For example, California retail gasoline prices reached $4.59 per gallon in June 2008, twice the current price, prior to the economic downturn.82 The current cost of electricity equivalent to a gallon of gasoline ranges from $0.38 to $1.87 for off-peak and $0.81 to $4.35 for on-peak periods, depending on the utility, the rate plan, the season of the electricity consumption, and the total percentage of “baseline” energy levels consumed during the month.83 Although there is a substantial range in electricity prices, PHEV owners will have the opportunity every day to recharge their batteries at rates lower than the cost of gasoline. Additionally, the most inexpensive times to recharge a vehicle occur at night, when vehicles are typically parked at home. Therefore, any market-based policy changes that increase the amount of vehicle miles powered by electricity from a plug will decrease total costs for consumers, i.e. the combined cost of gasoline and electric purchases. Further, the policy change that prompts the greatest increase in vehicle miles powered by electricity from a plug will yield the 80
Paul Krugman, Robin Wells, and Kathryn Graddy, “Economics,” Worth Publishers (April 6, 2007), ISBN 978-0716799566, Chapter 10. 81 Cf. Data Appendix Table AT8; Statistics for California from U.S. Energy Information Agency, “Weekly U.S. Retail Gasoline Prices, Regular Grade,” http://www.eia.doe.gov/oil_gas/petroleum/data_publications/wrgp/mogas_home_page.html, accessed February 21, 2009; U.S. Energy Information Agency, “California Retail Gasoline Historic Prices,” http://www.eia.doe.gov/oil_gas/petroleum/data_publications/wrgp/mogas_history.html, accessed February 21, 2009. 82 U.S. Energy Information Agency, “California Retail Gasoline Historic Prices,” http://www.eia.doe.gov/oil_gas/petroleum/data_publications/wrgp/mogas_history.html, accessed February 21, 2009. 83 Cf. Appendix Table AT8.
Fox APP
Page 33 of 51
largest overall cost savings for consumers. This result is true even if a policy change requires expensive development of equipment, upgrades to the electricity grid, and installation of new power plants. California’s electricity regulations would incorporate these costs into electricity rates. Consumers would use these electricity rates to determine their energy source purchasing decisions. I am assuming that California gasoline prices will continue to exceed off-peak California electricity prices. My basis for this assumption stems in part from the fact that California electricity generation’s GHG emissions are one-fifth of the emissions for a comparable amount of gasoline84 As a result, cap-and-trade GHG emission regulation systems (both CARB and the Obama Administration have taken steps towards implementing cap and trade schemes) or a carbon tax will produce a five times greater increase in cost for gasoline than for electricity in California.85 Additionally, the supply of gasoline is limited, while global petroleum demand has increased every year since 1983.86 Even a substantial migration from gasoline to electric-powered travel in California would do little to decrease global petroleum consumption, which might decrease gasoline prices. For example, even if 40% of all California vehicle travel is powered by electricity in 2030, as projected, this would decrease California gasoline consumption from current levels by approximately 77,000 barrels per day—0.09% of current global consumption levels.87 The diminutive size of the decrease is due to substantial predicted increases in total vehicle travel in the state.88 However, energy supply for electricity generation in California is not as constrained and new projects that harness renewable energy are becoming more prevalent. For example, in 2007 and 2008, CPUC-regulated utilities received bids for solar energy projects during the competitive-solicitation process at levels many times greater than in previous years.89 The solar project bid prices—the price per kWh in the contracts—also decreased.90 Policy option #1, where customers recharge their vehicle batteries using their existing home rate plan, is already in effect today. Therefore, if the CPUC decided to stay with this approach, which requires no change in policy, there would be no impact on consumer costs versus the status quo. It is likely that consumers will switch to PHEVs at some point because this will save them money, but selecting policy option #1 would not modify any
84
Cf. Appendix Table AT7 (Row H). Cf. Appendix Table AT7 (Row H); CARB, “Climate Change Proposed Scoping Plan,” October 2008, http://www.arb.ca.gov/cc/scopingplan/document/psp.pdf, accessed February 2, 2009; John M. Broder, “Obama’s Greenhouse Gas Gamble,” New York Times, February 27, 2009, http://www.nytimes.com/2009/02/28/science/earth/28capntrade.html?ref=politics, accessed February 28, 2009. 86 Energy Information Administration, “International Petroleum Consumption,” http://www.eia.doe.gov/emeu/international/RecentPetroleumConsumptionBarrelsperDay.xls, accessed February 28, 2009. 87 Cf. Appendix Table AT9 Row (D) and Table AT9 Row (E). 88 Ibid. 89 CPUC, RPS Competitive Solicitation data from 2003 to 2008 for SCE, SDG&E, and PG&E. The exact numbers are confidential. 90 CPUC, RPS Competitive Solicitation data from 2003 to 2008 for SCE, SDG&E, and PG&E. The exact numbers are confidential. 85
Fox APP
Page 34 of 51
consumer decisions from what they would otherwise do without a change in law or policy. Therefore, policy option #1 has a “Neutral” financial impact. Policy option #2, requires a small regulatory change, but may not have any impact on consumer costs. This policy option would let vehicle owners use any existing time-of-use electricity rate plan for their second meter—the one for the vehicle. The only scenario where customers might benefit from this plan is if any existing time-of-use rate plan has any period during the day where electricity rates are less expensive than the existing electric vehicle rate plans—allowing the customer to switch to that rate plan and save money. However, current CPUC policy sets all electric vehicle rates below the comparable household time-of-use rate plans for all times of the day.91 This means that the electric vehicle rate plans already provide the least expensive electricity service currently available for electric vehicles. Therefore, under current electricity rates, policy option #2 would not provide any impact on costs as opposed to what would otherwise occur without a change in law or policy because consumers could not save any money by switching to a different rate plan. Hence policy option #2 has a “Neutral” financial impact rating. Policy option #3 guarantees residents the least expensive electric vehicle rates for consumption at any time of day. In the worst-case scenario, this policy option has no impact on total consumer costs when compared to what would otherwise occur without a change in law or policy. However, policy option #3 allows utilities to increase the overall efficiency of the electricity grid by modulating demand to meet an intermittent supply of energy and reducing costly power reserves. Under CPUC regulations, these cost savings would be passed on to the consumer in the form of lower electric rates. Given that the utilities currently have demand response programs that reward customers for accepting intermittent electricity service, allowing the utilities to moderate demand is clearly less expensive for the overall electricity system at certain times.92 For example, one SDG&E program provides residential customers rebates of up to $200 per year for allowing the utility to periodically interrupt power to the customer’s air conditioning unit for a few
91 PG&E, “Tariff E-9: Experimental Residential Time-of-Use Service for Low Emission Vehicle Customers,” http://www.pge.com/tariffs/tm2/pdf/ELEC_SCHEDS_E-9.pdf, accessed January 10, 2009. SCE, “Schedule TOU-EV-1: Domestic, Time-of-Use, Electric Vehicle Charging,” http://www.sce.com/NR/sc3/tm2/pdf/ce114-12.pdf, accessed January 10, 2009. SDG&E, “Schedule EV-1: Domestic Time-of-Use for Electric Vehicle Charging,” http://www.sdge.com/tm2/pdf/ELEC_ELEC-SCHEDS_EV-TOU.pdf, January 10, 2009; SCE, Residential Rates, http://www.sce.com/AboutSCE/Regulatory/tariffbooks/ratespricing/residentialrates.htm, accessed January 30, 2009; PG&E, Residential Rates, http://www.pge.com/tariffs/ERS.SHTML#ERS, accessed January 30, 2009; SDG&E, Residential Rates, http://www.sdge.com/regulatory/elec_residential.shtml, accessed January 30, 2009. 92 PG&E, “Demand Response Programs,” http://www.pge.com/mybusiness/energysavingsrebates/demandresponse/, accessed March 1, 2009; SCE Automated Demand Response, http://www.sce.com/b-rs/large-business/auto-demand-response.htm, accessed March 1, 2009; SDG&E, “Demand Response,” http://www.sdge.com/aboutus/longterm/longtermDemandResponse.shtml, accessed March 1, 2009.
Fox APP
Page 35 of 51
hours during 10 to 15 days in the summer.93 The CPUC staff agreed that having a large amount of vehicles accepting intermittent service would be a huge asset for the utilities.94 In fact, one staff member who works on electricity rate development believes that intermittent service for vehicles will allow all electricity rates to decrease because of the overall savings for the sector.95 While utilities might experience significantly more cost reduction for cutting service during peak summer demand hours than moderating demand during other times, the same efficiency principle holds for periods of lower demand. Even if the savings from moderating consumption are smaller at lower-demand levels, utilities could reap those benefits every day of the year instead of during only 10 to 15 days. Under CPUC regulations, these cost savings will be passed on to the consumer in the form of lower electric rates. Because of these factors, policy option #3 is almost certain to decrease total consumer costs when compared to what would otherwise occur without a change in law or policy. Therefore, policy option #3 has a “Positive” financial impact rating.
Greenhouse Gas Emissions Impact Electric vehicle policy will have little, if any, impact on the amount of greenhouse gas emitted per kilowatt-hour of electricity generated. State law already prohibits utilities from signing contracts for electricity generated by any process that emits more GHG than the most efficient, low-GHG emission, natural gas power plants.96 State law also requires utilities to utilize renewable sources of energy for 20% of their portfolio.97 If electricity consumption increases, utilities will continue to meet customer demand with the least expensive variety of electricity available given these constraints, in the same way that they do today. This conclusion is important because it allows me to project the impact that electric vehicle travel can have on total statewide GHG emissions—i.e. totaling all the emissions from all of the vehicles and all of the power plants, etc. Fortunately, electric vehicle policy can have an impact on the total amount of GHG emissions statewide—specifically the emissions from motor vehicles and electric power plants. My analysis shows that electricity-powered vehicles in California will cause 80% 93
SCE, “Summer Discount Plan,” http://www.sce.com/summerdiscount, accessed February 22, 2009; SDG&E, “Summer Saver Program,” http://www.summersaverprogram.com/index.html, accessed February 22, 2009. 94 Presentation and discussion of the policy options and data analysis contained in this report that occurred at the CPUC in San Francisco on March 10, 2009. Approximately 20 CPUC staff members from relevant areas attended the discussion, invited by Judith Ikle, my primary contact at the CPUC. 95 Ibid. 96 Robert Collier, “California says no to coal, but world disagrees,” San Francisco Chronicle, May 28, 2007, http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2007/05/28/MNG3BQ2HNG1.DTL, accessed February 3, 2009; SB 1368, http://www.energy.ca.gov/emission_standards/documents/sb_1368_bill_20060929_chaptered.pdf, accessed February 3, 2009; Center for Energy Efficiency and Renewable Technologies, “Clearing California’s Coal Shadow from the American West,” 2005, http://www.ceert.org/ceert_reports/Coalreport.pdf, accessed February 3, 2009. 97 SB 107, http://www.energy.ca.gov/portfolio/documents/sb_107_bill_20060926_chaptered.pdf, accessed February 2, 2009.
Fox APP
Page 36 of 51
less greenhouse gas emissions per mile than gasoline-powered vehicles.98 Therefore, the policy option that promotes the largest conversion from gasoline- to electric-powered travel will also produce the most GHG emissions reductions from the transportation and electricity sector combined. As I determined previously, policy options #1 and #2 will not have any impact on overall consumer costs when compared to what would otherwise occur without a change in law or policy. This means that these two policy options will not prompt any change in GHG emissions because they would not result in any additional shifts from gasoline- to electric-powered travel than what would otherwise occur. Hence, I am categorizing policy options #1 and #2 as having a “Neutral” impact on GHG emissions. Policy option #3, however, does provide an overall reduction in GHG emissions when compared to what would otherwise occur because it prompts a decrease in overall consumer energy costs, as I showed previously. These cost savings will cause vehicle electricity prices to decrease relative to gasoline prices and encourage a greater shift from gasoline to electricity than would occur without a change in law or policy. While the lower cost of driving might spur additional overall vehicle travel, any increase in emissions due to a greater amount of travel should be dwarfed by the decrease in emissions due to the change in energy source. For example, Americans drove only 4.7 percent fewer miles in June 2008 than in June 2007, despite the fact that gasoline prices increased about 36% during that time period.99 However, individuals using electricpowered vehicles would need to increase their vehicle miles traveled by over 400% in order for their total GHG emissions to increase.100 Therefore, I am categorizing policy option #3 as having a “Positive” GHG emissions impact rating.
98
Cf. Appendix Table AT7 (Row H). U.S. Department of Transportation, “American Driving Reaches Eighth Month of Steady Decline,” August 13, 2008, http://www.dot.gov/affairs/fhwa1708.htm, accessed April 17, 2009; U.S. Energy Information Administration, “Weekly U.S. All Grades All Formulations Retail Gasoline Prices,” values for June 25, 2007 and June 23, 2008, http://tonto.eia.doe.gov/dnav/pet/hist/mg_tt_usw.htm, accessed April 17, 2009. 100 Since electric-powered travel causes the emission of only 20% of the GHGs associated with gasolinepowered travel, motorists would need to quintuple their vehicle miles traveled after converting to electricpowered travel in order to cause the same amount of GHG emissions. 99
Fox APP
Page 37 of 51
Policy Selection Table 3 summarizes the results after I evaluated the policy options against the selection criteria:
Table 3: Summary of Policy Option Evaluation
Legality Politically and Technically Feasible Simple Enough for Consumers to Use Effectively Financial Impact GHG Emissions Impact
Policy Option #1 Legal Feasible
Policy Option #2 Legal Feasible
Policy Option #3 Legal Feasible
Not Too Complicated
Not Too Complicated
Not Too Complicated
Neutral Neutral
Neutral Neutral
Positive Positive
Using the criteria I presented previously, I categorized policy options #1 and #2 as “tier 3” and policy option #3 as “tier 1.” Therefore, I am recommending that the CPUC implement policy option #3 because it is the only option in the highest-ranked tier.
Fox APP
Page 38 of 51
Chapter 7: Recommendations The CPUC has a unique opportunity to help decrease the United States’ dependence on oil, lower California’s GHG emissions, and decrease total energy costs for Californians. To move towards those goals, based on the information presented in this report, I recommend that the CPUC take the following actions: 1. Implement an intermittent-service rate plan for plug-in vehicle owners. Specifically, implement policy option #3 that I discuss in this report—allowing one meter for a customer’s house and another meter for their vehicle, with the vehicle meter using a separate, new, intermittent-service rate plan. The CPUC, with input from stakeholders—including utilities, electric grid operators, customer advocates, environmentalists, and any other parties who would be affected by the decision—can determine whether the fixed-rate or dynamic-pricing approach provides a better outcome. 2. Prepare for moderately increased electricity demand due to plug-in vehicles, amounting to one-third of current demand by 2030. By 2030, California PHEVs may consume approximately 72 billion kWh annually.101 The increase in demand will occur even without any change in CPUC policy because of forthcoming greenhouse gas regulations and the relatively lower cost of electricity when compared to gasoline. To prepare for increased demand, the CPUC will want utilities to increase their procurement of renewable sources of energy and possibly other sources of energy as well. 3. Develop programs and information campaigns, such as informing consumers about the cost of electricity equivalent to a gallon of gasoline, to help encourage consumer migration to plug-in electric travel. This information, which can include electricity costs for different types of vehicles under different electricity rate plans, could be included in a number of marketing materials, such as customer utility bills and advertisements that are able to appeal to ratepayers in a state as diverse as California. Widespread knowledge of this information will help consumers make economically efficient decisions for their vehicle travel energy source. The CPUC can use future studies to develop other programs to encourage migration to electric-powered travel.
As I mentioned in the “Scope of the Report” section, the analysis in this report is focused on motorists who have access to their home electricity service where they park their vehicle. There is a substantial amount of people, especially in dense city areas, that do not fit into this category. As a result, the CPUC could take other actions to help these vehicle owners recharge their vehicle batteries in ways that are efficient for the electricity sector. These actions can take the form of CPUC-initiated programs that provide resources to 101
Cf. Appendix Table AT6 Row (C); Cf. Appendix Table AT1 Rows (D) and (E).
Fox APP
Page 39 of 51
customers or other CPUC policies that encourage businesses to develop solutions and meet customer needs. For example, Better Place is a company that is creating electric vehicle recharging infrastructure in the San Francisco Bay Area that is estimated to cost $1 billion when fully deployed.102 Its business plan involves a network of battery charging and battery exchange stations. Better Place plans to locate charging stations near individual parking spots to charge vehicles while they are parked.103 The battery exchange stations will use robot arms to remove depleted batteries and replace them with fully charged batteries.104 Whether Better Place or another company provides these services, they will increase accessibility to inexpensive electricity for electric vehicle customers—particularly those motorists who do not have access to their home electricity service at the parking spot. For example, Better Place could charge their batteries overnight at the lowest possible electric rates. These low energy costs could be passed on to the consumer at the battery exchange station the next day. Better Place is one possible way for more Californians to achieve access to lower energy costs for electric-powered travel. The CPUC could solicit feedback from businesses like Better Place about how the CPUC can bolster the success of businesses trying to increase motorist access to electricity service. Increasing access to electricity service can enable motorists to convert from gasoline- to electric-powered travel and achieve the associated environmental and economic benefits discussed in this report. Therefore, I recommend that the CPUC: 4. Encourages and supports businesses and other agencies trying to provide inexpensive electricity access for electric vehicle owners who do not have access to their home electricity service where they park their vehicle.
As I discussed in the report, generating electricity during periods of peak demand is the most expensive and most polluting way to provide power. While high electricity prices might dissuade motorists from charging their vehicles at home during peak hours, they may try to recharge their vehicles at work or school and letting employers or institutions bear the cost. Certainly, the business or school will have a strong financial incentive to curb this added expense. However, these institutions may not be aware of the charging activity or of the significant cost it produces. Therefore, I recommend that the CPUC: 5. Provides educational information to businesses and other institutions about the cost of letting motorists charge vehicles on their premises during peak-demand periods.
102
Better Place, “California,” http://www.betterplace.com/california, accessed March 1, 2009. Better Place, “Charge Spots,” http://www.betterplace.com/our-bold-plan/how-it-works/charge-spots, accessed March 1, 2009. 104 Better Place, “Battery Exchange Stations,” http://www.betterplace.com/our-bold-plan/how-itworks/battery-exchange-stations, accessed March 1, 2009. 103
Fox APP
Page 40 of 51
6. Provides educational information to businesses and other institutions about how to prevent motorists from recharging vehicle batteries on their premises during peakdemand periods. Providing this information does not force businesses to change employee behavior. Businesses that want to provide battery-charging service as a tax-free benefit to their employees can simply ignore the information. These businesses may want to generate their own electricity during vehicle charging hours, such as by installing solar panels (a tax-deductible expense), in order to avoid the high utility prices for energy during peak demand hours.
As I discussed in the report, it is expensive to have “stand-by” power plants ready to contribute electricity to the grid if demand grows larger than supply. Having a large number of plug-in vehicles receiving intermittent electricity service will go a long way to reducing the need for those reserves. However, it is still possible to do even more to reduce the amount of “stand-by” capacity required. For example, Pacific Northwest National Laboratory ran a test in 75 homes with water heaters and clothes dryers, heavy consumers of electricity, that would reduce their power consumption automatically when they detected a drop in current frequency—a sign of electricity shortage.105 The utilities are already using some programs to automatically moderate air conditioner use, so a program expansion to other appliances might be useful.106 If a large number of these kinds of devices are installed across the state, it could be a valuable form of insurance against high levels of peak electricity demand. These devices, by lowering consumption during peak periods, could also decrease the number of expensive “peaker” plants required to deliver electricity service during the very high levels of demand experienced about 10-15 days per year. Therefore, I recommend that the CPUC: 7. Develops programs to increase the total amount of household devices that can be cycled off during peak-demand periods, such as air conditioners, clothes dryers, and water heaters.
These actions will help California meet its policy goals and decrease energy costs for consumers.
105
Michael Totty, “Smart Roads. Smart Bridges. Smart Grids.,” Wall Street Journal, February 17, 2009, http://online.wsj.com/article/SB123447510631779255.html, accessed February 17, 2009. 106 SCE, “Summer Discount Plan,” http://www.sce.com/summerdiscount, accessed February 22, 2009; SDG&E “Summer Saver Program,” http://www.summersaverprogram.com/index.html, accessed February 22, 2009.
Fox APP
Page 41 of 51
Chapter 8: Conclusion True to the title of this report, “Five Birds with One Stone,” plug-in hybrid electric vehicles can provide five major benefits for California, as shown in Table 4. California is home to 9 out of the top 10 cities in the nation with the worst air quality in terms of ozone pollution—a hazardous byproduct of gasoline-powered motor vehicles.107 Switching from gasoline- to electric-powered travel can help California meet its greenhouse gas emission reduction goals and improve air quality at the same time. This migration to electricity can also reduce our dependence on foreign oil and decrease total energy costs for consumers. Additionally, modulating the power flow rates for PHEV battery charging can help utilities utilize a greater percentage of intermittent renewable energy sources at lower cost. As this report discusses, it is possible for the CPUC to pursue policies that increase the magnitude of the impact of these five benefits.
Table 4: Switching to Electric Vehicle Travel Can Provide Five Major Benefits 1) Decreased Motor Vehicle Air Pollution 2) Decreased Overall GHG Emissions 3) Decreased Overall Energy Costs 4) Decreased Dependence on Foreign Oil 5) Increased Ability to Utilize Intermittent Renewable Sources of Energy
It is important to note that these benefits are in comparison to what would otherwise occur without a change in law or policy. In the short term, total GHG emissions will continue to rise until 2020 due to a projected increase in total California vehicle travel, as shown by Figure 2.108 However, in the long term, the increase in use of electric-powered travel begins to cause a decrease in total GHG emissions from vehicle travel around the year 2020.109 My analysis predicts that the total amount of gasoline-powered travel will decrease below current levels by 2030, as shown in Figure 2.110 The amount of GHG emissions avoided as a result of conversion to electric-powered travel will reach approximately 70 million metric tons of CO2e annually by 2030—about 16% of the total amount emitted in 1990.111 These results indicate that electric-powered travel could play
107
American Lung Association, “State of the Air: 2004,” http://www.lungusa.org/site/c.dvLUK9O0E/b.50752/k.D532/Rankings.htm, accessed on January 29, 2009. 108 Cf. Appendix Tables AT3 and AT6. 109 Cf. Appendix Tables AT3 and AT6. 110 Ibid. 111 Cf. Table AT6 Row(D) Column (4); California Energy Commission, “Inventory of California Greenhouse Gas Emissions and Sinks: 1990 to 2004,” December 2006, http://www.energy.ca.gov/2006publications/CEC-600-2006-013/CEC-600-2006-013-SF.PDF, accessed January 26, 2009.
Fox APP
Page 42 of 51
an important role in meeting California’s goal of reducing GHG emissions to 80% below 1990 levels by 2050.112
PHEVs can provide benefits for California, especially over the long term. As this report shows, motorists will have an incentive to switch to electric-powered travel as soon as PHEVs are commercially available, even without any CPUC policy changes. The CPUC has the responsibility to prepare for this conversion and ensure that adequate and relatively inexpensive electricity service is available to meet California’s electricity demands. Without guidance from the CPUC, consumers may behave in ways that add to the overall costs of the electricity system, such as recharging their cars at work during peak-demand periods. Fortunately, the nature of PHEV charging allows the CPUC to encourage behavior that actually increases the efficiency of the electricity system. This report presents policy recommendations and topics for future studies that can help the CPUC prepare for the electrification of transportation in ways that improve lives for Californians.
112
California Governor Arnold Schwarzenegger, “Gov. Schwarzenegger Signs Landmark Legislation to Reduce Greenhouse Gas Emissions,” press release, September 27, 2006, http://gov.ca.gov/pressrelease/4111/, Accessed February 2, 2009.
Fox APP
Page 43 of 51
Appendix Data Tables and Calculations These tables provide evidence to support data and claims presented in the report. The primary data come from a number of sources, all of which are cited in the relevant footnotes. I use the primary data to calculate data values for use in the report. I explain how I calculated all of the data in the footnotes. For example, in the footnote for Table AT1, I wrote “Column (5)= Column (4)/ Column (1).” This indicates that I generated Column (5) in the table by dividing Column (4) by Column (1). In these footnotes, if I do not specify the table number for columns or rows, then I am referring to the columns or rows of the table to which the footnote belongs. The table numbers in the Appendix have an “AT” prefix to distinguish them from tables in the main body of the report.
Common abbreviations: Abbreviation Long Form gal Gallons (of gasoline) kWh Kilowatt-hour (of electricity) MWh Megawatt-hour=1,000 kWh lbs Pounds (weight) MT Metric Ton (2,200 Lbs) VMT Vehicle Miles Traveled GHG Carbon Dioxide Equivalent Greenhouse Gases
Fox APP
Page 44 of 51
Table AT1: Utility Procurement and GHG Emissions Data113
114
(A) SDG&E 115 (B) SCE 116 (C) PG&E (D) Total
(1) 2006 (2) 2006 RPS (3) 2006 non- (4) 2006 GHG (5) 2006 GHG Emissions from Emissions Per Total Electric Procurement RPS Procurement Electric Procurement (Million MWh from Electric MWh) (Million (Million Procurement Procurement MWh) MWh) (MT) (MT/MWh) 19 1 18 7 0.35 83 14 69 24 0.29 79 11 69 16 0.21 181 26 156 47 0.26
Table AT2: Utility Procurement and GHG Emissions Data117 (1) 2006 GHG (2) 2006 RPS Emissions Per Procurement MWh from non- as a RPS Electric Percentage of Procurement Total Electric Procurement (MT/MWh) 118
(A) SDG&E 119 (B) SCE 120 (C) PG&E (D) Total
0.38 0.35 0.24 0.30
(3) GHG Emissions (4) GHG Emissions Projection for Total Projection for Total Electric Procurement Electric Procurement when 20% RPS when 33% RPS Achieved Based on Achieved Based on 2006 Emissions 2006 Emissions (MT/MWh) MT/MWh 6% 0.30 0.25 17% 0.28 0.23 13% 0.19 0.16 14% 0.24 0.20
113
Column (5)= Column (4)/ Column (1). Row (D) = Row (A) + Row (B) + Row (C). 114 SDG&E, “2006 PUP report,” http://www.climateregistry.org/CarrotDocs/35/2006/SDGE_PUP_2006_(rev).pdf, accessed January 18, 2009. 115 SCE, “2006 PUP report,” http://www.climateregistry.org/CarrotDocs/26/2006/SCEPUP06.xls, accessed January 18, 2009. 116 PG&E, “2006 PUP report,” http://www.climateregistry.org/CarrotDocs/19/2006/2006_PUP_Rev4_50122008.xls, accessed January 18, 2009. 117 Column (1)=Table AT1(Column 4)/Table AT1(Column 3). Column (2)=Table AT1(Column 2)/Table AT1(Column 1). Column (3) = Column (1)*(1-20/100). Column (4) = Column (1)*(1-33/100). Row (D) = Row (A) + Row (B) + Row (C). 118 SDG&E, “2006 PUP report,” http://www.climateregistry.org/CarrotDocs/35/2006/SDGE_PUP_2006_(rev).pdf, accessed January 18, 2009. 119 SCE, “2006 PUP report,” http://www.climateregistry.org/CarrotDocs/26/2006/SCEPUP06.xls, accessed January 18, 2009. 120 PG&E, “2006 PUP report,” http://www.climateregistry.org/CarrotDocs/19/2006/2006_PUP_Rev4_50122008.xls, accessed January 18, 2009.
Fox APP
Page 45 of 51
Table AT3: Estimate of California Vehicle Miles Traveled, 1980-2030121 Year (A) Billion Vehicle Miles Traveled In California
(1) 1980
(2) 1990
155
242
(3) 2000 (4) 2010 (5) 2015
280
362
412
122
(6) 2020 (7) 2030
457
577
121
California Department of Transportation, “2007 California Motor Vehicle Stock, Travel and Fuel Forecast,” May 2008, http://www.dot.ca.gov/hq/tsip/smb/documents/mvstaff/mvstaff07.pdf, accessed February 10, 2009 122 All of the data in this table is from the California Department of Transportation (see previous footnote) except for the 2030 prediction. I extrapolated the 2030 estimate from California Department of Transportation’s 1980-2020 data and predictions. I multiplied 2020 value by the percent change from 2010 to 2020 to arrive at the 2030 figure. This is a reasonable estimate of that value because the percent changes between all of the previous decades are very close in value.
Fox APP
Page 46 of 51
Table AT4: Projected Vehicle Statistics123 (1) PHEV (2) PHEV (3) PHEV 124 125 126 127 Annual Statistics Per Vehicle 10 20 40 (4) CV (A) Miles Traveled 12000 12000 12000 12000 (B) Gasoline Consumed (gal) 277 161 107 488 (C) Electricity Consumed (kWh) 467 1840 2477 0 (D) Miles Traveled by AC Electric 1497 5897 7939 0 (E) GHG Emissions from Gasoline Powered Miles (MT) 2.57 1.49 0.99 4.53 (F) GHG Emissions from AC Electric Powered Miles with 20% RPS (MT) 0.11 0.45 0.60 0.00 (G) GHG Emissions from AC Electric Powered Miles with 33% RPS (MT) 0.09 0.37 0.50 0.00 (H) Total GHG Emissions with 20% RPS (MT) 2.68 1.94 1.59 4.53 (I) Total GHG Emissions with 33% RPS (MT) 2.66 1.87 1.50 4.53 (J) Total GHG Emissions as a Percentage of CV Emissions with 20% RPS 59 43 35 100 (K) Total GHG Emissions as a Percentage of CV Emissions with 33% RPS 59 41 .33 100
Note: GHG emissions estimates assume that the portion of electricity generation that is non-RPS will have the same GHG emissions intensity (CO2e per MWh) each year in the future as it does today. Since California bans utilities from signing new power purchase agreements for electricity that is generated by anything more GHG intensive than the most efficient natural gas power plants, this is a reasonable assumption.
123
Rows (A), (B), (C), and (D) from Electric Power Research Institute and Natural Resources Defense Council, “Environmental Assessment of Plug-In Hybrid Electric Vehicles,” July 2007, http://mydocs.epri.com/docs/public/000000000001015325.pdf, accessed January 19, 2009. Row (E)= Row (B)*Table AT7(Row J)/2200. Row (F)=Table AT2(Column 3 Row D)*( Row C)/1000. Row (G)=Table AT2(Column 4 Row D)* Row (C)/1000. Row (H)= Row (E)+ Row (F). Row (I)= Row (E)+ Row (G). Row (J)= Row (H)/ Row (H Column 4). Row (K)= Row (I)/ Row (I Column 4). 124 PHEV 10=PHEV with battery capacity for 10 miles of electric only travel 125 PHEV 20=PHEV with battery capacity for 20 miles of electric only travel 126 PHEV 40=PHEV with battery capacity for 40 miles of electric only travel 127 CV=Conventional gasoline powered vehicle
Fox APP
Page 47 of 51
Table AT5: Projected Vehicle Statistics128 Year (A) AC Electric Powered Miles as a Percent of all Vehicle Miles Traveled (B) Total AC Electric Powered VMT (Billions) (C) Total AC Electric Consumption for All Vehicles (Millions of MWh) (D) GHG Avoided by Substituting AC Electric Powered Miles for Gasoline Powered Miles with 20% RPS (Millions of MT) (E) GHG Avoided by Substituting AC Electric Miles for Gasoline Miles with 33% RPS (Millions of MT)
Electric from Plug VMT as % of total VMT (EPRINRDC National) 2010 2015 2020 2030 0
2
5
20
0
8.24
22.85
101.38
0
2.57
7.13
31.63
0
2.48
6.88
30.53
0
2.58
7.16
31.78
Table AT6: Projected Vehicle Statistics
Year (A) AC Electric Powered Miles as a Percent of all Vehicle Miles Traveled (B) Total AC Electric Powered VMT (Billions) (C) Total AC Electric Consumption for All Vehicles (Millions of MWh) (D) GHG Avoided by Substituting AC Electric Powered Miles for Gasoline Powered Miles with 20% RPS (Millions of MT) (E) GHG Avoided by Substituting AC Electric Powered Miles for Gasoline Powered Miles with 33% RPS (Millions of MT)
Estimate of Electric from Plug VMT as % of total VMT Given CA's likely rules and incentives, and the 129 strong popularity of hybrids (1) 2010 (2) 2015 (3) 2020 (4) 2030 0
4
10
40
0
16.48
45.70
230.77
0
5.14
14.26
72.00
0
4.96
13.76
69.50
0
5.17
14.33
72.34
128
Row (A) from Electric Power Research Institute and Natural Resources Defense Council, “Environmental Assessment of Plug-In Hybrid Electric Vehicles,” July 2007, http://mydocs.epri.com/docs/public/000000000001015325.pdf, accessed January 19, 2009; Row (B)=Table AT3(Row A)*( Row A)/100. Row (C)= Row (B)*Table AT7(Row A). Row (D)= Row (B)*Table AT7(Row F)*1000/2200. Row (E)= Row (B)*Table AT7(Row G)*1000/2200. 129 All values are double the EPRI-NRDC national projections from Table AT5. This presents a rough estimation that California’s laws and policies will continue to promote more environmentally progressive results in California than the results measured in other states. Also, hybrids have been very popular in California. In 2007, over 26% of all new hybrid-vehicle registrations nationwide were in California. Associated Press, “Hybrid Sales, Led by Prius, up 38 Percent,” April 21, 2008, http://www.msnbc.msn.com/id/24230209/, accessed March 3, 2009.
Fox APP
Page 48 of 51
Table AT7: Efficiency and Emissions Statistics130 131
(A) Electric Powered Engine Efficiency (AC kWh/mile) 132 (B) Gasoline Powered Engine Efficiency (gallons/mile) (C) GHG Emissions per Mile for AC Electric Powered Engine with 20% RPS (D) GHG Emissions per Mile for AC Electric Powered Engine with 33% RPS (E) GHG Emissions per Mile for Gasoline Powered Engine (F) GHG Emissions Avoided by Substituting an AC Electric Powered Mile for a Gasoline Powered Mile with 20% RPS (lbs) (G) GHG Emissions Avoided by Substituting an AC Electric Powered Mile for a Gasoline Powered Mile with 33% RPS (lbs) (H) GHG Emissions for an AC Electric Powered Mile as a Percentage of GHG Emissions for a Gasoline Powered Mile with 20% RPS (I) GHG Emissions for an AC Electric Powered Mile as a Percentage of GHG Emissions for a Gasoline Powered Mile with 33% RPS 133 (J) CO2e Emitted per Gallon of Gasoline Combusted (lbs) (K) AC Electric kWh Equivalent to a Gallon of Gasoline
0.312 0.041 0.167 0.140 0.829 0.663 0.690 20 17 20.4 7.68
130 Row (C)= Row (A)*Table AT2(Column 3 Row D)*2200/1000. Row (D)= Row (A)*Table AT2(Column 4 Row D)*2200/1000. Row (E)= Row (B)* Row (J). Row (F)= Row (E)- Row (C). Row (G)= Row (E)- Row (D). Row (H)=100* Row (C)/ Row (E). Row (I)=100* Row (D)/ Row (E). Row (K)= Row (A)*Table AT4(Row A)/Table AT4(Row B). 131 Electric Power Research Institute and Natural Resources Defense Council, “Environmental Assessment of Plug-In Hybrid Electric Vehicles,” July 2007, http://mydocs.epri.com/docs/public/000000000001015325.pdf, accessed January 19, 2009. 132 Ibid. 133 Environmental Protection Agency, “Emission Facts: Greenhouse Gas Emissions from a Typical Passenger Vehicle,” February 2005, http://www.epa.gov/otaq/climate/420f05004.pdf, accessed January 24, 2009.
Fox APP
Page 49 of 51
Table AT8: Current Electric Vehicle Rates134 Residential Electric Vehicle Electricity 135 136 PG&E SCE Rate Plans (A) Lowest Off-Peak Rate (cents/kWh) 5 (B) Highest Off-Peak Rate (cents/kWh) 20.2 (C) Lowest Low-Peak Rate (cents/kWh) 10.5 (D) Highest Low-Peak Rate (cents/kWh) 38.5 (E) Lowest High-Peak Rate (cents/kWh) 28.7 (F) Highest High-Peak Rate (cents/kWh) 56.7 (G) Dollars per Gallon Equivalent for Lowest Off-Peak Rate $0.38 (H) Dollars per Gallon Equivalent for $1.55 Highest Off-Peak Rate (I) Dollars per Gallon Equivalent for $0.81 Lowest Low-Peak Rate (J) Dollars per Gallon Equivalent for $2.95 Highest Low-Peak Rate (K) Dollars per Gallon Equivalent for $2.20 Lowest High-Peak Rate (L) Dollars per Gallon Equivalent for $4.35 Highest High-Peak Rate
137
SDG&E 23.1 23.5 NA NA 26.3 34.4
21.3 24.4 24.3 27.4 25.4 39.4
$1.77
$1.63
$1.80
$1.87
NA
$1.87
NA
$2.10
$2.02
$1.95
$2.64
$3.02
134
Row (G) = Table AT7 Row (K) * Row (A). Row (H) = Table AT7 Row (K) * Row (B). Row (I) = Table AT7 Row (K) * Row (C). Row (J) = Table AT7 Row (K) * Row (D). Row (K) = Table AT7 Row (K) * Row (E). Row (L) = Table AT7 Row (K) * Row (F). 135 PG&E, “Tariff E-9: Experimental Residential Time-of-Use Service for Low Emission Vehicle Customers,” http://www.pge.com/tariffs/tm2/pdf/ELEC_SCHEDS_E-9.pdf, accessed January 10, 2009. 136 SCE, “Schedule TOU-EV-1: Domestic, Time-of-Use, Electric Vehicle Charging,” http://www.sce.com/NR/sc3/tm2/pdf/ce114-12.pdf, accessed January 10, 2009. 137 SDG&E, “Schedule EV-1: Domestic Time-of-Use for Electric Vehicle Charging,” http://www.sdge.com/tm2/pdf/ELEC_ELEC-SCHEDS_EV-TOU.pdf, January 10, 2009.
Fox APP
Page 50 of 51
Table AT9: Gasoline Consumption Projections 138
(A) US Petroleum Consumption as a Percent of World Consumption 24% 139 (B) California Petroleum Consumption as a Percent of US Consumption 9.5% (C) Estimated California Petroleum Consumption in 2030 as a Percent of 140 Current Consumption if Plug-In Electric Travel Produces 40% of All VMT 96% (D) Estimated Decrease in California Petroleum Consumption from 2010 to 2030 as a Percent of Total Current Global Consumption if Plug-In Electric 141 Travel Produces 40% of All VMT 0.09% 142 (E) Current Global Petroleum Production in Millions of Barrels 86
138
Energy Information Administration, “International Petroleum Consumption,” http://www.eia.doe.gov/emeu/international/RecentPetroleumConsumptionBarrelsperDay.xls, accessed February 28, 2009. 139 Energy Information Administration, “State Energy Profiles: California,” http://tonto.eia.doe.gov/state/state_energy_profiles.cfm?sid=CA, accessed February 28, 2009. 140 Row (C) = 100-(((Table AT6 (Column B Row 4) - (Table AT3 (Column A Row 7) - Table AT3 (Column A Row 4)))/ Table AT3 (Column A Row 4))*100) 141 Row (D) = ((1-Row (C))/100) * (Row (B)/100) * (Row (A)/100) * 100 142 Energy Information Administration, “International Petroleum Consumption,” http://www.eia.doe.gov/emeu/international/RecentPetroleumConsumptionBarrelsperDay.xls, accessed February 28, 2009.
Fox APP
Page 51 of 51