June 25, 2018 - From the June, 2018 issue

Carla Peterman on CPUC’s Vote to Invest in EV Charging Infrastructure

Last month, the CPUC unanimously approved investing $768 million in programs and projects to broadly expand the network of electric vehicle charging stations and other infrastructure throughout the state of California. With more than 400,000 electric cars on the road in California, TPR caught up with CPUC Commissioner Carla Peterman to discuss the significance of this investment, the role of the utilities in electric charging infrastructure, and how energy storage fits into the procurement decisions surrounding the state's electricity grid in the coming years. 


Carla Peterman

"The intention of these investments is to demonstrate California’s commitment to EVs, to seed infrastructure for the early adopters, and to leave room for innovative models to come forward and make EV charging cheaper in the next few years." - Carla Peterman

Last month, the CPUC unanimously approved investing $768 million in programs and projects to broadly expand the network of electric vehicle charging stations and other infrastructure throughout the state of California. Comment on the goals and motivations of this CPUC decision.

Carla Peterman: I’m very excited about this decision. The $768 million supports four programs to build electric vehicle infrastructure in both the light-duty space—like passenger cars—and the medium- and heavy-duty space, like trucks, port equipment, and transit. It’s a wide gamut of investments in the electric transportation sector.

We need to move the needle in this area, because about 50 percent of greenhouse gas emissions in California now come from the transportation sector. The Legislature realized—and the PUC agrees—that we can’t get to our emissions reductions goals by increasing our supply of renewable energy alone. We’ve also got to decarbonize the transportation sector.

In 2015, the Public Utilities Commission was directed by SB 350 to look at the role of electricity as a transportation fuel and to further identify the role utilities could play in making electricity an affordable and reasonable fuel option. In response, we asked our investor-owned utilities to propose creative projects that would meet specific needs in their communities, accelerate electric vehicle adoption, and complement other funding sources.

Last month, we approved several projects to enhance the deployment of electric vehicles, particularly in areas that are most affected by negative air quality. Our focus is on charging equipment, but we know that customers are more willing to buy the actual vehicle if they know that charging will be available.

We approved a program that provides charging infrastructure for at least 6,500 medium- and heavy-duty vehicles across 700 commercial sites in PG&E territory. We also approved a bigger program supporting nearly 9,000 vehicles at 870 sites in Southern California Edison territory. In both, there is a specific focus on disadvantaged communities: 40 percent of investments in Edison territory will go to disadvantaged communities, and 25 percent in PG&E territory.

Our third program supports the fast-charging network in PG&E territory. We approved the infrastructure to support 234 fast-charging stations at 52 sites. This gets us on our way to the governor’s goal of more than 10,000 fast-chargers deployed by 2030.

Finally, we also paid attention to the passenger car market and home charging. In San Diego Gas & Electric territory, we approved a program to provide rebates and wrap-around services for the installation of chargers in up to 60,000 single-family homes or small multi-unit dwellings. 

Elaborate on how these CPUC investments will position the state to significantly increase market availability of EV charging?

We hope that these programs jumpstart investment in the general charging market.

We have an overall state goal, established by the governor via executive order earlier this year, to get 5 million zero-emission vehicles on the road by 2030. Our investments are helping move us toward those goals.

We don’t have a state goal focused on charging for the medium-heavy-duty sector, but that sector is very important to tackle because of the associated emissions—not just greenhouse gases, but also NOx, SOx, and broader air quality issues, particularly in the LA Basin and San Joaquin Valley. We’ve focused on utility investments in the heavy-duty space because those might not be done by the private sector at this point.

As we have utilities invest, we don’t want to hinder the competitive landscape. There are many private companies doing exciting work and deploying interesting business models that could make charging more accessible, and we don’t want to limit that. But we know that the utilities have capital that they can deploy quickly, so we launched these programs while allowing opportunities for the private sector to step in.

The intention of these investments is to demonstrate California’s commitment to EVs, to seed infrastructure for the early adopters, and to leave room for innovative models to come forward and make EV charging cheaper in the next few years. 

Address San Diego’s $137 million home charging rebate program. Who do you anticipate will benefit from that, and how will it contribute to the CPUC’s goals?

The beneficiaries of that investment will be anyone who lives in a single-family home or small multi-unit dwelling who would like to take up electric vehicles. We’ve heard from property owners and homeowners about the barriers to adoption: Home charging isn’t necessarily that expensive, but it can be tricky to figure out how to install it, make sure it’s permitted, and get the right charger to fit your needs.

The San Diego program doesn’t just pay for the charging, but also manages the process from beginning to end—taking the transaction costs and hard work out of the equation for customers. All a customer has to do is raise their hand and say, “I just got an electric vehicle,” or “I’m going to get an electric vehicle in the next six months,” and they can get this service.

What’s exciting about this program is that it should meet 60 percent of the need for home charging in San Diego territory by 2030. The majority of the region’s likely home charging needs could be met with this investment. 

How does the CPUC anticipate the private sector, such as EV vendors and automakers, coordinating with and leveraging this public investment?

We designed this program requiring utilities, to the extent possible, to be agnostic to equipment vendors. In the San Diego program, for example, there’s a marketplace where customers can go and pick the charger that they think is right for them. We wanted to make sure that, even if the utilities were managing some of the process, they were supportive of a variety of vendors and customer choice. That’s how we’ve approached these programs historically.

In terms of coordination and cooperation with the private sector, we directed utilities that their investment needed to leverage other investments, and to seek partnerships where possible. We see opportunities for partnerships between the utilities and companies like VW that have infrastructure investment plans, as well as with other automakers.

During our proceedings, we had active involvement from the automakers, and they told us they were planning to invest in the fast-charging network. We thought, “Where can the utilities provide a complementary benefit?” In some cases, it’s in reaching out to market segments that are left back, like the medium-heavy-duty segment. In other cases, it’s having the utility invest in the make-ready infrastructure—all the wires and conduits necessary to support charging equipment—and then having the private sector or the customer pay for the charger itself. Each program is slightly different, and they’re structured to address the different levels of private-sector investment expected in those areas.

How might Veloz, the non-profit led by state and private-sector EV stakeholders, best contribute to realizing the CPUC goal of reducing barriers to consumer adoption of EVs?

The PUC is a member of Veloz, and we were members of its predecessor, the Plug-In Electric Vehicle Collaborative, which I chaired.

The PEV Collaborative was focused on bringing the private and public sectors together to address the barriers limiting electric vehicle adoption. Over time, it became clear that customers were just not aware of electric vehicles and the benefits they could provide. Veloz was founded to focus on getting drivers in the seats of electric vehicles and making sure that potential drivers really understand the value of EVs to them. It focuses on consumer education and awareness on electric vehicles.

As we encourage drivers to purchase EVs, we also need to make sure that they have charging available. Various public surveys have shown that drivers are reluctant to buy EVs because of the price as well as concern around charging. We think there is sufficient charging infrastructure to meet the needs of many drivers, but we need more. We want charging infrastructure to stay just ahead of that adoption curve of electric vehicles.

The work that we’re doing at the PUC, as well as all the great work that’s happening at the Energy Commission and the Air Resources Board, is focused on getting drivers an array of charging options at home or on the road. Our work is truly complementary; we’ve got to work on vehicles and charging at the same time.

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The California Energy Commission recently issued a report noting that the state would need between 229,000 and 279,000 EV chargers outside of single-family homes by 2025 to meet the state’s goal for adoption of zero-emission vehicles. Could you elaborate on the nexus between that CEC research and the CPUC’s recent decisions?

The Energy Commission has led the state analysis on what our infrastructure needs are going to be, and we require the utilities to consider their reports in designing programs and identifying future investments.

Governor Brown’s executive order earlier this year directed the Energy Commission to reallocate funding toward infrastructure investments for zero-emission vehicles, particularly light-duty vehicles. They’re investing in electric vehicle charging over the next few years to serve more than 200,000 charge ports. But there’s going to be a need beyond that.

Their study also identified a need for more single-family charging, and it doesn’t address medium-heavy-duty charging. The investments that we’ve approved are helping to fill in the gaps that aren’t identified in the CEC report, as well supporting the state’s overall goals.

I should also point out that in the last couple years, the Commission approved $197 million in investments for charging in workplaces and multi-unit dwellings. Those programs are underway, and we’re looking forward to learning from them about what further investments might be needed.

And I’d be remiss if I didn’t share that the PUC, the Energy Commission, and the Air Board work together very closely. We meet on a monthly basis to make sure that we’re being consistent and that we’re capitalizing on and aligning our different programs.

Another apparent convergence of the Energy Commission and the PUC priorities is energy storage. Update our readers on the PUC’s current involvement with energy storage projects.

It’s exciting that we’re now seeing storage decisions approved on a regular basis. Energy storage is becoming more relied upon as part of the utility toolkit for procurement. For example, we recently approved storage to support San Diego’s local reliability need, and storage projects to address the gas shortage from the closure of Aliso Canyon.

The more experience the Commission and the utilities have with storage, the more opportunities are emerging. And there has been a lot of work on improving battery efficiency to make sure that, whether it’s an electric vehicle or stationary storage, we’re getting these projects at the best price possible. We’ve seen the price of energy storage decline over the last several years, and we’ve seen the price of electric vehicles decline as well.

One thing we’re focused on right now is ensuring that the cost of electricity is affordable and understandable to customers. That’s the third piece of the equation: We need charging infrastructure, we need the vehicle, and we need pricing that customers can understand  and that makes them want to drive electric versus gas.

For the most part, people already can charge an electric vehicle for cheaper than running their car on gas if they do it at the right time of day. But not all customers understand what time that is. There’s a need to educate customers about rate design and the best plan to be on if they have an electric vehicle.

Japan has announced, “As the 1964 Olympic games left the Shinkansen high-speed train system as its legacy, the upcoming 2020 Tokyo Olympic Games legacy will be a hydrogen society.” What is the CPUC’s agenda with regard to hydrogen as a low carbon fuel?

We’ve started to look at the opportunity for hydrogen fuel-cell vehicles, which is another form of electric transportation. It’s not an area that we’ve focused on historically, since utilities don’t sell hydrogen. But we are starting to think about how electricity rates affect the cost of hydrogen production, in order to make it as cheap as possible to enable that customer option.

For hydrogen to be truly low-carbon, it has to be produced with electricity or bio-energy. And if it’s produced with electricity, that electricity is going to be one of the largest costs in the production process. But there are times of day when it’s cheaper to produce electricity, and times of day when it’s cheaper to use electricity. We are beginning to talk about what  rate designs could enable hydrogen production as cheaply as possible.

One challenge for hydrogen going forward is that the fuel-cell vehicle and hydrogen production communities are still figuring out the best business model for fuel. It will be beneficial for the utilities to stay in conversation with the fuel producers so that they’re making decisions in coordination and understanding each other’s issue.

Hydrogen production hasn’t typically been on the radar for the PUC or the utilities, but it’s going to be important as we move forward. Both fuel-cell and electric vehicles have an important role to play in meeting our state goals.

Governor Brown’s administration, which comes to a close at the end of the year, is preparing currently to host a Global Climate Summit this fall in San Francisco highlighting its legacy policies and programs. What climate policies do you, as an active PUC commissioner and former CEC board member, hope will roll over to the next governor’s administration? 

I hope that most of the policies get rolled over, if not all. Over the last eight years, where I believe Governor Brown and his administration have been successful is in setting both long-term goals—like our 2050 greenhouse gas reductions goal—as well as clear markers along the way. He and the Legislature have also identified planning processes that are adaptable, so that we can get to goal even if facts on the ground change.

I hope that the next administration will keep many of these planning processes in place, including our integrated resource planning at the PUC and our overall zero-emission vehicle planning. I also hope that the next administration learns from the investments that we’re making now, and is supportive of incorporating those lessons learned into the next series of investments. 

For more than a century, the CPUC has been a powerful agency regulating investor-owned utilities. Obviously, energy markets have changed, disruptive technologies for harnessing, delivering and monitoring the use of electrons have been introduced, and climate change is creating a new normal. To conclude, what should be the role of the CPUC in the 21st century?

The market is changing constantly, but our core mission is the same: ensuring that utility services are safe, reliable, and affordable. What does that look like as more entities start to sell power, from direct assets to community choice aggregators? What does that look like when we need to increase electricity substantially to support transportation? What does it look like in the face of climate change impacts that weaken our system?

There are lots of questions. But as long as we keep that overall framework in mind, I think we can continue to be successful. The electric industry has undergone several transformations since the creation of electricity, and I think we can manage the transitions to come as long as we do advance planning.

I think the role of utilities in transportation electrification has three parts, and we’re trying to tackle each of them. One role is as an infrastructure provider, which I’ve talked about. Another is as a distribution grid manager. We have to make sure that the distribution grid can accommodate these new loads, so we’re doing a lot of work with the utilities on distribution system planning and making sure that we have sufficient capacity and different circuits to accommodate potential EV road scenarios.

The third role is as fuel providers. We’ve got to continue to decarbonize the electric grid in order to make it value-add from a transportation perspective. Decarbonization of the grid is a message we continuously press to other commissions and other states, because it doesn’t make sense to deploy electric vehicles if you’re not also increasing your renewable supply.

Also, the investments we’re making are in service of important policy goals, but we must remember that, ultimately, they should provide ratepayer benefits. It’s important to be prudent and thorough about that. In our recent round of investments, we’ve approved only the programs that we think have a reasonable chance of success, that help to minimize ratepayer costs, and that bring greater benefits—because ratepayer money is precious.

The Commission is currently considering a new rulemaking on affordability across different sectors, and the metrics by which we can measure whether the investments that we’re approving are affordable. This is a real question for other states that might like to do similar environmental initiatives, but are concerned about ratepayer impacts. If California is going to lead, we’ve got to invest in new technology while making those investments as cost-effective as possible. It’s the combination of those two things that will allow other states and jurisdictions to follow us in the years to come.

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© 2018 The Planning Report | David Abel, Publisher, ABL, Inc.