Arizona regulators adopt policy to encourage regulated utilities to invest in EV infrastructure, programs

The Arizona Corporation Commission, in a decision docketed on Jan. 16, adopted policy to encourage regulated utilities to invest in infrastructure and develop programs that support electric vehicle (EV) charging and widespread transportation electrification.

As noted in the filing, Commissioner Boyd Dunn in August 2018 requested a docket be opened on his inquiry into EVs, EV infrastructure, and the electrification of the transportation sector in the state. That docket was closed in October 2018 so that the issue could be addressed in a rulemaking docket instead. In November 2018, the commission directed its Utilities Division Staff to develop the policy statement on EVs, EV infrastructure, and the electrification of the transportation sector in Arizona, the commission added.

One purpose for the commission developing a policy on EVs, EV infrastructure, and the electrification of the transportation sector is to address the role of regulated entities. Comments filed by stakeholders on the matter support a policy statement rather than a rule that would clearly identify the role of regulated entities in EVs, EV infrastructure, and the electrification of the transportation sector, the commission added.

The commission noted that its staff believes that issuing a policy statement at this time is appropriate because the EV market is still evolving and it is premature to adopt rules. A policy statement allows the commission to provide guidelines to regulated entities when deploying EV charging infrastructure and supporting software, the commission said.

As noted in the filing, the EV industry is growing rapidly in Arizona, as in other regions of the country. Some of the benefits of owning an EV include tax credits, high occupancy vehicle lane access during heavy traffic, and reduced vehicle licensing fees, the commission said.

Noting that there are hundreds of public EV charging stations around the state and thousands of EVs on the road with both areas showing huge growth year-over-year, the commission said that Lucid Motors has announced plans to build a $1bn EV manufacturing plant in Casa Grande.

“Staff believes that by adopting this policy it will send a signal to EV manufacturers to locate in Arizona and spur economic development,” the commission added.

According to a study commissioned by Salt River Project, as of March 2018, 813,000 EVs have been sold in the United States. The commission added that that study also found that:

  • EVs use about 2,700 to 3,300 kWh per year
  • Utility time of use (TOU) rates are effective in shifting peak loads
  • While DC Fast charging comprised less than 3% of total energy used in the study, DC Fast charging was the cause of most of the peaks in the total project load
  • About 81% of charging occurred at home, while only about 3% of charging occurred in public charging locations
  • The majority of charging occurred at Level 2 – 74% ­­– followed by Level 1 – 23.4% – and DC Fast charging – 2.5%

Commission staff recognizes that EVs, EV infrastructure, and the electrification of the transportation sector in Arizona comes with many benefits, the commission said, including:

  • Rate designs that reduce peak load and take advantage of times with low priced electricity
  • Increased grid reliability
  • Future possibilities of vehicle to grid integrations
  • Lower costs to consumers
  • Supports growth in battery technology, which will lead to more economically feasible energy storage
  • Increased EV usage
  • Reduced emissions
  • Environmental benefits
  • Lower health care costs

The commission noted that several challenges have been identified, including:

  • Whether companies deploying EV charging stations are public service corporations, which are defined in part as “all corporations other than municipal engaged in furnishing gas, oil, or electricity for light, fuel or power”
  • The appropriate rate designs specific to EV charging stations
  • The role of private versus regulated entities

The commission said that it has constitutional authority over public service corporations in Arizona. Staff does not believe that it is necessary to precisely define the commission’s role with respect to the provision of EV charging stations to customers at this juncture, the commission said, adding, “However, at some point the commission will need to address this issue.”

Staff believes that the commission can have its most impactful effect through its regulation of existing public service corporations providing electricity in the state. The commission added that its exclusive ratemaking authority allows it to influence and set appropriate pricing for EV charging stations. The rate design adopted and approved by the commission will have important impacts on grid reliability, the cost of electricity to customers, and the reduction of peak load prices, the commission said.

The commission noted that it can also incent deployment of EV charging stations through various ratemaking incentives.

In addition, the commission said, the proliferation of EVs and charging stations will also likely increase certain infrastructure needs and/or expenses of the regulated utilities, which will need to be factored into the commission’s integrated resource planning process.

Public service corporations can play a critical and necessary role in the EV market, the commission said. For instance, commission-regulated utilities do not currently have specialized tariffs applicable only to EV charging stations, the commission said, adding that such tariffs should be designed to achieve grid benefits, reliability, and lower costs to customers.

In addition, the commission said, public service corporations can, through pilot programs, obtain valuable information on the deployment of charging stations, customer charging patterns, and the need for rate design incentive programs.

Discussing the policy statements, the commission said, for instance, that it encourages public service corporations to develop educational and outreach programs – subject to commission oversight – as they relate to EVs, EV infrastructure, and the electrification of the transportation sector, and may request cost recovery for EV programs, including education and outreach programs.

Also, public service corporations and stakeholders will develop best practices for commission consideration that include consumer protections. The commission further noted that public service corporations should maximize electric grid benefits through appropriate rate designs applicable to EV charging. To accomplish that, regulated utilities should propose optional rate design tariffs to encourage customers to charge vehicles during off-peak hours, creating overall system benefits.

The commission added that public service corporations could deploy EV charging stations in identified areas of inadequate coverage, including rural and low-income areas, multi-dwelling units, and interstate corridors or highways.

In addition, the commission said that public service corporations should work with non-regulated entities to determine the location of charging and DC fast charging infrastructure where joint investment and ownership may be appropriate.

Among other things, the commission said that its staff will continue discussions with stakeholders on the issue of EVs, EV infrastructure, and the electrification of the transportation sector through future stakeholder meetings and will report to the commission on a quarterly basis with recommendations for the commission’s further consideration.

About Corina Rivera-Linares 3286 Articles
Corina Rivera-Linares was TransmissionHub’s chief editor until August 2021, as well as part of the team that established TransmissionHub in 2011. Before joining TransmissionHub, Corina covered renewable energy and environmental issues, as well as transmission, generation, regulation, legislation and ISO/RTO matters at SNL Financial from 2005 to 2011. She has also covered such topics as health, politics, and education for weekly newspapers and national magazines.