The California Public Utilities Commission (CPUC) recently issued a proposed decision aimed at funding $1 billion in infrastructure that will be needed to electrify the state’s transportation sector.
In August, the California Air Resources Board approved a rule that requires all new cars and light trucks sold in the state to be zero-emission vehicles (ZEVs) by 2035.
The proposed decision (Rulemaking 18-12-006) on Transportation Electrification Policy and Investment adopts a new Transportation Electrification Framework (TEF) that would offer rebates for behind-the-meter (BTM) electric vehicle infrastructure investment at commercial, industrial and residential sites.
The proposed decision would authorize $1 billion to be funded by the state’s investor-owned utilities’ ratepayers and administered by a third party. Each IOU would be required to contribute a proportionate share of the funding allocation based on its electric sales for 2024.
Of the total funds, 70 percent would be reserved for the medium- and heavy-duty electric vehicle sector and 30 percent for charging light-duty electric vehicles at or near multi-unit dwellings. Additionally, at least 65 percent of the funds would be earmarked for underserved communities as would 65 percent of the marketing education and outreach budget.
The proposed decision would also eliminate all IOU ownership of BTM charging infrastructure beginning in 2025.
The proposed decision comes in the wake of Assembly Bill 841, which was signed into law in September 2020, and required the CPUC and the state’s investor-owned utilities (IOUs) to establish new EV Infrastructure Rules that would allow for cost recovery of electric distribution infrastructure on the utility side of the customer’s meter when customers, other than single-family residences, install separately metered infrastructure to support electric vehicle charging infrastructure.
The EV Infrastructure Rules marked “a major policy shift,” the CPUC said. Before AB 841, the Commission approved cost allocations between customers and utilities for both utility-side and customer-side transportation electrification investments on a one-off, case-by-case basis.
Under the new EV Infrastructure Rules of AB 841, IOUs essentially “socialize across all ratepayers” the costs of electrical distribution infrastructure for electric vehicle charging for customers other than those in single-family residences. Those costs are part of the IOUs’ distribution system upgrade plans and are recoverable through a general rate case. Single-family residences were already receiving similar treatment under existing rules.
In October 2021, the CPUC began discussions on how to further accelerate transportation electrification funding. In February 2022, Commissioner Clifford Rechtschaffen, who was assigned to the commissions’ transportation electrification framework (TEF) initiative, issued a ruling revising the commission’s proposed TEF pertaining only to customer-side, i.e., BTM costs, given that AB 841 had deemed utility-side transportation electrification costs subject to rate recovery.
While the proposed decision would authorize $1 billion in funding for BTM transportation electrification costs, including marketing, education, outreach and technical assistance programs, it takes a cautious approach to how much the IOUs should spend in the first five years of the transportation electrification program known as Funding Cycle 1 of FC1.
In light of the quickly moving electric vehicle market, the proposed decision would cap spending during the first three years of FC1 at $600 million with access to the remaining $400 million held until the commission issues a Mid-Cycle Assessment.
“Given the immensity and importance of the core IOU responsibilities, the role of IOU ratepayers in subsidizing BTM TE [transportation electrification] infrastructure requires careful and ongoing consideration; indefinite ratepayer support may not be warranted,” the proposed decision states.
The proposed decision also directs the IOUs to host annual roundtables each July to convene the program administrator, stakeholders, and staff of the commission’s energy division to identify possible program modifications. IOUs would also have to host annual vehicle-grid integration forums in conjunction with energy division staff.
The IOUs are Pacific Gas and Electric, Southern California Edison, San Diego Gas & Electric, Liberty Utilities (CalPeco Electric), Bear Valley Electric Service, and PacifiCorp d/b/a Pacific Power.
The proposed decision also provides accommodation for already existing funding channels for transportation electrification. To date, the Commission has authorized approximately $1.8 billion for various transportation electrification programs, of which only about $333 million, or 17.5 percent, has been spent.
California will also receive $383 million in transportation electrification funds from the $2.5 billion in zero emission vehicle funds authorized by the federal Infrastructure Investment and Jobs Act of 2021.
The proposed decision calls for an overlap between the dispersal of the existing funds, referred to as FC0, that allows for a grace period while FC1 ramps up and FC0 programs ramp down.
Under the proposal, all FC0 programs and spending must be complete by Dec. 31, 2026, and FC1 would begin on Jan. 1, 2025, with a subsequent FC2 scheduled to begin on Jan. 1, 2030.
The California Energy Commission (CEC) estimates that by 2030 California may need up to 1.2 million electric vehicle chargers to support an estimated eight million light-duty electric vehicles and an additional 157,000 chargers to support medium- and heavy-duty electric vehicles.
Currently there are only 79,023 public and private chargers for the state’s 1.2 million light-duty electric vehicles and a smaller number of medium- and heavy-duty electric vehicles.
The earliest the CPUC could vote on the proposed decision would be during its Nov. 17, 2022 meeting. Interested parties may submit comments on the proposed decision by Nov. 3.
