On May 15th, Xcel Energy, the largest utility in Colorado, released their first Transportation Electrification Plan (TEP). It’s their proposal for how much money they’ll spend on transportation electrification - things like the infrastructure to support more than 18,000 charging stations, 100,000 new electric vehicles, electric school buses, and community charging hubs (I picture banks of shared electric bikes or scooters available for community use). There are over 300 pages of documents to cover what they’ll do over the next three years (once they get Public Utilities Commission approval in the fall), and as I continue to dig into it I find new things.
But one thing’s for sure: this is a big deal.
This will likely be the single biggest action taken in Colorado to tackle our state’s climate and air pollution problem this year.
It helps convert our transportation system away from dirty fossil fuels and toward the cleaner, cheaper fuel that comes from our electricity grid all while bringing in new sources of revenue that should result in lower electricity bills for everyone in the future. Their proposal is an important strategy for the state to hit its goal of 940,000 electric vehicles on the road by 2030.
Xcel is proposing to invest $101.5 million from 2021-2023 in promoting and supporting the conversion of our transportation system to one fueled by electricity. Making electricity our fuel for transportation will reduce greenhouse gas emissions and other air pollutants that are bad for our health immediately by eliminating tailpipe emissions. As Xcel’s grid gets more of its energy from renewable resources, the electricity for our vehicles will get even cleaner.
Xcel’s electrification proposal divides the $101.5 million into five main portfolios: Residential; Multi-Unit Dwelling; Commercial; Advisory Services; and Research, Innovation, and Partnerships.
While Xcel has a set amount of money assigned to each bucket, it is proposing to have the flexibility to move money between buckets to make sure that it’s spending on projects that are performing well.
Almost half of the money in the TEP ($48 million) is allocated to the Commercial portfolio, focused on fleet electrification, public charging, and reshaping the way that people travel through investments in micromobility. The kinds of things that count as “fleets” include city-owned vehicles and companies’ delivery trucks.
I think it makes a lot of sense for Xcel to focus electrification dollars on commercial fleets since many delivery trucks travel much greater distances than passenger vehicles, and electrifying them will have an outsized impact in reducing greenhouse gas emissions and improving air quality.
One proposal within the Commercial portfolio that shows a lot of promise is the idea of building mobility hubs that would support micromobility - things like electric-powered scooters and bikes.
In order to reform our transportation system the way we need to to hit our greenhouse gas emissions reduction goals and to help cities like Denver reach their goal of zero transportation-related deaths by 2030, we need fewer people to travel by car. That means people need more options to travel around, especially the short distances that account for many trips in urban areas. Xcel proposes to work with cities and municipalities to support mobility hubs, central locations with an electric charger where people can access a shared electric vehicle, electric bikes, and electric scooters. This comes at a real good time as Denver rolls out a replacement for the city’s old Bcycle program that closed in January. I’ll be posting a lot more about this in the months to come.
One project in the Research, Innovation, and Partnerships portfolio that is exciting is a $2.2 million proposal to convert dirty fossil fuel schools buses to electric-powered. Children can be more vulnerable to pollutants than adults because they are still growing and developing. Investing in electrifying school buses will make our children healthier because they will breathe fewer tailpipe emissions.
This innovation portfolio would be a great place for the public to weigh in during the Public Utility Commission approval process (more on this below) since even Xcel acknowledges they need help identifying creative ways to meet electrification goals.
In addition, Xcel’s electrification proposal dedicates $8 million to tackling charging challenges around multi-unit dwellings like apartment buildings. The TEP has different programs and rebates available based on if the parking at the building is assigned or not. Because almost half of vehicles in America don’t have access to a garage or off-street parking spot, figuring out how charging electric vehicles will work at multi-unit buildings with buildings that don’t have assigned parking spots will be critical to hitting the goal of 940,000 electric vehicles in Colorado by 2030.
And to help fleets, residential customers, and owners of multi-unit dwellings obtain charging infrastructure and convert their vehicles, Xcel is proposing to dedicate $13 million to advising these entities through their Advisory Services portfolio - experts who can provide needed technical expertise.
While this proposal has a lot of good pieces, there’s definitely some questions that will need answered.
One thing I’m keeping my eye on is how well Xcel manages when the actual electric vehicle charging happens. This matters because a kWh of energy costs a lot less to produce late in the evening and through the night then during what’s known as “peak charging” hours between 2pm and 6pm. In those hours we are all consuming a lot of electricity, operating everything from televisions to microwaves to air conditioning and so there is limited spare electricity.
If all the new electric vehicles charged at peak hours it would require a surge in new energy production, which is costly (plus there is no guarantee that new energy isn’t natural gas, which undermines the emissions benefits from using an electric vehicle). This means that to realize the full pollution and cost benefits of electrification, we need electric vehicle owners to charge their vehicles after dinner time and overnight. Xcel’s proposal appears to do this by requiring that people who take part in their electric vehicle programs also take part in a managed charging program, which means they will be required to charge their vehicles at the cheaper “off-peak” charging hours.
While the above are good pieces of Xcel’s proposal, other aspects of Xcel’s transportation electrification proposal are not as clear.
Xcel is required to submit an annual report to make sure its programs are working, which will inform future spending, but their proposal doesn’t immediately make clear what data is being collected and reported. If the TEP works, it means that the infrastructure that is built is highly utilized and people are charging and using EV infrastructure at times when energy is the cheapest to produce. That is the kind of data that needs to be tracked and shared and it’s not immediately clear how that will happen.
Another important part of making sure that everyone benefits from electrifying transportation is making sure the net money that Xcel receives from new electric vehicles results in lower electricity bills for ratepayers in the future. One of the reasons that utility ratepayers - people liek you and me who receive a monthly utility bill from Xcel - benefit when utilities spend money on things that encourage more people to convert to electric vehicles is that electric vehicles pay more into the utility grid than it costs to supply them with electricity. This is particularly true when the vehicles are charged at those cheaper, off-peak hours. According to a study by MJ Bradley & Associates, an electric vehicle charged during peak hours will result in a net of $42 for Xcel each year, and an electric vehicle charged during off-peak hours will result in a $78 net each year.
This should mean that Xcel could bring in more revenue than it spends as early as year one, especially if you account for the approximately 19,000 electric vehicles already plugging in in Xcel’s territory.
If the utility brings in more money than it spends, the net dollars can go back into speeding up our conversion to an electric-powered transportation system and it can help reduce utility bills for everyone.
Xcel’s proposal mentions “keeping bills low” but it doesn’t say that any net revenue from electrifying transportation will be returned to customers in the form of lower bills. Ultimately, we must ensure that the net revenue from their TEP is used to speed up electrification and into the pockets of ratepayers in the form of lower bills.
Xcel also asks for two Performance Based Incentives (PBIs). They are based on customer service and cost efficiency. While performance based incentives can be appropriate, they should only be used in situations where Xcel goes above and beyond high expectations or achieves some objective that is particularly difficult to achieve. It is not clear in the TEP whether customer service and cost efficiency meet these thresholds and what quantitative factors will trigger the incentives.
After hearing testimony from Xcel and numerous other interested parties called interveners this summer and fall, the Public Utilities Commission will ultimately approve Xcel’s proposed transportation electrification plan or a modified version of it in the late fall or early winter. We expect Xcel will begin spending money to implement its EV plan as early as January 1st, 2021.
As it stands, this proposal is a great start to protecting the environment and saving consumers money but we’ll be watchdogging the PUC process to ensure consumers and the environment are prioritized.