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Variable Utility Rate Plans for Electric Vehicle Drivers Will Have Little Impact

For electric utility companies, the increasing market adoption of plug-in electric vehicles (PEVs) represents both a significant business opportunity and a series of challenges. Many observers have suggested that variable rate plans specific to PEV owners could be a lucrative business model for utilities. According to a new report from Pike Research, a part of Navigant’s Energy Practice, however, data suggests that such plans may have little impact because the difference in price to the consumer may not justify the effort and risk associated with creating a new rate program for electric vehicle (EV) drivers.

“Plug-in electric vehicles are especially promising for utilities considering the tendency of electric vehicle owners to charge at night during off-peak hours, thus using capacity that is currently underutilized,” says research director John Gartner. “But specific rates for charging electric vehicles are unlikely to greatly influence consumer charging habits, especially when variable time-of-use plans are already in place.”

The growth of the PEV market brings a complex set of other challenges, as well, according to the report. Peak demand will spike if and when clusters of electric vehicles plug in at the same time. If their batteries are depleted, plug-in hybrid vehicle owners are likely to charge regardless of peak pricing because in most areas, electricity as a fuel will always be cheaper than gasoline. The vehicles also create a need for utilities to engage with a new set of previously unfamiliar stakeholders, including carmakers, dealers, fleet managers and passionate EV owner groups. Most importantly, PEVs create a set of unknowns about electricity consumption and infrastructure impacts for utilities, in addition to a temptation to respond to anticipated problems that do not necessarily pose actual risks to the grid or to a utility’s business process.

The report, “Best Practices for Utilities to Prepare for Electric Vehicles”, includes recommendations based on data collected thus far on PEV power consumption, and highlights the lessons learned from many of the leading utilities that have been involved in providing electricity for vehicle charging. Based on these findings, the brief provides best practice recommendations to enhance customer service in engaging with consumers. Also included are guidelines for interacting with regional EV groups, PEV dealers, and local officials, to enable utilities to create a positive experience for PEV owners while receiving the maximum benefit from this new revenue source. An Executive Summary of the report is available for free download on the Pike Research website.

Contact: Richard Martin


* The information contained in this press release concerning the report, “Best Practices for Utilities to Prepare for Electric Vehicles,” is a summary and reflects Pike Research’s current expectations based on market data and trend analysis. Market predictions and expectations are inherently uncertain and actual results may differ materially from those contained in this press release or the report. Please refer to the full report for a complete understanding of the assumptions underlying the report’s conclusions and the methodologies used to create the report. Neither Pike Research nor Navigant undertakes any obligation to update any of the information contained in this press release or the report.


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