Driving Green in California Costs Consumers More -- in Electricity Bills

By Suzanne Kane

11 648 views Jan 15, 2011

Public Charging Station for electric cars, courtesy Mitsubishi Motors

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A new Purdue University study shows that if California consumers don't look into alternative electricity-rate programs, the state’s tiered electricity pricing system could mean owners will pay some of the highest rates in the country to recharge their green cars.

The report comes just one month after the first deliveries of the all-electric 2011 Nissan Leaf and extended-range electric 2011 Chevrolet Volt to California consumers.

What a shock – figuratively speaking.

Try to wrap your mind around the problem. California was chosen to study, according to energy economist and lead researcher, Wally Tyner, because the state has long been at the leading edge of energy conservation policies and practices – aka the drive to be green – and plug-in hybrid vehicles (PHEVs) are expected to be popular there.

For those of you in non-tiered electricity bill states, in a tiered system, consumers pay a higher rate for any electricity they use beyond a certain point.

California has three rate tiers as well as a time-of-use system, which reduces the rate during periods of low use. That’s why electric utility companies encourage consumers to do laundry after 7:00 p.m. – when energy demands are lower (and, electric pricing).

2011 Chevrolet Volt

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Guess when most PHEV owners will be recharging their vehicles? Right, after they arrive home from work, school, doing errands, whatever – dinnertime and later.

(Every electric car sold by a major carmaker, however, includes software that lets the owner plug in the car on arrival at home, but direct it to start charging at a given time--for instance, after 11 pm or midnight, when cheaper overnight rates come into play.)

“The objective of a tiered system is to discourage consumption,” said Tyner. “In California, the unintended consequence is that plug-in hybrid cars won’t be economical under this system.”

2011 Chevrolet Volt 240V charging station

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Tyner added that almost everyone in California reaches the third pricing tier each month. Adding demand from a plug-in hybrid would ensure they’re charged the highest rate. The study found that introducing a PHEV to the household will increase average electricity usage by 60 percent.

Californians currently pay an average of 14.42 cents per kilowatt hour – which is about 35 percent higher than the national average.

The study said that a conventional Toyota Prius hybrid, which doesn’t require an outlet to charge, and a gasoline-powered Chevrolet Cobalt (no longer in production) are most cost effective in California.

In order for the Volt to be economical, oil prices would have to rise from less than $100 per barrel now to between $171 and $254. That’s even after factoring in up to $7,500 in federal and up to $5,000 in state incentives on the purchase of EVs and PHEVs.

Over the life of the vehicle, PHEV owners could shell out $10,000 more. As Tyner says, “Most consumers will look at the numbers and won’t pay that.”

2011 Nissan Leaf recharging

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