RECHARGE Act

Mr. President, I recently introduced the RECHARGE Act, S. 2241, with my friend and colleague, Senator Whitehouse, and we are very pleased that this bill, as amended, is included in the Infrastructure Investment and Jobs Act as Section 40431.

Section 40431 amends section 111(d) of the Public Utility Regulatory Policies Act of 1978, 16 U.S.C. 2621(d) in order to establish a new requirement that all public utilities--investor-owned utilities, customer-owned cooperatives, and public power utilities--must consider establishing EV-specific rates for residential customers, EV drivers, and commercial customers, who operate public and fleet EV charging stations, to promote greater electrification in the transportation sector.

Lowering emissions in the transportation sector will hinge upon the electrification of our country's motorized vehicles. Large investments in electric vehicle, or EV, charging infrastructure of the type included in other sections of this legislation will provide a catalyst for mass EV adoption.

The successful adoption of EVs will depend not only upon modernizing America's grid and charging infrastructure, but also upon updating our electricity sector rates, so that the infrastructure funded by this act can operate in an economically sustainable manner for decades to come. The commercial rates present today were not designed with the unique electricity load profile of a growing EV fleet in mind.

Public EV charging stations, and particularly high-powered DC fast charging stations designed for highway corridors and for heavier-duty EVs like buses and trucks, face a distinct set of hurdles imposed by the current regulatory system and traditional, demand-based electricity rates.

Most prominent among barriers to deploying commercial EV charging are demand charges, which are electricity rates set by public utilities on their customers, including EV charging station owners, based on the maximum amount of power, kW, drawn for any given time interval, typically 15 minutes, during the billing period, multiplied by the relevant tariff demand charge.

Demand charges are designed to capture the marginal costs imposed on the grid by high-capacity, high-utilization infrastructure such as factories. However, when traditional demand charges are levied upon high-capacity, low-utilization infrastructure such as EV charging stations, they can place a disproportionate cost burden on the station owners.

The high-powered, fast-charging stations our Nation needs to serve the EV driving public, public and private fleet vehicle operators, and the trucking industry have different load profiles than most commercial entities, with periods of dormancy punctuated by spikes in activity. And unlike most commercial operations, their demand profile is driven by real-time customer activity. So it is difficult for these stations to optimize their load profiles.

The burden of demand charges varies by State and by region and can fail to accurately reflect the marginal costs imposed on the system by EV charging stations. For example, in the Colorado PUC Electric Vehicle Working Group Report published in 2019, the Colorado Public Utilities Commission found that demand charges result in the annual cost to operate a direct current fast charging, DCFC, station in one Colorado utility territory being 35 times higher than the cost in a neighboring service territory. The problem will only worsen for the still higher- demand and lower-utilization application of EV truck charging.

Demand charges, if not reformed, may also introduce new issues of inequity as America electrifies transportation. For example, homeowners are able to charge an electric vehicle on very affordable residential utility rates, which currently average $1.16 per gasoline gallon equivalent according to the Department of Energy. But those who live in multiunit housing and rent their abode, a population that is disproportionately low-income and minority, often cannot charge an EV at home. They will charge their EVs at public charging stations, and those public charging stations must pay much higher commercial utility rates, including commercial demand charges, which make up as much as 90 percent of public charging station's utility bills according to RMI.

In recent years, some States and utilities have recognized this inequity and taken steps to reform their utility rates, to reduce and reform commercial demand charges and to adopt rates designed for low- load or electric vehicle charging infrastructure. These utilities and regulators should be commended for their forward-leaning approach to a complicated issue. Utilities in Colorado have begun to do this, as have utilities in quite a few other States.

Section 40431 requires only those States and utilities which have not already done so to take up the issue of how demand charge rates affect EV charging in order to encourage new private-sector investment in EV charging stations.

These States and utilities are allowed 2 years to consider the establishment of new rates that A, promote affordable and equitable EV charging options; B, facilitate deployment of faster charging technology that improves the customer experience; C, accelerate third- party investment in EV charging infrastructure; and D, appropriately recover marginal costs.

Our intention is to ensure that alternatives to traditional, demand- based electricity rates are made available to EV charging station owners with appropriate oversight by State public utility commissions. To remove any doubt, section 40431 does not empower, encourage, or allow State public utility commissions to regulate the prices that third-party owned EV charging stations charge their customers for EV charging services. Those prices are set in a competitive marketplace that benefits consumers, and this legislation does not affect that marketplace.

Section 40431 should prompt forward-looking change at the State and utility level which appropriately reflects and accommodates the real differences in geographies, electricity markets, and business environments which exist between and within States and utility territories. It ensures that attention will be paid to this problem nationwide, but also that each State and utility can decide how to address the problem its own way. Ultimately, it should lead to new rate designs that enable the private sector to make economically sustainable investments in the high-powered charging stations that will help drivers, fleet operators, and truckers go electric, while more appropriately reflecting the actual marginal costs added to the grid by EV charging stations.