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The decision is important because it means charging station owners won’t face prohibitive red tape to sell power.
A recent decision by Iowa utility regulators has removed a significant obstacle to the widespread development of public charging stations for electric vehicles.
The Iowa Utilities Board ruled last week that providing electric vehicle charging service does not make a business a public utility. That’s significant because public utilities are subject to state oversight on all aspects of their business, including the setting of prices.
The board’s finding also clarified that sellers of charging services may structure fees as they wish, and, in most cases, even sell power they generated on site such as with solar panels.
“This is a very good market signal,” said Justin Wilson, director of public policy for ChargePoint, one of the country’s largest developers of electric vehicle charging stations. “This is a big deal for us because it gives us a lot of freedom and flexibility to price charging services and meet the needs of different kinds of customers.”
Previously, ambiguity surrounding the state’s policy on charging stations “had essentially frozen development,” said Josh Mandelbaum, a senior attorney with the Environmental Law & Policy Center. “This will unfreeze it and hopefully lead to more development.”
The Iowa Utilities Board opened a rulemaking procedure to review its electric vehicle charging policy a year ago after the owner of the Iowa 80 Truckstop Inc., which claims to be the “world’s largest truck stop,” asked regulators to resolve a dispute between it and its local electric utility, Interstate Power and Light. When the truck stop began planning to install a vehicle charger, Interstate informed the owner that it could not charge by the kilowatt hour. Interstate claimed that by doing so, the truck stop would be violating Interstate’s state-granted monopoly.
Delia Meier, an owner and senior vice president of the truck stop company, said last fall that Interstate offered to help her devise an alternative: a flat charge based on the type of car, the type of charger and the time of day. Drivers would consult a chart to determine what they’d need to pay.
“I cannot imagine that’s in the customer’s best interest,” she said at the time.
Although the Iowa regulator’s ruling clears one hurdle, other issues remain. One is a 2.6 cents per kilowatt-hour excise tax on charging services passed earlier this year by the Iowa Legislature. It will take effect in 2023.
“Although we agree that users of the road should help pay for it,” said Kerri Johannsen, who directs the energy program for the Iowa Environmental Council, “hotels, workplaces, grocery stores, municipal parking garages and others will be less likely to install chargers if they know they will eventually be subject to the same bureaucratic red tape that a typical gas station faces.”
About 60% of chargers in Iowa are free to use and have no method to accept payments, Johannsen said. Some could be removed if owners face a new tax for offering the service.
Wilson, with ChargePoint, identified a couple of other “pieces of the puzzle that will come together in the next six to 18 months to make a robust charging system in Iowa.” One is rebates to incentivize the development of charging stations. In a rate case now before state regulators, Interstate Power and Light has proposed rebates ranging from $500, for the slowest home chargers, to $30,000 for the quickest chargers, known as DC fast chargers.
Iowa’s other major investor-owned utility, MidAmerican Energy, is sifting through applications from businesses that have indicated a wish to host one of the DC fast chargers that MidAmerican wants to install in 15 communities across the state. The utility will purchase, install and maintain the equipment, which can charge a car within 45 minutes. “Hosts” will determine the price and sell the service.
The company also offers $500 rebates to residential customers who buy or lease a new electric vehicle, and $1,500 rebates to businesses that purchase Level 2 charges, which generally power up vehicles within eight hours.
Iowa lags other states in electric vehicle adoption, so it remains to be seen how quickly charging infrastructure will proliferate. Registered electric vehicles — both battery-operated and plug-in hybrids — increased from about 1,100 in June 2016 to about 3,000 in December 2018, according to the Iowa Economic Development Authority.
Tom Ashley, vice president of policy for Greenlots, a developer of software for electric vehicle charging, predicts that, even with a helpful ruling from the utilities board, charging infrastructure will not pick up speed just yet. As of December 2018, charging stations were available in 103 locations statewide.
In the private, non-utility market, “there is not a business case for installing this infrastructure,” Ashley said. “But there can be for utilities.”
Regulated monopolies are assured a profit on capital investments that are approved by regulators, meaning that “they uniquely in the market can profit from making those investments,” Ashley said. “In terms of building a foundation for the market in Iowa, it’s going to be incumbent on utilities to go through the regulatory process, make filings, and hopefully gain approval to make those investments. No other type of entity is going to be motivated economically in the near term.”
Last month’s ruling could change that. Now that it can charge by the kilowatt hour, the Iowa 80 Truckstop soon will install one – possibly two – charging ports alongside all of those gasoline and diesel pumps at its location 20 miles west of Davenport.
Delia Meier said she’s motivated by a desire to meet the needs of any driver stopping at her mammoth roadside oasis. And should someone else want to finance more charging equipment at the truck stop, she said, “I’d open it up to anyone who wants to invest.”