The California Public Utilities Commission (“Commission”) voted recently to approve $768 million in expenditures for electric vehicle infrastructure programs proposed by the state’s three investor-owned utilities (“IOUs”). The programs are part of a directive of SB 350 that requires utilities to undertake transportation electrification activities.

Here is a brief overview of the approved programs:

• Approved at $137 million, SDG&E’s program provides rebates to up to 60,000 residential customers that install Level 2 (“L2”) charging stations, which refer to electric vehicle supply equipment (“EVSE”) connected to a 240-volt outlet.
• PG&E was approved for $22 million to install make-ready infrastructure to support 234 fast charging stations, as well as $236 million to support 6,500 medium- or heavy-duty EVs (like electric buses and trucks).
• SCE similarly received approval for $343 million to install make-ready infrastructure to support 8,490 medium- or heavy-duty EVs.
• In addition, the Commission approved $29.5 million for program evaluation.

Here is our analysis of what the Commission’s order means for the future of EVs and what the industry should be paying attention to:

In terms of charging technology, 150 kW fast charging and residential L2 are the minimum.

The Commission’s order emphasizes the need to use up-to-date technology to ensure some longevity for the investments. For example, in response to PG&E’s proposal for three levels of fast charging stations, the Commission directed the utility to forgo the lowest level and only install customer-side electric infrastructure necessary to support EVSE of 150kW or larger, approving a 25% contingency due to the increased cost of the faster chargers. Additionally, the Commission also noted that participants in rebate programs will be responsible for the full cost of proprietary made-to-order EVSE and make-ready infrastructure, since these are not scalable and may result in stranded assets should the manufacturer go out of business or change technology. In the case of SDG&E’s program, the Commission sided with the utility over concerns raised by stakeholders that Level 1 charging (which uses a standard household 120-volt outlet) is sufficient for residential purposes. SDG&E argued that the more advanced L2 will provide grid benefits by allowing for managed charging when paired with time-variable rates that reflect grid conditions. The Commission also noted the ability of these chargers to provide valuable data on patterns of charging.

To preserve competition, the IOUs can own the make-ready infrastructure, while third party owners can own the EVSE and back-end platform.

The law requires the Commission to ensure that these programs do not allow utilities to unfairly compete with non-utility companies. While some parties expressed concerns that allowing the utilities to do these installations would drive others from the market, the Commission recognized that the utility programs only make up a portion of the expected future adoption of EVs and the associated required infrastructure. PG&E and SCE are also required to conduct a competitive process for electrical contractors for installing their medium- and heavy-duty infrastructure. The Commission determined that in all cases the utility would only be allowed to own the make-ready infrastructure and not the EVSE, with SDG&E also not allowed to own any of the customer-side (meaning, behind the customer’s meter) make-ready infrastructure related to its residential charging program. PG&E and SCE were directed to allow customers of medium- and heavy-duty fleet programs the choice of whether to own infrastructure installed behind their meters.

Fleet electrification is accelerating.

To accelerate the electrification of vehicle fleets (like delivery trucks and buses), both SCE and PG&E proposed medium- and heavy-duty fleet programs that include the installation of make-ready infrastructure for charging fleet vehicles. In connection with these programs, the Commission also approved rebates for EVSE to customers supporting transit and school buses. The Commission’s approval requires PG&E and SCE to have a minimum of 700 make-ready installations each fully contracted for by 2024, and 6,500 additional vehicles each electrified and directly attributable to the programs. SDG&E had previously received approval from the Commission in January for programs that include adding charging stations at the Port of San Diego and San Diego International Airport, as well as delivery and shuttle fleet hubs.

Emphasis on disadvantaged communities.

As these programs are under the directive of SB 350, the utilities are required to consider environmental justice issues. The Commission then evaluated the impacts of the proposals on disadvantaged communities. Electrifying the transportation sector promises significant benefits to these communities, especially those located near major industrial areas that are well-positioned to receive benefits of electrifying fleets operating in those areas. All three IOU programs provide additional incentives for disadvantaged communities, including providing additional rebates or higher allowances for customers in those areas and dedicating specific amounts of their approved expenditures for programs in those areas.

The Commission’s approval of these expenditures is intended to spur innovation and technology in order to drive more rapid adoption of EVs in both residential and fleet contexts. Ultimately, the order looks for areas where the funds would make the longest and most impact, requiring the utilities to utilize more advanced technologies for faster charging and to focus on disadvantaged communities where changes to fleets will provide significant air quality benefits.