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$100 Million For Electric-Car Charging: Devil, Meet Details

 
2,006 views Apr 10, 2012
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2011 Nissan Leaf plugged into an EVgo quick-charging station, Texas

2011 Nissan Leaf plugged into an EVgo quick-charging station, Texas

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You'd think that $100 million of electric-car charging stations in California would be a good thing, right?

While an agreement announced last month may disturb California utility customers--the injured parties whose high power bills led to the deal--the state's electric-car drivers may  benefit from their pain.

Even plug-in drivers, though, should be aware of certain deal provisions.


Positive reactions, but...

Reactions were generally positive to Governor Brown's announcement that the state would get $100 million in charging-station installations as part of the settlement of a long-running lawsuit over electric-rate price fixing in 2000.

Plug-In America issued an approving press release, as did the Union of Concerned Scientists.

Since then, two people in the electric-car world expressed their concerns to us. Neither was willing to be identified, since they are involved with the companies, politicians, and organizations that negotiated the deal.

Our sources said their concerns were based on deal language they'd seen; we have not independently reviewed it, since it hasn't been made public.

They were pessimistic that the parties would accept substantial changes to the terms before the agreement becomes a binding contract.

DC fast-charge & Level 2 charging stations

In March, the state and its Public Utilities Commission agreed to settle claims against NRG Energy Inc. over the pricing of long-term power contracts signed in March 2001 with Dynergy power plants now owned by NRG.

Of the $120 million settlement, $100 million will fund installation of 200 public DC fast-charging stations plus "make-ready" wiring and location work for charging outlets at 1,000 hard-to-serve locations across California.

The fast-charging stations will be installed in the San Francisco Bay Area, the San Joaquin Valley, the greater Los Angeles area, and various locations in San Diego County.

The result will be to encourage consumer adoption of plug-in electric vehicles, the state says, helping to achieve California's clean-air goals--including 1.5 million zero-emission vehicles by 2025 on state roads.

The remaining $20 million--just one-sixth of the settlement--goes to rate relief for customers of three electric utilities in the state. They will get less than $10 apiece.

Good for electric-car drivers, but...

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All of our sources said they considered the general outlines of the deal to be positive for current and future electric-car owners. But several facets of the agreement need to be understood.

Notably, NRG is not paying California $100 million, which the state would use to fund charging station installation. Instead, NRG is doing the work itself, and the $100 million represents "in-kind" value.

Since NRG owns and operates the growing EVgo network of charging stations in Texas, this makes sense. But it's hardly punitive.

Settlement gives NRG full control--for life

But the real problems lie in the terms and language of the proposed settlement.

First, the 200 DC fast-charging stations will be owned by NRG for their entire life. That means that to settle its alleged price-fixing, NRG is building an asset it can earn money from.

Second, NRG will also hold the rights to operate the Level 2 charging stations for life. It will have 18 months to install its own hardware at locations once they're wired up, and then it will open competitive bidding for the rest.






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Comments (23)

  1. fb_1001015277 avatar John Briggs Posted: 4/10/2012 1:27pm PDT

    This is a terrible situation all around. There is no punishment here and the network being built out will certainly charge EV drivers too much money. They should at least supply the charging for free for 5 years or something. The value of the electricity will be chump change.
     
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  2. fb_1322599804 avatar Paul Scott Posted: 4/10/2012 3:44pm PDT

    John, I'd agree that the punishment is slight, but we can't really say it's non-existent since they are paying $20 million in cash to the rate payers. Whether those negotiating this deal could have gotten more is the question. I want to hear who was involved in that and why they settled for this instead of more cash and a deal allowing the state to use the $100 million for EVSE and letting it bid the work.

    I heard that FERC also weighed in on this decision in that it does not allow for 100% compensation to the damaged parties in cases like this. I don't know why that is, seems unfair to me.
     
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  3. fb_1001015277 avatar John Briggs Posted: 4/10/2012 4:28pm PDT

    It really sounds like the utility "agreeing" to accept as punishment something they might have done anyway.
     
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  4. fb_1322599804 avatar Paul Scott Posted: 4/10/2012 10:18pm PDT

    Yeah, there's some of that here for sure. I heard tonight that this is about 20% of the total penalty meted and paid by either Dynergy or NRG. It would be nice for an investigative journalist to dig in and tell us the truth.
     
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  5. fb_100000301945849 avatar Ladson Geddings Posted: 4/10/2012 2:06pm PDT

    The locations currently are designed for the cities; exactly where they are not needed. Instead the state should have the level 2 and QC stations positioned along I-5 to fill out the voids between Northern California and Oregon. Also, there are voids on most main routes in California. the level 2 stations are made for city use; the QC stations work best for those driving a distance.
     
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  6. fb_1322599804 avatar Paul Scott Posted: 4/10/2012 3:38pm PDT

    As a LEAF salesman, I'll disagree with this post slightly. Yes, we definitely want to close the gap in N. California to the OR border on I-5, but that will only require a few DC stations. Many would-be EV drivers live where night time charging is either non-existent, or too expensive to install. For them, having a conveniently located DC fast charge station available can make the difference between them being able to switch to an EV, or not. Certainly, here in LA, there are hundreds of locations that would greatly enhance the viability of BEVs in the metropolitan region.
     
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  7. fb_100003507791047 avatar Brian Keez Posted: 4/11/2012 7:21am PDT

    I agree, I need DC Quick charging for extended one way trips. After I arrive at my destination and the car sits parked for hours and level 1 or 2 is fine during that time. Anyone that purchases an EV needs to have access to a 110 or 220v outlet where they park overnight. EVSEupgrade.com.
     
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  8. bwhntr avatar Steve S Posted: 4/10/2012 4:45pm PDT

    Sounds like one of the two parties could not negotiate its way out of a wet paper bag....
     
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  9. fb_100000005296979 avatar Kent Beuchert Posted: 4/10/2012 5:01pm PDT

    For those who don't know, the Union of Concerned Scientists has become a joke to those of us with science degrees. One needn't be a scientist to become a member of same. Just fork over twenty five bucks (I think) and Presto!!, you're a bona fide concerned scientist. Several have enrolled their dogs as members and one displayed a picture of the mutt. Looking appropriately concerned, I might add... Those who run the organization, as far as I can tell, make their decisions without consulting their members. Of course it would be hard to evoke an opinion from their four legged members.
     
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  10. prberg avatar prberg Posted: 4/10/2012 5:35pm PDT

    Thanks for the article. I can't believe that NRG has to build the charging stations but then owns them and can collect the fees for people to use them. Sounds like this settlement is more of a joke. All this excitement for some potential high fee charging stations that you have to be a member to use.

    Corporate power is ridiculous in this country.
     
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  11. Norbert N avatar Norbert N Posted: 4/11/2012 7:18am PDT

    Regarding this part of the article: "They were pessimistic that the parties would accept substantial changes to the terms before the agreement becomes a binding contract."

    Does this imply that one of the parties *wants* to make substantial changes? Or just that, in the view of your sources, that they should?

    This involves 2 things for NRG which are not voluntarily: Pay $20 million, and make a *legally binding commitment* for the installation, within the next 4 years, of 200 fast chargers and "wiring for at least 10,000 individual charging stations".

    The article doesn't give any information about why that would be a bad settlement. BTW, there are already $4 billion of settlements between other parties, related to spot mark purchases.
     
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  12. David Knox, eVgo avatar David Knox Posted: 4/11/2012 8:20am PDT

    eVgo here. What this agreement does is bring a guaranteed investment in California in the form of a much larger and more capable network much faster than would occur naturally. 200 DC chargers will increase the number of these chargers in the four largest metropolitan areas by a factor of about 20 to jump start EV adoption and as the number of EVs on the road increases, it will benefit all EV service providers. Cost structures such as the cost for DC charging is bracketed by the CPUC at a minimum of $7 to avoid undercutting competition and a maximum of $10 off peak and $15.
     
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  13. john_v avatar John Voelcker Posted: 4/11/2012 10:01am PDT

    For the record, Mr. Knox called me after posting this comment. He raised some points he felt should be acknowledged in the article, and has promised to send them to me with backing data.

    Once I receive that, I'll evaluate and possibly write another piece or perhaps add excerpts to this piece.

    EVgo has been quite energetic in posting its side of the story on various plug-in forums. As is, of course, its right. The more info, the merrier ....
     
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  14. boba avatar bob a Posted: 4/11/2012 11:13am PDT

    I am interested to learn the estimated value of the benefit Dynegy/NRG gained from the alleged nefarious acts to put the "penalty" in perspective.
    David Knox, how does installing 200 dc chargers benefit all EV service providers? Also, how is it a penalty if your company benefits? Perhaps a better penalty would be for EVgo/NRG to pay ALL demand charges associated with publicly accessible chargers for the next 10 years with no cap; or, funding an evse build out whereby NRG/EVGO does not manage the build-out and can NOT benefit. Investing in ones self for its own benefit expecting an economic return does not constitute a penalty; its called an investment.
     
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  15. jeffhre avatar Jeff Hre Posted: 4/11/2012 1:58pm PDT

    David Knox, DC charging at $7 is nearly six times the cost of getting a charge at my home. I won't do the math at $11 and $15 at this point. Though if I am ever forced by circumstances to drive to place of business of loan-sharks, I may conceivably say, "Oh what the heck, seems appropriate, considering."

    Help me out here am I missing something, how is paying NRG the equivalent of $28 for a gallon of gas a public service?
     
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  16. fb_9434926 avatar Dr. Zeman Posted: 4/11/2012 10:59am PDT

    Sounds like a great settlement to me. Too bad NRG didn't sell electricity in Tennessee. I would love to see 200 fast chargers installed in Tennessee. Maybe Nissan will do it when the Smyrna plant starts spewing forth oodles of new Leaves or is that Leafs. I drive a Leaf and I love it, but I'd really love to be able to drive between Memphis and Nashville and not have to rent a car to do it.
     
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  17. jeffhre avatar Jeff Hre Posted: 4/11/2012 1:46pm PDT

    Once NRG receives it's federal incentives for doing this good deed, collects fees from users, and eventually sells the assets to the highest bidder, will they have actually have spent a dime of their own money? Looks a little like mission accomplished from their perspective...twice. Title this chapter, NRG 2001-2012; A legacy of overwhelming earnings and outstanding financial successes in the Golden State.
     
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  18. jeffhre avatar Jeff Hre Posted: 4/12/2012 9:18am PDT

    Nov 29, 2011 - By ELIZABETH SOUDER/The Dallas Morning News.

    NRG Energy Inc. is attempting to launch the electric vehicle revolution in the center of the Oil Patch: Houston.
    The company announced Thursday that it will spend $10 million to build a network of charging stations for electric cars in Houston and offer customers all-you-can-use charging for a flat fee. It's the first such network in the U.S., and NRG will extend the concept to Dallas and other cities next year.

    The move is a relatively inexpensive play by a company accustomed to spending billions on power plants. NRG wants a piece of the transportation fuel market, the country's largest consumer of energy.
    "That's a very attractive market for the electric industry,"
     
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  19. jeffhre avatar Jeff Hre Posted: 4/12/2012 9:22am PDT

    My apologies, Ms. Souder's byline should have been dated Nov 19, 2010.
     
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  20. gbshaun avatar shaun wallace Posted: 4/12/2012 3:04pm PDT

    I think a big Thank You is due to those who put this deal together (if it really happens). How else were we going to get 200 fast-chargers throughout the state? So far the public charging, and in particular the fast-charging, part of the EV dream has failed to materialize. I couldn't tell you my closest L3. Certainly it's out of range for me (San Diego North County).
    Would I pay $7 to recharge eg at the Irvine Spectrum (57 miles away)? - sure, that'd be $9 round-trip, about 50% of what it would cost me to take the wife's car.
    I know there were some potential issues with fees from SDGE for 40Wh draw, and with plug compatibility. So I hope this commitment will get those sorted.
     
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  21. fb_1564735781 avatar Douglas Stansfield Posted: 4/13/2012 6:13am PDT

    This will not be good overall. People that have EVs know what it costs to put electricity in them. Paying a Premium price to charge takes away the greatest benefit that EVs have over gas cars. They are cheaper to operate once you have them.
     
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  22. fb_799475006 avatar Pat Bahn Posted: 4/13/2012 8:18am PDT

    even a pricy charge is good if it gets you home, but your point is valid.

    Desert gas stations charge a fortune for gas
     
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  23. fb_799475006 avatar Pat Bahn Posted: 4/13/2012 8:18am PDT

    i guess, i'm more interested in the numbers.

    $100 Million to install 200 Lev 3 plus make ready 1,000 hard to serve Lev 2 locations.

    a Lev 2 is at it's heart a 40 amp circuit. a Lev 3 is a 100 Amp circuit.

    Now we are either talking 100,000 per Lev 2 location or 500,000 per Lev 3 location or some trade between that 80K per Lev 2 Ready spot and 400K
    per Lev 3 charger.

    1,000 A + 200 B= 100,000,000


    Now I'm not a professional Electrician, but, that seems kind of high. A residential install is done for a few grand.

    I'd prefer to see Dynegy/NRG spend their $100 Million providing 200 Amp Drop Points (Meter Bases) on a concrete pad at say 2-3000 hard to serve locations. Then let service providers bid to provide chargers.
     
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