California electricity pricing threatens plug-in hybrid buys


Professor Wally
Tyner, Purdue
West Lafayette, IN, U.S.A. — (METERING.COM) — January 17, 2011 – California policies aimed at reducing electricity use and curbing greenhouse gas emissions have the unintended consequence of making new plug-in hybrid vehicles uneconomical, according to a new study from Purdue University.

The study, led by Wally Tyner, James and Lois Ackerman Professor of Agricultural Economics, found that as a result of the state’s tiered electricity pricing system, Californians will pay some of the highest electricity rates in the country to recharge plug-in hybrid vehicles. States with flat electricity rates or those that vary price based on the time of use will be more economical.

California has three rate tiers. It also has a time-of-use system, which reduces the rate during periods of low demand. In addition, Californians pay some of the highest electricity rates – an average of 14.42 cents per kilowatthour, which is about 35 percent higher than the national average.

“The objective of a tiered pricing system is to discourage consumption. It’s meant to get you to think about turning off your lights and conserving electricity,” said Tyner, whose findings were published in the early online version of the journal Energy Policy. “In California, the unintended consequence is that plug-in hybrid cars won’t be economical under this system, as almost everyone reaches the third pricing tier each month.”

According to the study, adding a plug-in hybrid would increase the average household electricity use by nearly 60 percent, and most of this would be charged at the highest rate.

The California Plug-in Electric Vehicle Collaborative recently published a report intended to establish the state’s leadership in the plug-in electric vehicle marketplace, highlighting time-of-use rates to encourage off-peak charging. Other recommendations include reducing plug-in electric vehicle costs, simplifying and prioritizing home charging installations, optimizing the placement of non-residential charging infrastructure, and reinforcing California’s policy leadership to guide plug-in electric vehicle markets.