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California electricity pricing threatens plug-in hybrid affordability

January 14, 2011 | 11:15 am

VwemotionCalifornia has been targeted as an early adopter market for plug-in hybrid vehicles, such as the Chevrolet Volt. Yet a study released Thursday said the price of recharging those vehicles may make them less economical to operate than traditional hybrids.

California utilities tier electricity pricing, so heavier users pay higher rates. The study said most Californians reach the most expensive tier of electricity pricing each month. 

"The objective of a tiered pricing system is to discourage consumption," said study author, Wally Tyner, Purdue University's James and Lois Ackerman Professor of Agricultural Economics. "It's meant to get you to think about turning off your lights and conserving electricity. In California, the unintended consequence is that plug-in hybrid cars won't be economical under this system."

According to Tyner, adding a plug-in hybrid to a household increases its average electricity use almost 60%. In California, most of that increase would be charged at the highest rate, he said. Californians pay an average of 14.42 cents per kilowatt hour, or 35% more than the national average, Tyner said.

Tyner advocates time-of-use pricing, which charges electricity users based on the time they take electricity from the grid. Since most electric vehicle owners will charge their vehicles at home and at night, when rates are lowest, Tyner said time-of-use pricing would make electric vehicles more economical.

Tyner's study found that without time-of-use pricing, the Toyota Prius is more economical to operate than the Chevrolet Volt. Oil prices would need to rise to between $171 and $254 per barrel to offset the price premium on the Volt, for both the car itself and the electricity needed to charge it.

In Los Angeles, the Department of Water and Power offers three options for EV home charging. Customers can install a time-of-use meter for their EVs, while keeping the rest of their household on a regular meter that charges standard residential rates. This system discounts the price of electricity 2.5 cents per kilowatt-hour for night and weekend charging.

They can also convert their entire household to a time-of-use meter and receive the 2.5 cents per kilowatt-hour discount on a block of energy up to 500 kilowatt-hours for night and weekend use. Or they can keep their existing meter and charge their car, subject to the existing three-tier rate structure.

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-- Susan Carpenter

Photo: Volkswagen AG Blue-E Motion concept car. Credit: Andrew Harrer / Bloomberg

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