Case Background
On June 19,
2020, Florida Power & Light Company (FPL or utility) filed a petition
requesting approval of three optional electric vehicle (EV) public charging
pilot tariffs. The first tariff, Utility-Owned Public Charging for Electric
Vehicles (Rate Schedule UEV), would establish a charging rate for utility-owned
fast charging stations. The second set of tariffs, Electric Vehicle Charging
Infrastructure Riders for General Service Demand and General Service Large
Demand (Rate Schedules GSD-1EV and GSLD-1EV) tariffs, would establish a tariff for
third-party public charging stations operating in FPL’s service area. The
tariffs and associated rates would limit the demand cost associated with
general service demand rates billed to the charging stations. The utility
requests for the three proposed tariffs to take effect in January 2021 for a
period of five years from the effective date of the tariff, unless extended by
order of the Commission or terminated early by FPL upon notice to the
Commission.
By Order No.
PSC-2020-0398-PCO-EI, issued October 26, 2020, the Commission suspended the
60-day file and suspend provision pursuant to Section 366.06(3), Florida
Statutes (F.S.). There are sixteen interested persons in this docket. Comments were filed by Advanced Energy
Economy (AEE); Tesla, Inc. (Tesla); Electrify America; EVgo Services (EVgo),
LLC; Drive Electric Florida; the Edison Electric Institute; Greenlots; and the
Florida Petroleum Marketers Association, Inc. These comments have been placed
in the docket file. In addition, an email objecting to the proposed UEV rate as
being too high has been placed in the docket file.
In support of its
petition for the proposed pilot tariffs, FPL lists several benefits of EVs and cites
Section 339.287(1)(f), F.S., that states that “ensuring the prompt installation
of adequate, reliable charging stations is in the public interest.” Furthermore,
Section 339.287(2), F.S., directs the Florida Department of Transportation, in
consultation with the Commission and the Florida Office of Energy, to develop a
master plan for electric vehicle charging infrastructure and submit the master
plan to the Governor by July 1, 2021.
FPL began
voluntarily implementing in 2019 an EV infrastructure pilot called FPL
EVolution. Under the EVolution pilot, as of June 2020, FPL has installed 166 Level
2 (4-6 hours to full charge) charging stations at 27 locations with plans to
install more than 1,000 additional charging stations over an approximate
three-year period. The additional charging stations FPL plans to install will
include Level 2 and fast charging stations at locations such as public parks,
malls, companies that wish to install charging stations for public and employee
use, high-traffic areas along highways such as the Florida Turnpike,
Interstate-95, or Interstate-75, and along evacuation routes. Specifically, FPL
estimates that it will install 1,150 Level 2 chargers and 218 fast charging
stations. FPL stated that the average cost to install a single Level 2 charger
is approximately $5,500 and for a fast charger approximately $80,000; however,
actual cost could vary based on location and technology.
FPL contends
that the EVolution pilot will help the state expand the number of EV charging
stations and allow FPL to conduct research in areas such as: (1) FPL-owned
charging stations, (2) partnering with commercial customers who wish to offer
EV charging services on their premises, (3) rate structures, and (4) the
effects of charging stations on system load and the electric distribution
system.
FPL states that
the utility intends to request base rate recovery of the EVolution infrastructure
as part of its next base rate proceeding. FPL anticipates the total investment
in the FPL EVolution pilot to be $30 million through the end of 2022; however,
a portion of this investment will be offset by any revenues received under the
proposed UEV tariff. FPL reflects the revenues, operating expenses, capital
additions, and depreciation associated with the current and planned Level 2 and
fast charging stations as above-the-line items on the Earnings Surveillance
Reports filed with the Commission.
Commission
Jurisdiction
Under its
general grant of authority and the flexibility afforded by the
Florida Supreme Court in construing and applying these statutes, the Commission has previously approved
several EV pilot programs. In 1995, the Commission approved an electric vehicle tariff
for Tampa Electric Company. More recently, in 2017, the Commission
addressed EV charging stations owned by utilities in two rate case settlements.
In Gulf Power Company’s rate case settlement, the Commission permitted the
utility to provide EV charging stations on a revenue neutral basis as a pilot
program and stated that the Commission “retains the ability to review and make
a determination regarding the appropriate regulatory jurisdiction and
regulatory treatment of EV charging stations.” In Duke Energy Florida, LLC’s (DEF) rate
case settlement, the Commission authorized the utility to purchase, install,
own, and support Electric Vehicle Service Equipment as part of a five- year
pilot program and the agreement provided that DEF may incur up to $8 million
plus reasonable operating expenses.
In last year’s
session, the Legislature enacted Section 339.287, F.S. This statute recognizes
the emerging importance of EV charging stations and the important role of
utilities in this effort. Staff also notes that several public utility
commissions in other states have approved utilities’ provision
of EV charging to the public.
Staff
has issued four data requests with responses provided by the utility on August
3, August 10, October 2, and November 6, 2020. This recommendation addresses
FPL’s proposed tariffs as shown in Attachment A to the recommendation. The
Commission has jurisdiction over this matter pursuant to Sections 366.03,
366.04, 366.05, and 366.06, F.S.
Discussion
of Issues
Issue 1:
Should the Commission approve FPL’s proposed optional
Utility-Owned Public Charging for Electric Vehicles (UEV) pilot tariff?
Recommendation:
Yes, staff recommends that the Commission approve
FPL’s proposed optional UEV pilot tariff, effective January 1, 2021. FPL should
file annual reports by January 30, with the first report due January 30, 2022,
for the reporting period of January through December 2021. The report should provide
capital and operating costs, revenue requirements, revenues collected, and
energy sales of its utility-owned fast charging stations, together with updated
market rates, to allow the Commission to monitor the reasonableness of the UEV
rate. The tariff should remain in effect for a period of five years, unless extended,
modified, or terminated by order of the Commission or terminated early by FPL
upon notice to the Commission. Before the end of the five-year period, FPL
should file no later than September 1, 2025, a petition to extend, modify, or
terminate the UEV pilot tariff. (Draper, Coston, Stiller)
Staff Analysis:
Overview of Proposed UEV Tariff
The proposed UEV tariff would apply to customers charging
electric vehicles that purchase charging services directly from FPL at certain FPL-owned
public fast charging stations. Fast charging stations provide electricity at
high voltage (the UEV tariff requires power to be delivered at 50 kilowatts or
greater) which results in a charging time of approximately 30 minutes. FPL
stated that the determination of which charging stations would use the proposed
tariff would be made on a site by site basis and based on the site host’s
preference. If the UEV tariff is not used, the site host would provide the
charging services and pay FPL’s otherwise applicable commercial rates and
retain the revenues collected for providing charging services.
The user of a utility-owned fast charging station must
register an account with FPL’s mobile application, including payment
information, prior to charging the EV. FPL currently does not have a tariff to
charge customers who use charging stations the utility owns and operates under
its EVolution pilot and, therefore, FPL is currently not charging drivers for
charging services. Currently, the site host for each station is the customer of
record and pays FPL standard rates for the electricity delivered to the site.
The EV charging services are provided for free by the site host or the site
host may charge a fee directly to the EV drivers.
FPL’s proposed volumetric rate is $0.30 per kilowatt-hour
(kWh).
FPL explained that the rate was chosen based on a comparison of various automotive
fuel alternatives available to customers. Specifically, FPL stated that when
comparing the average mileage efficiency of electric vehicles to
gasoline-powered vehicles, the electricity price that equates to the same cost
per mile is $0.31 per kWh. Furthermore, public fast charging prices in Florida
offered by other providers, such as Tesla, EVgo, and Electrify America, average
at $0.35 per kWh. However, FPL explained that the utility gave more
consideration to the Tesla charging rate of $0.28 per kWh, because at the time
the utility did the calculation, Tesla was the only EV provider charging on a
per-kWh basis. EVgo and Electrify America offered per-minute charging rates and
due to varying charging speeds may present a level of uncertainty when
coverting to a price per kWh. FPL
asserts that the proposed $0.30 per kWh rate is reasonable compared to the
equivalent cost per mile for gasoline-powered vehicles and the EV pricing
options offered by non-utility providers.
The proposed $0.30 per kWh rate is not cost-based. FPL
stated that the utility currently does not have data regarding actual sales
volumes and operating costs of utility-owned public charging stations and,
therefore, developing cost-based rates would be conjectural at this time. To
support the proposed “market-based” rates, FPL referred to a decision by the
Washington Utilities and Transportation Commission, which approved a pilot
tariff for fast charging rate that is comparable to rates being charged by
other public charging facilities.
Comments on Proposed UEV Tariff by Interested
Persons
Greenlots, the Edison Electric Institute, and Drive
Electric in written comments support FPL’s proposed UEV tariff. AEE filed
comments in the docket on June 19, 2020.
AEE explained that it represents a diverse set of businesses and supports the
creation of beneficial EV-specific rates. However, AEE expressed concern that
FPL’s proposed rate of $0.30 per kWh is 15 percent lower than the average rate
of $0.35 per kWh offered by non-utility providers, or third parties. AEE
asserts that, based on a review of their members, there is “concern that the
price differential could inadvertently create a tilted playing field that
challenges third-party charging infrastructure development over time.”
Tesla filed comments on June 23, 2020.
In its comments, Tesla suggests that the calculation of the FPL proposed rate should
not include the price Tesla charges, or in the alternative the rate should be
set on FPL’s expected costs of providing charging services. As shown in Chart 1
on page 10 of FPL’s petition, FPL included a Tesla charging rate of $0.28 per
kWh in its calculation of the average charging rate of $0.35 per kWh offered by
non-utility charging stations. Tesla asserts its business model for its
charging network is “unique and not necessarily replicable by other charging
operators.”
Electrify America, in its comments filed on August 14,
2020, advocated a shared-responsibility model for utility investment that can
encourage third-party infrastructure development while limiting ratepayer risk.
Electrify America states that it operates the nation’s largest public fast
charging network, including 110 chargers in Florida and several more projects
currently under construction. Electrify America states that several
jurisdictions have encouraged investment in public charging through the
shared-responsibility model. Electrify America did not address the proposed $0.30
per kWh rate.
EVgo, a competitive supplier of EV charging infrastructure,
filed comments on October 5, 2020. EVgo
contends that FPL’s petition is premature as there has been no forum in Florida
to discuss the appropriate role of utilities in owning and operating EV infrastructure.
EVgo stated that, given that the role of the utility in owning and operating
fast charging infrastructure has not been debated, FPL’s proposed UEV tariff
should be evaluated in FPL’s next rate case. Finally, EVgo states that the
proposed $0.30 per kWh rate creates an uneven playing field if the utility is
granted the ability to recover costs of its public charging infrastructure.
The Florida Petroleum Marketers Association, Inc. (FPMA)
filed comments on November 10, 2020, objecting to FPL’s petition.
Specifically, the FPMA states that the Commission does not have the authority
to approve pilot programs and does not have authority to permit tariffs for EV
charging stations by public utilities. Furthermore, the FPMA asserts that the
Commission should not adopt rates that are unfair and biased and that all
ratepayers should not have to subsidize the EV infrastructure used by on a
small minority of EV owners.
Staff Analysis
FPL asserts that one of the goals of its petition is to learn
more about EV driver needs and gather more specific usage and cost data to
allow FPL to develop cost-based rates for EV charging services. Staff
acknowledges that the proposed UEV tariff is not cost-based, but based on a
“market-rate.” Fast charging rates vary by provider, by location, and the level
of charging offered. Staff believes FPL’s calculation of the proposed UEV rate
is appropriate for the limited purpose of this pilot and that traditional
cost-of-service based rates can not be accurately calculated at this early stage
of utility-involvement in the EV market. Staff recommends that FPL’s proposed
market-based rate is reasonable in the limited context of approving pilot tariffs
with the specific goal to collect cost and usage data for utility-owned fast
charging stations.
Section 339.287(2)(c)1, F.S., emphasizes the Legislature’s
intent for an adequate supply of reliable EV charging stations to support and
encourage a competitive market. The proposed UEV tariff appears to be
consistent with the legislative objectives of Section 339.287, F.S. Allowing
FPL to participate in the EV infrastructure build-out in Florida by offering a
utility-based rate as an option to EV customers during this nascent stage of EV
adoption and the EV charging market development, promotes the public interest
and should provide value to EV customers. Staff believes that FPL’s proposed
tariff will facilitate the development of the competitive EV charging market by
allowing the utility, together with other providers, to offer fast charging EV
services. The increased availability of EV chargers will remove a barrier to
adoption of electric vehicles in Florida.
FPL is not seeking approval of the costs associated with
the EVolution pilot in the instant docket. Staff is not prejudging recovery of
the EVolution investment and the Commission retains full discretion to evaluate
FPL’s request in the next rate case for recovery of its EVolution investment
and its impact on the general body of ratepayers, including the benefits, if
any, to the general body of ratepayers.
FPL explained that the utility will work with the site
hosts to determine which fast charging stations installed by FPL under the
EVolution pilot will utilize the proposed UEV tariff. Any revenues collected
pursuant to UEV tariff would be used by FPL to offset the revenue requirement
associated with the EVolution facilities. For any FPL EVolution fast charging
stations that will not take service under the proposed UEV tariff, the revenue
requirement would be recovered from the general body of ratepayers, if approved
by the Commission in the next rate case.
Reporting Requirements
This is the first request by a Florida utility for an EV
charging rate applicable to utility-owned fast charging stations. During the
pilot period, FPL should file annual reports by January 30 providing capital
and operating costs, revenue requirements, revenues collected, and energy sales
of its utility-owned fast charging stations. The first annual report would be
due January 30, 2022, for the reporting period January through December 2021.
In addition, FPL should evaluate and provide any updates to the market rates,
i.e., rates charged by non-utility EV charging providers, to maintain
consistency with the market rates. The information collected by FPL will allow
staff, and interested parties, to monitor the development of the EV charging
under the UEV tariff and ultimately determine a cost-based rate. If FPL and/or
staff determine that the UEV rate should be modified during the pilot, based on
the data collected by the utility, staff will open a docket for Commission
consideration. The annual reports should be filed in this docket.
Conclusion
Based on the above, staff
recommends that the Commission approve FPL’s proposed optional UEV pilot
tariff, effective January 1, 2021. FPL should file annual reports by January
30, with the first report due January 30, 2022, for the reporting period of
January through December 2021. The report should provide capital and operating
costs, revenue requirements, revenues collected, and energy sales of its
utility-owned fast charging stations, together with updated market rates, to
allow the Commission to monitor the reasonableness of the UEV rate. The tariff
should remain in effect for a period of five years, unless extended, modified,
or terminated by order of the Commission or terminated early by FPL upon notice
to the Commission. Before the end of the five-year period, FPL should file no
later than September 1, 2025, a petition to extend, modify, or terminate the
UEV pilot tariff.
Issue 2:
Should the Commission approve FPL’s proposed GSD-1EV
and GSLD-1EV pilot tariffs?
Recommendation:
Yes, the proposed GSD-1EV and GSLD-1EV pilot tariffs
should be approved. FPL should file annual reports by January 30 reporting the
number of fast charging stations taking service under the tariffs, the number
of fast charging stations that received the benefit of mitigated demand
charges, and the annual revenue loss resulting from the reduction in
demand-related revenues from fast charging customers. The first annual report
would be due January 30, 2022, for the reporting period of January through
December 2021.The GSD-1EV and GSLD-1EV pilot tariffs should remain in effect
for a period of five years, unless extended, modified, or terminated by order
of the Commission. Before the end of the five-year period, FPL should file no
later than September 1, 2025, a petition to extend, modify, or terminate the
tariffs. (Draper, Coston, Stiller)
Staff Analysis:
Overview of Proposed GSD-1EV and GSLD-1EV Tariffs
The proposed optional pilot tariffs would apply to
customers that operate public fast charging stations and would remain in effect
for five years. In response to staff’s fourth data request No. 5, FPL clarified
that the tariff would apply to existing and new charging stations. Since the
fast charging stations are typically commercial customers, they are billed on
FPL’s standard commercial General Service Demand (GSD) or General Service Large
Demand (GLSD) rate schedules. The GSD and GSLD rate schedules are comprised of an
energy charge (based on the amount of energy, or kWh, consumed) and a dollar
per kilowatt (kW) demand charge. The
demand charge is billed on the highest usage, or demand, over a specified time
interval (30 minutes). This peak usage determines the demand charge for the
billing month.
FPL states that the current rate design poses a challenge
to the economics of the public fast charging stations that experience a high
demand and low levels of kWh energy sales, or utilization. At low levels of
utilization, the electric bills incurred by the charging stations result in
demand charges being spread over a relatively low volume of energy sales. This
is referred to as a low load factor customer. Charging stations with higher kWh
sales, i.e., high load factor customers, are able to spread the billed demand
cost over more energy sales and are, therefore, more likely to recover their
costs.
FPL asserts that the demand charge included in standard
demand rate schedules creates a barrier to entry during the early years of the
EV market. FPL further states that fast charging providers and potential public
charging site hosts have expressed concerns over their ability to recover costs
in the early years of the EV market adoption.
To address the challenges FPL identified for public fast charging
stations, the utility proposed tariffs that include a demand limiter mechanism.
Under the tariffs, the amount of demand billed to the customer would be the
lesser of the measured demand or the limited demand as calculated by dividing
the kWh sales by a fixed constant of 75 hours. Mathematically, applying the 75
hours constant to the kWh sales results in a reduction in the demand billed to
a customer with a load factor of less than ten percent. Customers with a load
factor above ten percent would pay the standard demand charges contained in the
GSD and GSLD rate schedules and would not receive a reduction in the electric
bill.
Comments on Proposed Tariffs by Interested
Persons
Greenlots, the Edison Electric Institute, and Drive
Electric in written comments support FPL’s proposed GSD-1EV and GSLD-1EV
tariffs. EVgo Services supports FPL’s proposal; however, EVgo suggests to
increase the demand limiter of 75 hours to a limiter of 100 to 200 hours and
increase the term of the pilot program from five to ten years. Tesla, Electrify
America, and AEE also stated that increasing the demand limiters would help
improve fast charging stations’ finances. Several interested persons referred
to other states that have approved demand limiters of 100 or 200 hours, tariffs
that reduce or eliminate demand charges, or no demand charges.
Staff Analysis
The proposed tariffs are not-cost based as FPL will not fully
recover its demand-related, or fixed, costs from customers with low load factor
fast charging stations. The demand limiter is designed to provide rate relief
that will facilitate and encourage the development of EV fast charging infrastructure
during this nascent stage of EV adoption and EV charging market
development. Staff believes the proposed
demand limiter pilot tariffs represent a balanced approach to encourage
third-party market development at these early market stages, while limiting ratepayer
risk. Staff believes this also aligns
with the legislative intent to encourage the installation of EV infrastructure.
The proposed tariff could have an impact on the general
body of ratepayers. In response to staff’s data request, based on 2019 usage
data of 41 fast charging stations, FPL estimated the annual lost revenues to be
approximately $157,000. However,
FPL asserts that if the proposed tariffs are successful in accelerating the
adoption of EV use, any additional revenues will contribute to the recovery of
fixed costs, reducing the impact on the general body of ratepayers.
As discussed above, some interested persons expressed a
desire for a larger reduction in the demand charges. However, a larger
incentive would have the potential of shifting more costs to the general body
of ratepayers. Staff believes that FPL’s proposed demand limiter balances the
interests of low load factor fast charging stations and the general body of
ratepayers that could be impacted by the associated revenue loss when base
rates are reset in FPL’s next rate case.
Reporting Requirements
To monitor the value provided to fast charging stations by
the proposed tariffs, staff recommends that FPL file annual reports, similarly
to the reports recommended in Issue 1. Specifically, the reports should include
the number of fast charging stations taking service under the tariffs, the
number of fast charging stations that received the benefit of mitigated demand
charges, and the annual revenue loss resulting from the reduction in
demand-related revenues from fast charging customers. The first annual report
would be due January 30, 2022, for the reporting period January through
December 2021 and the annual reports should be filed in this docket.
Conclusion
The proposed GSD-1EV
and GSLD-1EV tariffs are designed to mitigate the impact of demand charges on fast
charging stations with low utilization levels. Fast charging stations with a
load factor over ten percent will pay the traditional tariffed rates. While the
discount on the demand charges could cause a potential impact on the general
body of ratepayers, staff believes the impact would be minor. Additionally, the
proposed pilot tariffs could facilitate the growth of the EV infrastructure in
Florida and additional revenues could mitigate any adverse impact on the
general body of ratepayers.
Based on the above, the
proposed GSD-1EV and GSLD-1EV pilot tariffs should be approved. FPL should file
annual reports by January 30 reporting the number of fast charging stations
taking service under the tariffs, the number of fast charging stations that
received the benefit of mitigated demand charges, and the annual revenue loss
resulting from the reduction in demand-related revenues from fast charging
customers. The first annual report would be due January 30, 2022, for the
reporting period of January through December 2021.The GSD-1EV and GSLD-1EV
pilot tariffs should remain in effect for a period of five years, unless
extended, modified, or terminated by order of the Commission. Before the end of
the five-year period, FPL should file no later than September 1, 2025, a
petition to extend, modify, or terminate the tariffs.
Issue 3:
Should this docket be closed?
Recommendation:
No. If a protest is
filed by a substantially affected person within 21 days of the issuance of the
order, the tariffs should remain in effect, with any revenues held subject to
refund, pending resolution of the protest. If no timely protest is filed, this
docket should be placed into monitoring status upon the issuance of a
consummating order so that the utility can file its reports in this docket. (Stiller)
Staff Analysis:
If a protest is filed by a substantially affected
person within 21 days of the issuance of the order, the tariffs should remain
in effect, with any revenues held subject to refund, pending resolution of the
protest. If no timely protest is filed, this docket should be placed into
monitoring status upon the issuance of a consummating order so that the utility
can file its reports in this docket.
