Disadvantaged Communities Priced Out of EVs: The Impact of California's High Electricity Rates

Electric vehicles (EVs) are often promoted as cost-effective and environmentally friendly alternatives to gasoline-powered vehicles. For example, the Department of Energy (DOE), explains , "Created by Argonne National Laboratory, researchers found that no matter where you live in the country, you will save driving an electric vehicle."

However, the tools used to calculate these cost savings, such as the DOE Vehicle Cost Calculator and the PG&E cost savings estimates , can be misleading. This is especially true for residents in California, where electricity rates are the highest in the nation outside of Hawaii. This article will examine the flaws in these calculators, compare the actual costs of driving the most popular EV sedan versus the most popular hybrid, and discuss the implications for low-income and disadvantaged communities, particularly in areas like Bakersfield with severe pollution issues.

Analysis of DOE Vehicle Cost Calculator

The DOE Vehicle Cost Calculator simplifies electricity rates on a statewide basis and does not allow users to select their specific utility provider or rate schedule.

For instance, the calculator assumes an average electricity cost of 22.8 cents per kWh in California, which does not accurately reflect the higher rates charged by PG&E.

Electricity Use Assumptions

• DOE Calculator: Assumes 22.8 cents per kWh for CA residents
• PG&E E1 Rate (Tier 1): $0.42676 per kWh
• PG&E E1 Rate (Tier 2): $0.53406 per kWh
• PG&E EV Rate (Off-Peak): $0.35 per kWh

These assumptions lead to significant discrepancies in the cost estimates provided by the DOE calculator.

Source: PG&E E1 rate tariff

Analysis of PG&E Cost Savings Estimates

PG&E’s cost savings estimates are also flawed. They often overestimate the savings from switching to an EV by using generalized and oversimplified assumptions. Somehow, the calculator assumed I'd save $21,595 annually with a Tesla Model 3. Try the calculator for yourself.

The actual costs can be much higher to drive electric, especially for residents in hot climates like Bakersfield, who are likely to hit Tier 2 rates due to high air conditioning usage. Residents in hot climates would have to pay higher peak rates (73 cents) for air conditioning in order to benefit from lower off-peak EV charging rates (37 cents). This trade-off may work in cooler areas like the Bay Area where folks don't always have an air conditioner, but it is impractical for Central Valley residents - around 7.2 million of California's residents.

Moreover, the EV rate tariff is not available for existing Net Energy Metering (NEM) customers like myself, who rely on solar power to offset electricity costs. This limitation further complicates the economic feasibility of switching to an EV for many households.

Source: PG&E EV rate tariff

Comparative Cost Analysis

Let's compare the annual costs of driving a Toyota Prius hybrid and a Tesla Model 3 EV under different electricity rate scenarios using accurate, real-world data.

Assumptions

• Annual Mileage: 13,476 miles per year
• Electricity Efficiency for Tesla Model 3: 4 miles per kWh
• Fuel Efficiency for Toyota Prius: 57 mpg
• Price of Gasoline: $4.80 per gallon
• Electricity Rates for Pacific Gas and Electric Company :
• Tier 1: $0.42676 per kWh
• Tier 2: $0.53406 per kWh
• EV Rate (Off-Peak): $0.35 per kWh

Calculation Steps

1. Annual Fuel Cost for Toyota Prius:
2. Annual Electricity Cost for Tesla Model 3:

Summary of Costs

• Toyota Prius: $1,134.82 per year
• Tesla Model 3:
• Scenario 1 (Tier 1): $1,437.55 per year
• Scenario 2 (Tier 2): $1,799.45 per year
• Scenario 3 (EV Rate, Night Charging): $1,179.15 per year

Implications for Low-Income and Disadvantaged Communities

The discrepancies in cost calculations are particularly problematic for low-income and disadvantaged communities. These residents are often unable to afford the higher initial costs of EVs and are further burdened by high electricity rates. As a result, the purported savings from driving an EV are not realized, making hybrids a more cost-effective option. This issue is especially critical in Bakersfield, where pollution levels from smog and particulates are among the worst in the nation. The city needs EVs more than the rest of the state to reduce pollution, yet the high costs of fueling EVs make them unattainable for many.

Real-World Example

In 2012, early adopters of EVs, like myself, benefited from lower electricity rates and net metering. At that time, driving an EV was more affordable and provided significant savings. However, with the increase in electricity prices and changes in rate structures, these savings have diminished.

To truly make EVs accessible and affordable for all, especially for low-income and disadvantaged communities, several steps need to be taken:

• Accurate Cost Calculators: Develop tools that allow for detailed and accurate cost estimations based on specific utility rates and user scenarios.
• Restore Net Metering: Ensure that solar net metering is available to all, enabling residents to produce their own power and offset high electricity costs.
• Policy Changes: Advocate for policies or utility reform that address the high cost of electricity and promote equitable access to EVs.

Additionally, exploring Vehicle-to-Grid (V2G) Integration or Bi-Directional Charging could provide an innovative solution. These technologies allow excess power producers to become outlets for low-cost, solar-powered EV charging using vehicle-to-vehicle (V2V) connections. This could further reduce the burden on disadvantaged communities by providing alternative charging solutions and promoting sustainable energy practices.

By addressing these issues, we can make EVs a viable and cost-effective option for all residents, helping to reduce carbon footprints and drive sustainable change.

Meanwhile, should we be more transparent about the impacts of high electricity prices on EV adoption and the inequities that are created for disadvantaged communities in California?

Agree or disagree? Please share your thoughts!