EV Charging Enables Stronger Customer Engagement

Before, ratepayers essentially reached out to their utility for outages and billing issues. Not exactly great.

Compare this with how engaged average drivers are. In fact, drivers are quite passionate about filling up their cars. They’ll drive out of their ways to pay less and fuel up on days when price is lower. They follow loyalty programs from gas station chains and use coupons. Gas stations have become minimarts. Clearly, motorists are deeply engaged with those providers.

Now with EV charging, utilities also become mobility enablers, empowering their customers to go see friends and family, or to go to work and shopping, interacting regularly when charging vehicles. Just like gas stations before them, leading utilities leverage the new charging touch points, with robust education, outreach and assistance programs, starting on the dealer lot, vetting electrical contractors for home chargers, and partnering with charging station site hosts, all along with a focus on providing value for the customer. 

A major value-creation opportunity is leveraging home EV charging to get customers on time-of-use or dynamic electricity tariffs. Residential EV charging responds well to price signals – even a small rate differential induces a strong tendency for overnight charging.[1] This is not surprising as light-duty EVs can be easily programmed through the car or the charger to begin charging at a preset time. The impact of time-of-use tariffs on charging is impressive: PG&E customers enrolled in time-of-use tariffs conduct 93% of EV charging off peak; at Southern California Edison, 88% of charging is off-peak.[2]

There is just a problem with time-of-use tariffs: utility customers are not opting for them. A few jurisdictions have decided to install smart meters and to impose time-of-use tariffs – such as Ontario in Canada[3] and, soon, California and other states[4]. However, most regulators are giving customers the choice (“opt-in”) rather than imposing time-of-use tariffs. Unfortunately, opt-in rates for residential time-of-use tariffs tend to be very low – sometimes less than 1%[5]. This is unfortunate, as time-of-use tariffs improve the peak-to-average ratio, reducing system costs for all ratepayers.

Charging an electric vehicle with low-cost off-peak electricity is a powerful argument for utilities when persuading customers to go for whole house time-of-use rates. Furthermore, the addition of the off-peak charging EV load makes it uneconomical to return to flat electricity rates, ensuring customer retention. Once adopted, time-of-use tariffs also incite customers to shift other household loads to off-peak – a positive feedback loop. By promoting whole house time-of-use, the net value to ratepayers of EV charging then becomes that much more. 

Benefits extend beyond EV charging and time-of-use opt-in. Utility professionals know how difficult it is to recruit customer participants for energy efficiency and demand response programs. [6] However, EV drivers are utilities’ most digitally engaged customers[7] – prime customers for these programs. Those are the customers most open to buy Energy Star® appliances and smart thermostats. With additional touch points and greater trust, recruiting EV customers for energy programs is much easier. 

With EV charging, utilities can reset customer engagement – especially as owning and driving a car has much more emotional appeal than other uses of electricity like, say, hot water to clean dishes. 

[1] Final Evaluation for San Diego Gas & Electric’s Plug‐in Electric Vehicle TOU Pricing and Technology Study, Nexant, Inc., February 20, 2014

[2] Beneficial Electrification of Transportation, The Regulatory Assistance Project (RAP), January 2019, p. 66.

[3] Analysis of Ontario’s Full-Scale Roll-out of TOU Rates – Final Study, prepared for the Independent Electric System Operator, by The Brattle Group, Inc., Mountain Economic Consulting and Associates, Inc. and eMeter, a Siemens Company, February 03, 2016.

[4] 2019 Utility Demand Response Market Snapshot, SEPA, September 2019.

[5] Driving Transportation Electrification Forward in New York, Considerations for Effective Transportation Electrification Rate Design, Prepared for Natural Resources Defense Council, Synapse Energy Economics, Inc. June 25, 2018.

[6] 2019 Grid Integration Insights, SEPA, 2019. 

[7] EV owners tend to fit the demographics of digitally engaged consumers. See https://www.carmax.com/articles/hybrid-electric-2017-survey-results, accessed 20191127, for EV drivers and The New Energy Consumer: Unleashing Business Value in a Digital World, Accenture, 2015, for smart home owners.

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