The biggest electric utility in California, the largest car market in the country, just took an important step to give drivers access to a cleaner fuel that’s roughly the equivalent of buck-a-gallon gasoline.  Pacific Gas & Electric (“PG&E”) has submitted a proposal for new and improved rate plans that encourage electric car drivers to charge when there’s plenty of spare capacity on the electrical grid, at a price that, in real dollars, is less than half what gas cost in 1949.[1]

To be clear, PG&E already has rates designed for electric cars, but those rates are unnecessarily complex and in need of an update, which is why the California Public Utilities Commission directed PG&E to develop new, simpler options for electric vehicle drivers.  Yesterday’s proposal is actually the second attempt by PG&E to comply with that directive.  The first one spurred 75 letters of protest from some vocal electric car customers who objected to some of the proposed changes. The plan PG&E submitted yesterday addresses the concerns raised in those protest letters and should significantly improve the fundamental economics of vehicle electrification in a large portion of the Golden State.

Both the original PG&E proposal and the one submitted yesterday offer the lowest prices during nighttime hours to encourage drivers to charge when there’s plenty of spare capacity in the electrical grid.  But the new proposal is more attractive across the board, and and has more hours during the weekend when drivers can take advantage of the lowest price.  More good news for electric cars in California, whereas the original proposal would have imposed an $8.00 monthly customer charge, the new proposal has no customer charge.  Likewise, whereas the original proposal would have simply replaced the existing electric car rates, the new proposal would allow those customers who like their current rate plan to keep it until 2015.

The Public Utilities Commission still has to review the proposal, and even if it’s approved, it’s not likely to be fully implemented until the Fall, but yesterday’s announcement is fundamentally a good news story for Californians who are sick of paying high and volatile prices at the pump.

Kudos should be given to the 75 electric car drivers who sent in letters to the Public Utilities Commission suggesting improvements to the original PG&E proposal.  They represent a significant chunk of the total number of electric vehicle customers in PG&E territory.  Utility regulatory filings do not generally garner that degree of public participation, which is a testament to the increased energy awareness that occurs when people start to drive on electricity.

Not many people know what a “kilowatt-hour” is, what one costs, or what it can do for them, but everyone knows the price of a gallon of gas and most people know how far they can drive on one.  The electricity world could use some of that awareness and electric cars can help bridge the gap.  Sixty-seven percent of participants in a yearlong study conducted by the University of California at Davis reported that driving an electric version of the Mini Cooper changed the way they think about energy.2  As my colleague, David Goldstein, explains, there are literally trillions of dollars in savings to be had from investments in energy efficiency.  If we paid as much attention to that number as we do to the price of a gallon of gas, our economy and our environment would both stand to benefit.


[1] Driving a modern electric car on PG&E’s proposed off-peak rate of just under 10 cents/kWh is equivalent to driving a 30 mile-per-gallon conventional vehicle on $1.00/gallon gasoline. The price of gasoline in 1949 was $0.268/gallon, or $2.42/gallon in 2010 dollars.  Source data: Energy Information Agency.

[2] UC Davis Institute of Transportation Studies Research Report: UCD-ITS-RR-11-05, p. 71.