The Gongwer Blog

May 22, 2022 Through May 28, 2022

Electric Vehicle Plan Prompts Free Market Concerns

By Gongwer Staff
Posted: May 23, 2022 7:36 AM

Several interested parties urged senators to proceed with caution when considering a wide-ranging plan to bolster the electric vehicle industry they fear may undermine competition.

The proposal (SB 307) from Sen. Michael Rulli (R-Salem), which was up for a third hearing before the Senate Energy & Public Utilities Committee, is an effort to land Ohio a slice of the $300 billion automakers have pledged to invest in EV production by 2025.

It proposes to do so by injecting $85 million into the state education grants, factory retooling programs and the like. The bill also calls for vehicle sales tax incentives that are estimated to cost the state between $55 million and $70 million per year. (See Gongwer Ohio Report, April 5, 2022)

Industry groups have urged support and no opponents testified at Tuesday's hearing. Still, the lineup of interested parties shared their own concerns, suggesting the proposal would undermine competitive markets.

Michael Haugh, co-director of the Ohio Consumers' Counsel's analytical department, promised the agency will shift to the opponent column if language enabling charges to consumer bills to fund program development is not removed.

Mr. Haugh argued the bill as written would exacerbate the existing utility "subsidy culture" and lead to excessive charges for consumers.

"The bill references 'minimizing overall program costs'...but history informs us that the utilities and the PUCO can be expected to lack a strict definition for 'minimizing' charges to consumers," Mr. Haugh said.

If utilities want to get involved in competing in that area, he argued, they should do so through their unregulated side businesses.

"This bill should leave electric vehicle charging to American and Ohio entrepreneurs," he said. "This line of business should not be opened to monopoly utilities who issue monthly electric bills to their captive Ohio customers."

Hightower Petroleum Chief Operating Officer Stephen Hightower said the fuel distribution company has begun investing in the electric vehicle market and urged members to encourage private investment and "free market approaches."

"Ohio should avoid charging businesses and citizens with the cost of building EV infrastructure via demand charges and subsidies," he argued. "These added costs would discourage private investment while having an adverse impact on the overall business climate of the state."

Sen. Mark Romanchuk (R-Mansfield) asked the witness how he feels about the prospect of having to compete with a public utility that is subsidized by ratepayers.

"Does that make you feel good or does that make you want to move forward, charge forward and invest your own money?" he asked.

"We want the playing field to be even," Mr. Hightower responded. "We're not resisting this change. We're embracing it. But as we begin initially, let's get this right upfront so it will encourage participation in the market."

Other interested parties raised similar concerns in written feedback, including Chris Zeigler, Executive Director of the American Petroleum Institute-Ohio.

"We are concerned that the legislation encourages and authorizes utilities to invest in EV charging infrastructure and to recover those costs from the entire utility-customer base," he wrote. "This approach discourages non-utility companies from using their capital to install the (infrastructure) as it would be next to impossible to compete with a utility in this market space."

He also questioned encouraging investor-owned utilities to rate base "make-ready" infrastructure, which he said amounts to charges to finalize infrastructure that could go unused for decades.

Rachael Carl, managing director of public policy services for the Ohio Manufacturers' Association, wrote that although some elements of the bill will ensure Ohio retains a "dominate role" in the industry, it "regrettably, would also expand the role of Ohio's regulated utilities."

"This provision would expose customers to new costs from the riders that would finance electric car charging stations – while providing little to no guardrails to prevent excessive increases in Ohioans' power bills," she wrote.

Robert Baratta, writing for Americans for Affordable Clean Energy, described several forthcoming amendments the group is shopping to "encourage private sector investment in the development of a statewide electric vehicle charging network."

He wrote that lawmakers should level the playing field between utilities and fuel retailers, and create an economical rate structure for fast charging.

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