A study by Purdue University researchers suggests that California’s tiered electricity rate structure could make plug-in hybrid electric vehicles a poor economic choice, dealing a blow to the state’s ambitious goals for getting such vehicles on the road.
The Purdue team noted that California’s already high electricity rates – 14.4 cents per kilowatt hour (kWh), on average – rise as consumers increase their monthly electricity use. For instance, Pacific Gas & Electric charges 12 cents per kWh for the first 294 kWhs used by most Bay Area residents. That rate rises to 14 cents/kWh for the next 88 kWhs used, all the way up to 39 cents for amounts over 589 kWh. According to the Department of Energy, the average California household uses 580 kWh each month.
Add in the electricity it takes to charge a plug-in, and that makes the plug-in a bad choice, the researchers say. “In California, the unintended consequence (of tiered pricing) is that plug-in hybrid cars won’t be economical under this system,” said Tyner, whose findings were published in the journal Energy Policy. “Almost everyone in California reaches the third pricing tier each month. If they add a plug-in hybrid, they are charged the highest rate.”
The Purdue team ran simulations comparing the costs of operating a Chevy Volt in California to the Toyota Prius hybrid and Chevy Cobalt gasoline-powered car. They said that to make the Volt the best option, oil prices would have to rise to between $171 and $254 per barrel. Oil is currently hovering around $90/barrel. Tyner and his colleagues said that in order to encourage plug-in adoption, California should offer time-of-use pricing.