Electric Vehicle Adoptions among CT Zip Codes at Flat and Off-Peak Electricity Rates: County Impacts REMI Seminar Lake Tahoe, 12 October 2012 Peter E Gunther Senior Research Fellow CCEA

Introduction: Zip Code Data Yearly Vehicle registrations by type Aggregate Family Incomes Commuters from Destination Zip Code (ZC) by Distance Ergo electric and gas used in GM’s Volts Distance Ranges by Commuters possibly in EVs: – Volts 50 Miles – Tesla Up to 400 Miles – Sedans Out in Mid 2012 CT Data on 252 residential ZCs out of 341

Background Process Used Annual Cross-Sectional Data on 252 CT ZCs to Estimate Registrations in Other 89 Mapped Market 5% and 25% Approximation of Required Transformer/Transmission Upgrades Projected EVs and Total Light Vehicle Growth Transformer Upgrades at: – 5% Market Penetration If Charged at Flat Rates – 25% Market Penetration If Charged at Off-Peak Rates

Concentrations of Zip Codes Requiring Transmission Upgrades in 2022 Flat Rates (n=341)

Concentrations of Zip Codes Requiring Transmission Upgrades in 2022 Off-Peak Rates (n=341)

Stepwise Approach: Bifurcated for Flat and Off-Peak Rates Based on Elasticities on the Spread between Flat and Off-Peak Rates in CT Developed a Cost Neutral Rate Spread for Homeowners to Attain Off-Peak Rates Incremental Household Savings on Gasoline = Increased Electricity Costs + Increased Consumption Reallocation Off-Peak Electricity Savings $ Exceed Flat

Analytical Progression Straight Substitution of Electricity for Gasoline GHG Reductions – Amenity $38.98/tonne CO2eq Capital Adjustments-Accelerating Actual Non- Residential Capital Toward Optimum Capital

Connecticut Job Impacts from Adopting EVs Flat and Off-Peak Rates without Amenities

County Job Impacts Off-Peak Rates without Amenities

GHG Relative Intensity of GHG Reductions 2027

Value of GHG Reductions (Millions 2010 $)

Connecticut Impacts from Adopting EVs Flat and Off- Peak Rates with & without Amenities (# of Jobs)

County Job Impacts Off-Peak Rates without Amenities

2023 & 2028 Sector Impacts from Adopting EVs at Flat and Off-Peak Rates with & without Amenities (# of Jobs)

Connecticut Impacts on Capital Stock (Millions Fixed 2005 $)

Connecticut Impacts on Capital Stock: Flat Rates no Amenities (Millions Fixed 2005 $)

Capital Adjustments This Study Produced Estimates of Actual and Optimal Changes to Capital Stock for Each Scenario Given that Reliability Is a Virtual Necessity, The Gap between Optimal and Actual Is Used as a Proxy for Capital Adjustment: – 40% Construction – 30% Producer Durable Purchase of Engines & Turbines – 30% Producer Durable Purchase of Transmission

Job Impacts of Capital Adjustments Flat Rates Off-Peak Rates

Job Impacts with Replacement Batteries Flat RatesOff-Peak Rates

Real Income Impacts (Millions Fixed 2005 $) Flat Rates Off-Peak Rates

Current Income Impacts Before Financing (Millions Current$) Flat Rates Off-Peak Rates

Further Rate Adjustments? Scott’s approach is to adjust rates to cover capital costs Yet, in this scenario new electricity supplies are demand driven Test: If value added by utilities exceeds incremental capital expenditures by a significant margin, then no further rate adjustments may be need.

Utility Value Added before & after Deducting Capital Expenses (Millions 2005 $)

Employment Summary Flat RatesOff-Peak Rates

Current Income Impacts Inclusive of Financing (Millions Current $) Flat Rates Off-Peak Rates

Utility Output Impacts (Millions 2005 $) Flat RateOff-Peak Rates

Utility Output Impacts (% of Base) Flat RateOff-Peak Rates

Conclusions Off-peak electricity rates position EV owners to save on EV transportation operating costs and to allocate more household income to other consumption than occurs with flat rates. With curtailed demand for gasoline, stations will close causing a drop in retail employment in all scenarios Prior to Capital Adjustments, the Off-Peak Rate Structure Generates More Jobs and Income Including Financing in the Model is Necessary – It Increases Employment and Income Impacts Utility Output Impacts under Off-Peak Rates are About two-Thirds of Those under Flat Rates. While Flat Rates Appear to Generate More Income this Occurs Only Because the Capital Adjustment Is $600 Million Higher than Necessary under Off-Peak Rates - A Measure of the Wasted Resources from Misguided Flat Rate Policies!