TVA board approves utility’s first rates for commercial EV charging stations

by Peter Maloney
APPA News
November 19, 2020

The Tennessee Valley Authority’s (TVA) board of directors recently approved a new commercial rate structure aimed at supporting the expansion of electric vehicle charging infrastructure across the region.

TVA conducted a pilot program for electric vehicle rates about a year and a half ago, but the new rate would be the first at the utility that is useable for everybody, Joe Hoagland, vice president of innovation and research at TVA, said.

The new rates apply to any commercial, level-three fast charger, but not to residential charging. “The new, commercial rate is simpler,” Hoagland said. “It takes out almost all of the demand charge, so there is a simple rate based on kilowatt hours (kWh), so it looks similar to gasoline on a cents per gallon basis.”

Hoagland said TVA did a lot of work with stakeholders to understand what needs to happen to facilitate electric vehicle adoption in the Valley and identified four barriers: a lack of infrastructure and concerns about range anxiety, a lack of supporting rate policies, the relatively high costs of electric vehicles, and a low level of awareness regarding electric vehicles among customers. The new commercial rates structure “is the first step in addressing those barriers,” Hoagland said.

The new commercial rate will apply to the wholesale rate TVA charges its 153 local utilities. While all the details of the wholesale rates are not yet worked out, it will be competitive with rates offered by third party charging stations, Hoagland said.

Electric vehicles represent a “huge opportunity for us to continue with our mission of economic development” in the Valley, Hoagland said.

In late October, General Motors said it plans to invest nearly $2 billion in its Spring Hill, Tenn., manufacturing plant to build fully electric vehicles. Volkswagen, which already manufactures electric vehicles in Tennessee, last week said it has begun construction of a new, laboratory for electric vehicle batteries in the state. Nissan also has a factory in Nashville where it produces its LEAF electric vehicle.

In addition to manufacturers, wider use of electric vehicles could be a draw for other companies looking that are focused on their sustainability goals and are looking to relocate, and electric vehicles also represent “an opportunity for a significant amount of carbon dioxide reductions,” Hoagland said.

For TVA, electric vehicles also represent a sales growth opportunity and could improve the utility’s ability to balance its load, Hoagland said. “There is value in this for everybody, the consumer, the local utility and TVA,” he said.

“Actively supporting the electrification of transportation multiplies our own carbon reduction efforts and moves the entire region toward greater sustainability and economic opportunity in the future,” Jeff Lyash, TVA’s president and CEO, said in a statement. “TVA has reduced carbon emissions by nearly 60% since 2005, and we have concrete plans to reach 70% by 2030.”

At the board meeting, TVA noted that it in fiscal year 2020 it’s provided nearly 60% of the region’s electric power from carbon free sources, which it said is the largest percentage of clean power produced by any Southeastern utility.

TVA also noted that it has increased solar energy capacity by nearly 70% with nearly 1,200 additional megawatts of solar energy under contract that is due online in the next two years.

Also at the board meeting, TVA said that despite restrictions imposed to help stop the spread COVID-19, it managed to conduct scheduled maintenance and capital improvements, resulting in improved system performance and decreased fuel costs.

So, while its operating revenue was down about 5% due to a combination of weather and pandemic impacts, TVA said the shortfall was offset by “improved operational performance that lowered operating and maintenance costs, reduced fuel costs and exceeded TVA’s debt reduction target by more than $400 million, reducing debt to its lowest level in 30 years.”

TVA estimated its fiscal year net income at $1.4 billion.