November 14, 2016…

November 14, 2016

Arielle Mayer
Senior Policy Advisor
Ministry of Transportation
Policy and Planning Division
Transportation Planning Branch
Environmental Policy Office (Toronto)
777 Bay Street
Suite 3000
Toronto Ontario
M7A 2J8

Dear Ms. Mayer:

Re: Ministry of Transportation (MTO) Discussion Paper on Electric Vehicle Incentive Initiatives under the Climate Change Action Plan

The Electricity Distributors Association (EDA) represents the collective voice of Ontario's local
electricity distribution sector, which safely and reliably delivers power to millions of homes,
businesses and public institutions. The EDA draws together under a single umbrella
approximately 63 of the local distribution companies (LDCs) that deliver electricity to homes
and businesses across Ontario. The distribution sector as a whole employs 10,000 people
directly, holds $19 billion in assets, and makes hundreds of millions of dollars annually in direct
contributions to both municipal and provincial revenues.

The EDA welcomes the opportunity to provide input on key program design elements regarding the education, awareness and uptake of low to zero-emission vehicles, specifically electric vehicles (EVs) in the province of Ontario, as envisioned under the government’s Climate Change Action Plan (CCAP). Increasing the uptake of EVs across the province and the implementation of several other initiatives under the CCAP will have a significant impact on LDC operations and infrastructure in the coming years. Therefore, it is imperative that LDCs are integrally involved in the development and roll out of EVs and of EV infrastructure across the province, along with other CCAP initiatives that will have an impact on the electricity distribution sector.

4.1 Electric Vehicle Incentive Program

The Electric Vehicle Incentive Program (EVIP) was launched in 2010 to support the adoption of low to zero-emission vehicles in the province. The program was further enhanced in 2016 to make EVs even more affordable. The Ministry of Transportation is now proposing further changes to EVIP and also to the Electric Vehicle Charing Incentive Program (EVCIP) as part of the implementation measures under the CCAP.

EV Purchase and Related Incentives
In terms of EV purchase incentives, the current incentive is capped at 30% of the MSRP and/or $3000 for cars that have an MSRP of over $75,000. Given that the government is trying to promote greater use of EVs, there is a need for greater incentives to encourage the purchase of mid-level EVs vs. luxury EVs. To date, the purchase price of an EV remains the single biggest barrier and the government needs to shift away from the perception that EVs are not affordable to the average Ontario household. The EDA recommends that the government flow greater funds to help Ontarians purchase more mid-level family EVs and not provide any further incentives for vehicles priced at $75,000 MSRP or higher.

Northern Ontario has not seen a significant uptake of EVs given that EV batteries do not last as long as in the rest of the province given the colder winters, leaving consumers hesitant to purchase them in that area of the province. To ensure that there is an eventual shift in consumer preferences towards purchasing low and zero-emission vehicles, we recommend that the government provide additional incentives to customers in Northern Ontario to purchase plug-in hybrid vehicles so that there is more encouragement for customers to consider an alternative from traditional vehicles. The EDA further recommends that there should be more investment in public charging stations in Northern Ontario so that customers feel more confident about purchasing and using an EV on a regular basis.

Electric Vehicle Charging Incentive Program
The current Electric Vehicle Charging Incentive Program (EVCIP) is directly linked to the receipt of a rebate from EVIP. However, the current process means that LDCs do not have any knowledge where in their jurisdictions private charging stations are being built and therefore do not have a mechanism to track increased electricity usage and a possible change in load profile for a particular feeder/transformer station. This makes it difficult for LDCs to predict load profile changes and build/improve infrastructure to meet those changes. The EDA recommends that the process for receiving the EVCIP include a requirement for the customer to allow data disclosure to the LDCs. This will allow LDCs to monitor and anticipate changes in load profiles and the province to track EV uptake more effectively.

In terms of the type of Level 2 charging station, the EDA strongly recommends that the government provide additional incentives to encourage customers to install a managed charger that allows the LDCs to better manage loads in their jurisdiction, especially in areas that are seeing an increase in EV ownership. The customer will still be able to charge their EV at any time; however, based on the overall load on the grid, the LDC will be able to scale power levels up or down to the charging station and may defer charging to another time while respecting the owner’s need to use the vehicle. This could be thought of as a grid asset which would be eligible for LDC ownership within its rate base.

The EDA also recommends that the government separate eligibility to participate in EVCIP from EVIP. It should not be relevant whether the car being charged received an incentive from the government; the intention is to support residential charging station usage, so used cars and those purchased before, without the benefit of the EVIP should still be eligible.

A higher adoption of a managed charger aligns with the implementation of other CCAP initiatives more efficiently, namely the four-year initiative offering Free Overnight Charging for EVs. As mentioned earlier, a managed charger allows the LDC to track EV charging; therefore, LDCs can track overnight charging consumption in a household using the same mechanism. This will not only help the province meet one of its immediate goals in implementing free overnight charging, but it will also not be a stranded asset for the LDC or the customer after the four-year free overnight charging initiative is completed as the customer will continue to charge their EV using the same asset and LDCs can continue to make us of it for system reliability purposes.

The EDA also recommends that programs such as EVCIP should be aligned with other CCAP deliverables such as the construction of new homes and office buildings that have EV charging infrastructure already in place and the implementation of policies that promote the construction of net zero homes. It is important that various EV-related initiatives under the CCAP are not implemented in isolation as every element of transportation electrification will have a ripple effect.

Public Transit Infrastructure
The EDA would also like to note that it is important for the province to align the electrification of public transit infrastructure with the expected increase in EV ownership to ensure that there is minimal or manageable load constraints on the grid. The province should be increasing awareness of public transit options at the same time increased EV ownership is encouraged so that certain jurisdictions do not face an overwhelming increase in demand in electricity both from private EVs and public transit. The EDA recommends that carpool parking lots offer EV charging stations to allow for Ontarians to share rides and also use their EVs.

4.2 Electric Vehicle Chargers Ontario Program (EVCO)

Current Regulatory Framework
The EDA would like to highlight to government that the current regulatory framework in Ontario is not supportive of LDCs owning and operating electrical vehicle charging stations. Following the release of the CCAP, the Ontario Energy Board (OEB) issued a bulletin in July 2016 that stated that, according the OEB staff’s view, ownership or operation of an EV charging station, and the selling of EV charging services from that facility, do not constitute distribution or retailing of electricity. The issuance of this bulletin is a regulatory barrier for LDCs to build and own any EV charging infrastructure as they may not be able to recover their costs from the rate base.

The framework is very different in other jurisdictions that have led the way in encouraging EV ownership and in supporting the construction of EV infrastructure. The Public Utilities Commission of California (CPUC) issued a decision in December 2014 to allow California utilities, which includes over 80 municipally owned utilities, to take on a critical role in the transportation sector as “procurers, deliverers and suppliers” of electricity as a transportation fuel and expanded the utilities’ potential role in ownership of EV charging infrastructure. Back in 2011, the CPUC had banned utilities from investing in EV charging infrastructure, arguing that the benefit of their participation would be outweighed by the anticompetitive effect of stifling independent parties in the market. But between 2011 and 2014, California policymakers and regulators learned that motivating the market for charging infrastructure is extremely difficult, as the business case for public EV charging infrastructure based on selling electricity alone is not robust. The policy goals to accelerate adoption to meet climate targets also led regulators to review the role utilities could play, arguing that they were well-positioned to accelerate the EV infrastructure market and can be an asset for third parties to improve their own business cases.

This milestone decision has been a big driver in increased EV ownership in California, with sales data as recent as October 2016 showing that of the half a million EVs sold in the US since 2011, 50% of the sales (245,740 out of 523,610 sales) were in California . With the government aiming to increase the sales and ownership of EVs under the CCAP, the EDA strongly urges government to provide the necessary guidance to the OEB to reconsider its existing position on LDCs’ ownership of EV infrastructure. The EDA further recommends that the OEB be given direction to establish a consistent streamlined process for LDCs to present business cases to support EV infrastructure construction to recover the funds from the rate base.

Electric Vehicle Charging Stations in Commercial and Multi-unit Residential Properties
In terms of programs to deploy charging stations in workplaces, multi-unit residential buildings (MURBs), downtowns and town centres, consideration needs to be given to the timing of the charging and the amount of time the vehicle will be charged. For workplaces, downtowns and town centres, the EDA recommends that the government encourage the construction of both Level 2 and Level 3 chargers to allow customers the choice of how long to take to charge their vehicles and consequently, the price they are willing to pay. Level 3 chargers are more expensive to install but charge a lot faster, so those charging stations could charge a higher flat fee for customers who are only at that location for a short period of time and need to have their vehicle charged faster. The level 2 charging stations can then offer charging at a lower fee for a longer time.

For new and existing MURBs, the infrastructure and the corresponding meter must be separate from the rest of the services so that residents with EVs are the ones paying for the service. The EDA recommends that the government develop a guideline so that all involved parties have a consistent roadmap to follow. This will ensure that condo boards are more supportive of upgrading existing infrastructure to encourage EVs. The EDA recommends that existing MURBs can be offered financial incentives, similar to CDM retrofits, to participate in a program to have EV charging stations installed in their properties. It is further recommended that new and existing MURBs work with LDCs to have managed charging stations installed which will allow LDCs to manage loads effectively and also help in implementing the government’s free overnight charging initiative.

Involvement of LDCs in the second phase of EVCO
As has been touched on previously, LDCs will be an integral part of the government’s plans to increase electrification in the transportation industry. LDCs will need to build and improve their infrastructure to meet the electrification demands and therefore need to be consulted on and involved in all levels of discussion when it comes the next phases of the EVCO. The EDA recommends that the next round of EVCO include LDC-specific consultations when it comes to determining the locations of the next stage of charging stations so that LDCs are informed of upcoming changes to their loads and of the need for any new construction and can advise on any potential load constraints. The costs associated with building or improving LDC infrastructure to power charging stations should also be included in the overall cost of building new EV infrastructure. Given that the second round of EVCO will involve municipalities with the construction of inter-city and in-city charging stations, it will be imperative to work closely with the LDC of the municipalities involved.

The Ministry of Transportation should also add a requirement in the EVCO RFP process for respondents to demonstrate engagement with LDCs to understand the costs of connecting to the LDC system. These costs would accrue to the proponent and could impact the viability of the bid pricing and so lack of knowledge of these costs could give preferential access to those with less expertise, while more professional bids are erroneously deemed less cost-effective. In general, the capability and qualification of the proponent teams should be taken into account in evaluating submissions to EVCO.

Lastly, it is recommended that LDCs are consulted with during discussions of building EV charging infrastructure to support public transit lines and for large private or public fleets as that level of construction will have a significant impact on LDCs’ loads and infrastructure.

4.3 Education and Awareness

Educational and Marketing Campaigns
It will be crucial for the province to educate Ontarians about the benefits of EVs and about the various incentives available for EV owners as part of the implementation of CCAP. The EDA is supportive of any province-wide marketing campaign the Ministry is planning and LDCs can also support the initiative through presenting key messages during their own community outreach events and by placing information on their websites. We recommend that a province-wide educational and marketing campaign be developed with input from LDCs so that there is a consistent message across the province to encourage greater EV uptake. The EDA can help facilitate the discussion to develop this campaign.

Concurrently, it is also important for potential vehicle owners to have an “EV experience” as many do not have any EV driving knowledge. The EDA recommends that the province consider setting up an initiative where customers can have the opportunity to “own an EV” for a day or a week during which they can use an EV as their own vehicle to learn the benefits of an EV; the ease of charging an EV at home; and get an understanding of the general usage of the car such as battery capacity, charging time etc. Car rental companies can also be given a financial incentive to offer an EV as a rental vehicle which is competitive to a regular vehicle rental.

Partnerships with vehicle manufacturers and car dealerships
As mentioned before, LDCs strongly support the installation of a managed charger for private properties to allow for better load management of the grid. The EDA recommends that car manufacturers in the province work with LDCs to understand the benefits of managed chargers so that they can distribute information down to their dealerships to educate customers about managed chargers when they are purchasing EVs.

Online cost calculator
Lastly, as part of the education and awareness of EVs, the EDA recommends that the government develop an online cost calculator that can be used by private car owners and also large vehicle fleet owners to assess the cost of owning and operating EVs. Such a tool, which will include the various incentives that are available to customers for owning an EV, will allow customers at all levels to evaluate the costs and benefits associated with owning an EV and encourage increased EV uptake. The online cost calculator can be made available on various websites such as the Ministries of Transportation, Environment and Energy; Service Ontario; Plug n Drive; car manufacturers and dealers; and LDCs.

Electrification across various sectors, including transportation, is a critical initiative under CCAP. The EDA strongly encourages the Ministry of Transportation to work closely with other Ministries to ensure that initiatives such as EV-ready new homes and businesses and construction of net zero homes are aligned and the LDC industry is consulted upon during implementation. All of these initiatives will have a considerable ripple effects on LDC operations, assets and reliability and LDCs also need to be ready to meet new electricity demands in the province. Therefore, the EDA recommends that LDCs are integrally involved in the implementation of the various transportation electrification initiatives across the province.

Thank you again for the opportunity to provide comments on this consultation. The EDA’s members continue to be interested in being integrally involved with the increased uptake of EVs as part of the government’s CCAP. We look forward to the next steps in this consultation process.

Sincerely,

Teresa Sarkesian
President and CEO

:akh

[Original Comment ID: 196517]