Electric car-charging stations: Will market forces cut prices?

Charging stations charge by time or by amount of electricity used--amount of electricity is generally viewed as the fairer option. But electric-car drivers may start to choose only those stations that charge a fair price, meaning market forces will adjust prices down.

Jeff Barnard/AP
In a March 2012 file photo, a Nissan Leaf tops off it's battery in Central Point, Ore., at one of the charging stations along Interstate 5. US car buyers bought a record number of hybrid and electric cars in March 2012 as gas prices neared $4 per gallon. Many of these hybrid owners are hoping market forces bring the price of charging stations down.

As some public charging stations have started charging fees for charging sessions, many electric-car drivers are debating what a fair price would be. 

Virtually all drivers accept that it's reasonable to pay something to charge at a private business.

Two executives from Coulomb Technologies, which is installing the ChargePoint network of charging stations, weighed in with their experiences after two years in the trenches.

They suggest that electric-car drivers will choose only those stations that charge what's viewed as a fair price, meaning market forces will adjust prices to acceptable levels.

Today, the most common model now being introduced is to set costs for charging sessions by time, e.g. $2 per hour.

This is largely viewed as unfair. The majority of mass-market plug-in vehicles for 2011 and 2012 draw only 3.3 kw per hour, or about 50 cents of electricity per hour at average U.S. electricity costs.

Some newer electric vehicles (the 2012 Ford Focus Electric, 2012 Coda Sedan, and the 2012 Tesla Model S) can charge that twice that rate on public Level 2 charging stations.

It would appear that electric-car owners unanimously want to be charged for the actual electricity they use, measured in kilowatt-hours.

Unfortunately, many states do not allow a private vendor to “set electric rates,” a privilege reserved to utilities that are regulated by various state and local public commissions. 

Leading the way to address this problem, California has passed a law (AB631) that allows charging station owners to decide exactly how they want to set charging fees: per hour or per kilowatt-hour.

And, said Pat Romano, CEO of Coulomb Technologies in an interview, other states are planning to follow suit.

“We don’t set pricing for charging from our units," added Richard Lowenthal, founder and Chief Technology Officer of Coulomb.

He asserted that the pricing is “free to be set” by property owners where the charging stations are located. 

Romano acknowledged that “$2 is expensive per hour,” and said he believes that pricing formats will “settle in” as electric-car owners and charging-station providers become more educated. 

Romano said Coulomb executives are "advocates of per kilowatt pricing,” and that only about 20 percent of the stations they have installed so far are charging today.

Electric-car drivers "are a good demographic to encourage to shop at your business," he pointed out, "so free charging--or at most a dollar an hour for charging by time--would be fine.” 

Lowenthal added that a market adjustment has already taken place for two of its ChargePoint stations in Palo Alto, California.

Both started out costing $5 an hour for charging, but no one used them at those rates. Now, one charging station is free and the other is costs just 50 cents an hour. 

The message seems to be clear for electric-car drivers: Unless you are desperate, avoid using any charging station that costs more than $1 an hour. Use your “market force” to demand pricing based on actual use, or at least less than the $2-per-hour rates seen at initial “experiment” sites. 

Romano and Lowenthal noted that most charging stations--especially in government or workplace locations--are likely to remain free for some time to provide an incentive for adoption of electric vehicles.

And they suggested that free charging can act as a powerful inducement for higher-income shoppers, the ones buying plug-in vehicles, to visit a local shopping area or business.

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