A Texas Senate bill will encourage competition by the the private sector.
By Matt Welch
1:30 AM on Mar 7, 2023 CST
All across Texas, heads are turning as consumers see more and more electric vehicles on our highways and county roads. With good reason, folks are starting to wonder what the automotive market of the future is going to look like and whether they should consider taking the EV plunge.
The number of electric vehicles in the U.S. is projected to reach 18.7 million by 2030. To keep pace with this phenomenal rate of growth, the U.S. needs to construct over 1.25 million EV charging stations — which amounts to building hundreds of chargers each day until 2030, according to an analysis by Charge Ahead Partnership, a coalition dedicated to advancing common sense, market-based policies that will accelerate the development of the nation’s electric vehicle charging network.
But who will build and operate these charging stations? Should it be left to the utility monopolies in charge of electric transmission and distribution? Or should it be left to the free-market forces of competition where companies vie to offer these services, just as they do today with retail gas stations today?
As fiscal conservatives, we believe the best way to develop a broad charging network is through an affordable, fair and competitive approach that gives consumers the confidence to purchase electric vehicles and meets the needs of today’s drivers. Throughout economic history, the competitive market-based approach has proved to lead to lower costs for consumers along with accompanying private sector investment.
While regulated distributed utility monopolies are integral to the future of EVs, they are not the best candidate for a leadership role in the establishment and expansion of the EV charging network. They have implemented rate-basing to cover the installation and development costs of EV charging stations. Rate-basing allows these monopolies to transfer the cost for the creation and operation of charging infrastructure to all of their utility consumers on their monthly electric bill, while the vast majority of their customers do not currently drive an EV and will not benefit from EV charging stations.
What’s worse, captive rate-basing for EV chargers allows utility monopolies to sell electricity at prices below the market rate and spread the cost of this loss to all of their customers. This gives these power companies a tremendous advantage over private companies who want to make investments in EV charging stations. This structure is anathema to the free-market principles espoused by many elected officials in Texas.
State Sen. Charles Schwertner, R-Georgetown, recently filed SB 1002, a bill that aims to encourage private investment, ownership and operation of electric vehicle charging stations. If passed into law, the bill will create a framework that promotes competition and rapid deployment of EV charging stations across Texas by private sector developers and investment.
The bill would also prevent electric transmission and distribution utilities from using captive ratepayer funds to subsidize their own EV charging stations. This legislation will ensure that all EV charging providers are competing on a level playing field, without the incumbent utility monopolies having an unsurpassable advantage. The utility companies, meanwhile, should focus their energy on ensuring a capable and reliable grid so Texans can keep their lights on and their EVs running.
Electric vehicles currently constitute less than 1% of all vehicles registered in Texas. However, since 2020, the total number of electric vehicles across Texas has nearly tripled as more people adopt the technology. With rapidly growing adoption rates, it has become essential to ensure Texas will be able to meet the demand of these new vehicles on the road with a sufficient charging network.
A competitive framework, encompassed in SB 1002, will lead to the development of an EV charging network driven by innovation, competition, and the consumer experience, thereby creating better results for EV drivers.
Matt Welch is the state director of Conservative Texans for Energy Innovation, a statewide education and advocacy nonprofit organization that promotes free enterprise, increased competition and less government regulation in our energy economy. He wrote this column for The Dallas Morning News.