Jay Smith:
Manufacturers are moving their production lines to electric vehicles, and the administration has set by 2030 to have half of new vehicle sales be electrical vehicles. We know that this is coming. And there are some barriers that are holding people back from buying an EV. We hear often that certainly the cost is one barrier that’s coming down, but the other barrier that people have to getting an electric vehicle is range anxiety. That fear of will I be able to get to the destination that I want to get to? If I want to travel long distances, will there be a place to recharge? And so building out that EV charging network across the country is going to be important to moving forward with electric vehicles. And we think the fastest, most efficient way to do that is to utilize fuel retailers who already have the real estate in the right locations. They offer the amenities that drivers have come to expect, and they have the infrastructure to provide that service. They’re used to serving drivers for and they want to continue to serve drivers in the future, but there are some barriers that are preventing fuel retailers and retailers like convenience stores, many of your members, from getting into that business. And that’s what we’re trying to overcome, those barriers.

Jeff Lenard:
Doug, briefly set up each of those barriers.

Doug Kantor:
What’s interesting is this industry is more than willing to invest a lot of money if you can make money selling stuff. That’s what the convenience industry is all about. Frankly, lots of retail you could say the same for, but we have a situation now where because of the way electricity markets work, that isn’t possible. And there are two reasons. One is that commercial users of electricity get hit with something called a demand charge that is not just based on how much electricity they use, but the highest consumption they have over a short period of time. They get penalized for that. And that’s really an anachronism in certain ways that was there to influence manufacturing and deal with big draws on the electrical grid all at once. But when you talk about electric vehicle chargers, they demand a lot of electricity really fast. So it puts retailers that install these at a terrible disadvantage in such a way that they can’t possibly charge consumers the amount they are paying based on those demand charges. That structure has to change of how electricity is sold to commercial users. The second is that lots of electrical utilities are out there getting approval to raise everybody’s electricity bills in order to pay for not only their own installation of chargers, but the operation of chargers. And so that’s subsidized competition, which appears to make the cost of electricity much lower than it really is, it undercuts the rest of the private market and makes it very difficult to make money on it. Those two things combined, and by the way I should note the electric utilities don’t have to hit themselves with a demand charge so there’s two ways on which these things disadvantage local retailers that makes it very difficult to invest and really unless those two things are dealt with it will stunt the growth of investment over time.

Jay Smith:
In terms of that demand charge, a convenience store for example has a very steady usage of electricity over the course of a month. They have refrigerators that are keeping the sodas cold. They have cashiers that are running. They have a very steady us of electricity. One EV charger that is installed at their location, even if they only have one driver charge for 20 minutes in the entire month, they could see their electric bill for the month triple. That just gives you an idea of how big this demand charge is. And you can imagine that with only a handful of EV drivers, there’s no way that retailers can pass that cost on to the EV driver. And as Doug said, when the power companies get into this business, they don’t have to pass that on to the EV driver. One, they don’t charge themselves. That’s pretty convenient. And second, any costs that they have, they’re allowed to spread that out as Doug said over their entire customer base, over an entire city or state, if they happen to have that big of a footprint.

Jeff Lenard:
These demand rates are based on, what, the highest 15 minutes of usage within a month?

Jay Smith:
Exactly. It’s like a 15 to 20 minute window, which ironically or coincidentally is about the same as a fast charge to charge your electric vehicle. And as Doug mentioned, it was really conceived in the idea of manufacturing when assembly lines were on for eight hours at a huge demand, and then would go basically dormant for the 16 hours of the day when the shift wasn’t working. We need to come up with a rate structure that accounts for the power companies having to bring sometimes more power to a location. But we can’t do it in a way that stifles retailers from being able to then do something with that electricity and provide it to EV drivers. So in many ways, we look at this as some people like to couch this as retailers versus utilities. It really is going to have to be a partnership. There is a role for utilities to play. Our grid needs to have more electricity. If we’re going to have 50% of our vehicles on the road being electric, I can guarantee we’re going to need to produce a lot more electricity. And the power companies are going to make a lot more money when they sell more electricity. And the retailers who have been serving drivers who know how to do that, will be able to then take that electricity and provide it that last link into the electric vehicle.

Jeff Lenard:
Doug, are you hearing anything on Capitol Hill with the work that NACS is doing to advocate legislators about the issue? My understanding is our message is we want chargers but we want to be able to do it in a way that there’s a logical business case.

Doug Kantor:
A year or two ago, lots of this development of the electric vehicle market, especially on the charging side, was based on a bit of wishful thinking. Nobody had really analyzed the block and tackle of how much money is going to have to get put in, where’s it going to have to put in, where’s that money coming from, all those sorts of things. And now, especially after Congress worked through the infrastructure bill, they’re starting to realize this is more complicated than we thought. And this can’t possibly happen where it’s all just government money raining down into electric vehicle chargers. The only way that we can really replicate what we’ve done for gasoline and diesel powered vehicles is for the private market to invest money because they have a way to make money doing it. And the other thing that’s really important and good about that model is it helps discipline prices and get people good service over time, because you got a bunch of private sector folks fighting for customers who care about how much are they going to pay and are the bathrooms clean and do they have the kind of coffee that I like. Or maybe the right kind of snack. All of those things are really important for the future. Some of the model that’s happened in the past was with government money coming in, this is easy, put a charger in the middle of an empty post office parking lot. Those kinds of experiences are not good consumer experiences. Once you plug in and have 20 minutes and you have to go to the restroom, you realize this is not an ideal situation. And certainly if you want to get something else on your drive, it also doesn’t satisfy those needs. So working with the private sector is key. And that pricing piece is going to be key too, because if we have a local utility that has locked up the electricity market in a given geography as the only offeror of electric vehicle charging, eventually those costs are going to inflate because they don’t have competitors trying to undercut them.

Jeff Lenard:
If you’ve seen these classic pictures of New York’s 5th Avenue, there’s a comparison between 1900 and the 1915. The first picture shows 5th Avenue and everything on the street is horse powered. It is literally a horse except for one car, one gas powered vehicle. And 15 years later, same street, there’s only one horse in the picture, everything else is an automobile. And that just shows how quickly the market can adapt given the right conditions, given a level playing field and given the opportunity to aggressively compete for customers.

Doug Kantor:
That’s exactly right. And look with price signs out on the street that are very large, so everybody can read them while driving their vehicle. The gasoline industry in the United States may well be the single most price, competitive commodities market in the world. Electric vehicle drivers ought to have precisely the same benefit today. They don’t, it is very opaque. It is hard to know what those prices are. It’s hard to compare them. We’ve got a long way to go, but as you point out, we know how to get there. It’s not that complicated. We’ve done it before.

Jeff Lenard:
Jay, the name of the partnership is Charge Ahead partnership. It communicates everything that our industry wants. We want to charge ahead just like the rest those who want EV charging. There’s a lot of stakeholders that need to come together to think about the greater good to get where we need to be. What are some of the messages that are resonating?

Jay Smith:
This is an issue that does bring a lot of folks together. You can be pro environment and you want to reduce greenhouse gases but to have more electric vehicles on the road, what’s stopping that? Not have enough charging stations. So there’s that argument to it. There’s the free market argument. There are people who believe the private sector is willing to invest in this. They’re willing to put their own private capital. We don’t need to have rate payers like you and me on our power bills at home subsidizing this because the private sector’s willing to do it. We don’t necessarily need government to do it because we’re willing to do it too. So it really does resonate that there’s a lot of arguments and there’s also a social equity fairness. Should people who are struggling to pay their power bills at home be subsidizing somebody who’s driving an $80,000 electric vehicle to charge on the cheap? That doesn’t make sense. As Doug said, there is a solution, we know how to get there and retailers aren’t afraid of competition. We’re not even opposed to the power company being in this business, but just play by the same rules that are put on us, charge yourself the same demand charge or the same rates that you’re charging. It’s when that playing field is level that you’re going to see competitive pricing, increased quality of service, all those things that customers and drivers have come to expect. And quite frankly, demand those can happen if we just level the playing field. You mentioned Congress. Unfortunately there is no silver bullet that Congress can by decree make this happen. Utility companies are generally in most states regulated monopolies. And so this is something that will have to be battled out state by state and that’s what the Charge Ahead partnership is doing in supporting legislation in states that are trying to create a level playing field, working with regulatory bodies, public service commissions to establish rate structures that make sense for EV charging.

Jeff Lenard:
Doug, would it be fair to say that these future costs, if we don’t address this properly, some of these charging costs, these demand costs could become similar to swipe fees?

Doug Kantor:
You point to something that’s really important here, which is certainly for us but more importantly for American consumers across the country. We’ve learned the lesson over and over again, especially over the last few years, that big monopolies are bad. They’re bad because they end up costing way too much and consumers pay too much. They’re bad because they don’t deliver innovation in the way that they should. Having those competitive market dynamics helps on all of those fronts. And if we don’t watch where we’re going on this, as Jay pointed out, regulated monopolies and electricity, some of that’s for a reason in the electricity market, you didn’t want to have to build multiple sets of wires everywhere, but frankly, we had the same problem with telecommunications and we came to realize that that was a big problem. We went from courts trying to break up AT&T to Congress passing a big law requiring competition and the cost of long distance for those with a few gray hairs who can remember when there was such a thing as long distance and not just a cell phone. Those costs dropped dramatically when we suddenly had competition. So there are plenty of ways to do this, but we’ve seen this movie before where monopolies mean too expensive and really bad for consumers.

Jeff Lenard:
And most of all, they stifle growth in innovation. If we are going to get to this EV future, we really need continued innovation to get to that growth to have everybody move together. Jay, if somebody wants to learn more and get involved with the partnership or find out more about what’s going on, what are some things they might want to do?

Jay Smith:
Sure. We have a website, chargeaheadpartnership.com and on that website is information about this issue and helps explain to consumers why they should care about this and how the EV charging market expands. But we also have a way you can sign up to for free to stay connected to us. You can either have your company join or as an individual or organization and we’ll keep you informed. And more importantly, when the battle then comes to your state, we can reach out to you and say, now is the time to let your elected leaders hear from you that you think EV charging can best be done by the private sector and retailers as partner, as part of it. It’s an easy way to get connected at chargepartnership.com.

Jeff Lenard:
Are there any states that are particularly important right now as we have this conversation?

Jay Smith:
Every state is important because we want this EV charging network everywhere. I don’t want single any out, but I will tell you this time of year some of the sessions are out of session, but it doesn’t mean we’re not getting started and looking forward to next year. In any state, I would encourage you to connect with us online and we can let you know when it’s actually time for battle. There was legislation passed in Louisiana recently that the governor then signed, which moved the ball in the right direction. Now the battle goes to the public service commission to get it across the finish line. We’re expecting legislation in Ohio, South Carolina, Georgia, Florida and Texas. It won’t be done until all 50 states, like I said there’s no federal solution here. We do think once we get some momentum people see we can do this with the private sector. We don’t have to spend taxpayer money or have it subsidized by rate payers. We think once we demonstrate that and show that the private sector’s willing to step up, there’ll be a lot of momentum there and it’ll make the job a lot easier getting those things passed later in other states.

Doug Kantor:
One thing I would add to that is there are some things going on at the federal level. We did get a provision into the infrastructure bill that told states to take another look at their rate structures to try to deal with some of these problems. We’ve recently seen a bipartisan group of senators and house members write to the federal energy regulatory commission urging them to use that authority and really lean on the states to make changes in the right direction on this to allow the private sector to grow here. And there’s more that can be done. There’s more that Congress can do. There’s more that FERC can do. I think the interplay of what Jay’s talking about with these states, which is incredibly important, and what the feds can do to push the states to make some changes here can hopefully move us all in the right direction.

Jay Smith:
One other thing about the federal government and the infrastructure bill that Doug mentioned earlier, it put $7.5 billion towards EV charging infrastructure and that money is going to be dispersed to the states. And the states for the first $5 billion of that over five years have to put together a plan for how they’re going to spend it. And the federal government has asked each state to put that plan together by August 1. Now’s the time to reach out to your state DOT partner of transportation who is putting together these plans and encourage them to use the federal money that they’re going to get from that infrastructure bill and invest it in ways that incentivize more private investment. Don’t just take federal money and give it to, for example, a local government that’s going to build a charger at a library and doesn’t actually bring more investment into it. We would like to see that money. And I think the federal government has put provisions in the infrastructure bill – they want this money to be used to incentivize private investment too because they recognize that retailers can accelerate that growth. It’s important for DOTs as they’re putting together their plans to hear from retailers who say they’re willing to invest along this corridor.

Outro:
Convenience Matters is brought to you by NACS and produced in partnership with Human Factor. For more information, visit convenience.org.

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