Electric Car Utility Rate Plans: Top Five Rules

By · April 23, 2019

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kWh meter

One key advantage of driving an electric car is that it’s much cheaper to fuel than a gas-powered vehicle. It's a sure thing—that is, if an EV owner has done the necessary research about rate plans and charging times. But blindly driving forward without thinking about the rate plans offered by your local power company, can lead to unexpected—and sometimes unfortunate—outcomes.

“You have to do the math,” said Reiko Takemasa, former product manager for electric vehicles, Pacific Gas & Electric. “People considering an electric car should do the research, but we can’t expect them to be math and science whizzes.”

Why is the calculus of home electricity pricing so tricky? Because those electrons—charged by the kilowatt-hour (kWh)—can be as low as $0.05 per kWh or climb as high as $0.50 kWh, depending on these variables:

  • Tiers (a system that raises the kWh-rate as you use more electricity)
  • Your location (because the baseline of tiers depends on your territory)
  • Whether or not your EV-charging has been isolated on a separate meter
  • Whether you’ve selected a round-the-clock flat rate or time-of-use pricing
  • The hour of the day you charge
  • The season

Beware: Trying to fully understand how each of these factors can affect your rate can short-circuit your brain. For every rule, there are multiple exceptions, special considerations, and alternative approaches. To make things a bit easier, here are a few rules-of-thumb regarding EV rate plans.

What’s At Stake?

Before getting started with the rules, consider this inexact—but nonetheless useful—formula for seeing how much you’re saving with an electric car versus an internal combustion engine vehicle, offered by PG&E’s Takemasa:

Take the kWh rate and multiply it by 10 to get the approximate equivalent for a gallon of gasoline.

In other words, at $0.12 per kWh for electricity, it would be like paying $1.20 per gallon.

Nissan LEAF charging

How much does it cost to charge an EV? That depends on when you charge, where you are, and the rate plan you've chosen.

1Get help with a rate plan from your utility company.

Utility companies have a vested interest in supporting electric vehicle adoption and making sure you charge at times that support the efficiency of the grid. As a result, they have set up online tools and customer support centers to answer your questions. “Once you’ve made the decision to buy an EV, call the utility,” said Russell Garwacki, manager, pricing design and research, Southern California Edison. “The utility knows the rates and plans available to you. We’ll present those options, and then it’s up the consumer to make the final choice.” Garwacki told us that regular charging of an electric vehicle is like adding an entire house to the grid—so not only will the call help you determine the best rates for your situation, it will help the utility properly plan for a bright EV future.

2To get the absolute lowest rate for charging your EV, subscribe to a time-of-use plan and only charge at off-peak hours.

If your electric car is your daily commuter vehicle and you’re replenishing its battery pack every day, then you’re a great candidate for a time-of-use (TOU) plan. Instead of paying a flat rate around-the-clock, starting around $0.12 or $0.13 per kWh, the price drops down to around $0.05 - $0.10. Again, that’s if you set up your car to charge after midnight—when everybody’s sleeping and not using much power. (Remember, exact rates depend on a lot of things, and change all the time.)

3To subject yourself to the absolute highest rate, sign up for a time-of-use EV rate and only charge at peak hours during the day.

Making this mistake requires real effort. Here’s the background: The reason that utilities can charge less during those wee hours of the morning is that they crank up the price during the peak times of day—between 2 pm and 9 pm at PG&E; and 10 and 6 pm at Southern California Edison.

During peak hours on a TOU plan, the price jumps way up. If you have a big house full of power-thirsty appliances and systems and charge your EV on a daily basis, you could easily get pushed you into the highest tiers—where on-peak charging could climb to $0.40 or $0.50. Remember that means you would be paying the equivalent of $5 a gallon.

4Time-of-Use plans are better for almost every EV driver.

Unless you run heavy equipment during the day and have absolutely no opportunity to shift your most demanding energy use to off-peak hours, then TOU is a good choice. (Another possible exception would be an electric car or plug-in hybrid owner that only drives short distances, lives in small energy-light homes, only charges a few kWh per day, and is willing to pay higher rates in exchange for the flexibility to charge anytime.)

Even those customers can take advantage of TOU rates by separately metering the power for their electric car. “By and large, EV-adopters are more energy aware and environmentally aware, and they understand the value of off-peak charging,” said Garwacki. As a result, he believes that EV drivers are willing to adjust the time of charging and thereby get a better rate (while helping the grid). Garwacki told us that most of SCE’s EV customers opt for single-meter time-of-use rates.

5Do a careful cost calculation before going with separate metering.

As we mentioned, EV customers have the option to install a separate meter that only tracks EV charging. The first important cost input when calculating whether or not to install a separate EV meter is how much it will cost for that installation (commonly completed by an electrical contractor). If your electric panel and current meter are near where you plan to charge your car, the expense could be just a few hundred dollars. But running conduit or digging trenches can push these costs into the many thousands of dollars.

Once you get an idea of how much it will cost to install the separate meter, then you need to determine how much you’ll save by keeping that car’s energy needs off your main meter. Southern California Edison estimates that an EV will add as much as 350 kWh of energy usage to your account in a typical month. That can quickly push you into the upper tiers, which could double or even triple your rate. (Depending on your utility’s rules, the separate meter will either establish a separate baseline amount of electricity used to determine your tier or remove the tier structure altogether.)

Choosing a TOU plan, while staying on a single meter, can mitigate these higher costs—and help you avoid a headache and expense of separate metering. But if you believe that adding a new meter is going to be relatively easy and inexpensive, it’s worth taking the time to run the numbers to see if it’s really worth it (ideally with help from your utility).

New to EVs? Start here

  1. Seven Things To Know About Buying a Plug-In Car
    A few simple tips before you visit the dealership.
  2. Incentives for Plug-in Hybrids and Electric Cars
    Take advantage of credits and rebates to reduce EV costs.
  3. Buying Your First Home EV Charger
    You'll want a home charger. Here's how to buy the right one.