Will electric vehicles kill the gas station?
As electric vehicles began to take hold, many entrepreneurs thought that powering them could be a source of income. But they faced a strange financial hurdle. The refueler pays the utility for the electricity, but cannot ask the driver to share the cost. Thus, companies have found workarounds. Some providers charged for time spent plugged in. Others charged session fees. (Until two years ago, Tesla Inc., the market leader in electric vehicles, let many of its drivers fill up for free at its Supercharger stations.) Neither strategy reflected the true cost, but it was a beginning. The companies needed a change in the law – an exemption that would allow, for the first time, someone other than a power company to sell electricity.
Delia Meier, senior vice president of Iowa 80, a chain of truck stops, has taken a leadership position in Iowa to open the market to “charge-to-charge,” as it’s sometimes called. “There’s a lot of paperwork, a lot of stuff that probably doesn’t make sense,” she said. The Iowa Utilities Board met infrequently and moved slowly. Meier’s regional utility, Alliant Energy, would request additional hearings and submit objections at the last minute. To Meier, it seemed the utility was leading a passive, faceless resistance, using its unparalleled expertise before the utility board to wear down anyone who challenged its monopoly status.
“All the time it seemed like people agreed with us,” Meier said. “Then (the council) would hold a hearing and decide not to do anything about it. It went on and on and on. »
In a statement to POLITICO’s E&E News, Alliant said, “We are excited to be at the forefront of electrification efforts and working hard to understand and meet the needs of our customers.”
In 2019, after a three-year process, Iowa relaxed its rules so stations like Iowa 80 could charge customers any price for electric fuel, just like gasoline. Most states have done the same. The main lobbyists who forced the issue were not gas stations, but new companies whose bread and butter were charging stations – EVgo Inc., ChargePoint Holdings Inc. and, of course, Tesla. Alongside them were environmental groups like the Natural Resources Defense Council, which argued that a transition to electric vehicles – needed to stave off the climate crisis – could not happen without a financial incentive to sell fuel electricity to conductors. Today, only seven states still regulate electric vehicle charging as the exclusive domain of the power company.
But even with the freedom to charge customers what they want, gas station owners still think the utility has stacked the odds against them.
One reason is that some utilities also own and operate charging stations. They do it with their taxpayers’ money, in plans approved by regulators. Typically, this happens sparingly and in areas avoided by private industry. But convenience store owners fear the utility as a competitor because the utility has a state-allocated profit built into every investment it makes. They worry that this padding could lead the utility to set a new floor for fuel prices that the gas station cannot match.
Angela Holland, president of the Georgia Association of Convenience Stores, explained it this way to Georgian lawmakers last year. Its 6,500 members “must use electricity from a single utility. If this same electricity supplier is authorized to provide electricity refueling stations… by taking zero capital risk as the private sector will, they will create and maintain a monopoly in this market.
Gas station owners say their resistance to the power company is not an effort to slow the transition away from their flagship product. “We don’t have any more commitment to fossil fuels than we do to Snickers bars,” said Brian Young, owner of a gas station chain in eastern Alabama. Rather, the prospect of installing a charging station is extremely expensive.
Convenience stores make tiny profits on gasoline and diesel. “Whether we sell at a dollar or four dollars,” Young said, “we always make 14 cents.” In this low-margin world, a fast charger is a monster investment. Hardware can cost $150,000 or more, according to a 2019 study by think tank RMI. It’s an invigorating risk, especially since no one knows exactly where future EV drivers will want to fuel up.
“Honestly, I dread it, but maybe there’s an upside,” Bob Bajwa, a gas station owner in Ritzville, Wash., said of the prospect of switching to electric vehicles. He is somewhat optimistic given his personal experience. Bajwa already has a charging station — installed on its property in 2015 by charging provider EVgo — which receives only an occasional customer and generates almost no revenue.
Convenience stores know they are overwhelmed. It’s hard to imagine a future without a power grid, but a future without gas stations can be predicted quite easily. Refuelers cannot overturn the utility as a linchpin. But a crucial question remains: how much will the fuel cost?