Ontario is making significant strides in its commitment to support electric vehicle (EV) adoption across the province. On May 1, 2024, then-Minister of Energy Todd Smith announced that Ontario is exploring options to lower electricity charges for EVs. This initiative aims to make charging infrastructure more economically accessible in more communities. By reducing electricity costs for EV charging stations, especially in areas with lower demand for EV charging services, the government hopes to encourage the expansion of charging infrastructure. This, according to Smith, will provide Ontario drivers with greater "confidence to transition to electric vehicles, and take advantage of [its] growing, world-class clean grid."
In response to this directive, on May 30, 2024, Ontario Energy Board (OEB) staff issued a proposal to address high electricity rates for public EV charging stations with a low load factor. This proposal seeks to enhance the integration of EV chargers with Ontario's electricity system. Central to this proposal is the introduction of the Electric Vehicle Charger Discount Electricity Rate (EVC Rate), designed to reduce the delivery cost that a distributor charges EV charging stations. Distributors typically recover their cost of transmission service based on coincident demand at a transmission station through Retail Transmission Service Rates (RTSR). When low load factor EV charging stations are charged based on their noncoincident demand, they would contribute disproportionately to RTSR.
The EVC Rate aims to mitigate this issue by providing a discount on RTSR for low load factor charging stations. It is important to note that the EVC Rate is not a fixed rate nor is it a subsidy for EV chargers. Depending on the coincident peak contributions of the charging stations and their load factors as estimated by the OEB, the EVC Rate would be dynamically calculated for participating stations. The OEB would provide distributors with a numerical parameter, allowing them to determine the EVC Rate for participating stations by multiplying their RTSRs with the parameters.
While participation in the EVC Rate would be optional for EV charging stations and contingent upon meeting specific criteria, all rate-regulated electricity distributors in Ontario must offer the EVC Rate. OEB staff has proposed three rate design options, including one fixed-rate option unaffected by specific load factors and two options varying with monthly load factors. Stakeholders are invited to provide feedback on these options, each of which comes with its own advantages and drawbacks.
OEB staff recommended using a provincewide EVC Rate initially, but the distributors would have opportunities to propose any specific customization to their EVC Rate as they gain more experience with public EV charging stations. The OEB would review the EVC Rate periodically after its implementation, based on the distributor and customer experience and other relevant considerations.
Regarding the financial impact of the EVC Rate, while it reduces the RTSR for participating charging stations, actual savings would vary based on the participant's base RTSR, load factor and the EVC Rate design. Estimated total bill savings for participants range from 8% to 42%. Presumably, the savings would be passed on to EV owners using the charging stations. Charging stations not participating in the EVC Rate may face higher costs initially, as distributors will recover RTSR revenue shortfalls through RTSR variance account clearing processes.
The OEB has proposed that all electricity distributors must offer the EVC Rate to eligible customers starting January 1, 2026. Eligible customers can voluntarily opt in to receive this rate.
As part of the broader plan to support EV adoption and enhance accessibility of EV charging infrastructure in Ontario, approval of the new rate structure by the OEB will significantly contribute to the province's goal of establishing a domestic EV battery ecosystem and positioning Ontario as a hub for automotive innovation in North America. This initiative aligns with the government's commitment to facilitate the ongoing transition to electric, low-carbon, connected and autonomous vehicles.
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