Electric vehicles (EVs), including medium- and heavy-duty vehicles (MHDVs), are critical for cutting transportation-related greenhouse gas emissions. They’re more efficient than fossil fuel vehicles and can help reduce electric rates overall. However, demand charges in commercial utility rate structures can significantly increase electricity costs, creating a barrier to electrification. Smart rate design can help remove these obstacles and support broader EV adoption.

This dashboard shows the potential savings from eliminating demand charges across seven EV charging use cases. The “proxy” rates shown illustrate what effective rates might look like under demand charge-free rate structures tailored for MHDVs and high-powered charging. The goal is to identify where demand charges disproportionately impact EV charging costs, particularly in the early stages of MHDV adoption.

The dashboard has two main sections: the Summary page provides an overview of potential savings for EV fleet operators and DC fast charger owners, while the State Reports section offers a detailed look at effective rates and bills by use case across major utilities in each state. These insights can highlight where demand charges may be hindering electrification, such as when rates are unusually high for a specific use case or vary widely between neighboring utility territories, pointing to opportunities for EV-specific rate design.

Dashboard

Background and Methods

This analysis was conducted by Synapse Energy Economics in 2023 and commissioned by the Natural Resources Defense Council (NRDC).

Electric bills for commercial and industrial customers typically include three types of charges: fixed, volumetric, and demand charges.

  • Fixed charges (or customer charges) are flat monthly fees that cover administrative and customer service costs such as metering and billing.
  • Volumetric charges ($/kWh) are based on total energy consumed and may vary by time-of-use (TOU).
  • Demand charges ($/kW) are based on a customer’s peak power demand during the billing period.

For EV applications like DC fast chargers and medium- and heavy-duty vehicle (MHDV) fleets, peak demand can be high relative to total energy use. This makes demand charges a disproportionately large part of the bill, raising the effective cost of electricity and posing a barrier to electrification.

The analysis underlying the dashboard estimated potential savings from removing demand charges across seven EV charging use cases. The dashboard presents the resulting effective rate ($/kWh) for five electric fleet types and two DC fast charger types, calculated by dividing the sum of fixed, volumetric, and demand charges by average monthly energy use.

The analysis covers the two largest utilities in each state by commercial and industrial customer share. Rate data is based on the most recent tariffs (as of summer 2023) from utility websites or Public Utility Commission filings, including EV-specific rates when available. Riders, surcharges, and taxes are excluded unless part of an EV-specific rate.

To approximate demand charge-free rates, “proxy” rates were selected from currently available tariffs—either non-demand commercial/industrial rates or residential rates if no alternative existed. The dashboard compares original “base” rates to these proxies to provide a preliminary estimate of potential savings. In cases where base rates already lacked demand charges, proxy rates were not used and no savings were calculated.

Some utilities offer bundled rates (including generation, capacity, transmission, and delivery) while others offer distribution-only rates (limited to local delivery). Distribution-only rates apply in deregulated markets or where utilities separate generation and delivery services. Not all utilities offer both rate types.

Load profiles used in this analysis were provided by Lawrence Berkeley National Laboratory in September 2022. Effective rates are estimates and may differ from real-world billing outcomes.