Thursday, August 12, 2010

How Much Will Driving an Electric Car Save You?

Electtic cars

How much will driving an electric car save on transportation costs? It's one of the biggest questions people have as they consider the switch from internal combustion to electric drive. For people accustomed to per gallon calculations, entering the world of plug-ins involves a bit of new thinking and some extra consideration.

Across the U.S., electricity rates vary from lower than 3 cents per kWh in central Washington state to more than 27 cents per kWh in Hawaii. In some regions, such as much of California, electricity rates vary drastically by the time of day the electricity is being used (it becomes more expensive during high demand periods, typically the middle of the day). Given these huge variations from state-to-state, and sometimes hour-to-hour, figuring out how much you might save by driving an electric car can get to be a bit tricky.

For those of you not interested in the particulars, suffice it to say that, even at 27 cents per kWh (currently the most expensive in the U.S.), you will be paying about half as much per mile in "fuel" costs as your average family sedan at $3 per gallon gas. On top of that, you won't have to go to the service shop for oil changes anymore (saving about $30 every 3-4 months for most Americans). And, at the average US electricity rate of 12 cents per kWh, you would be paying about a quarter as much for "fuel" costs—dropping your yearly fuel bill from about $1,400 to $350.

But what if you live in an area that has time-of-day use charges? Will you always be able to charge in the wee hours of the morning when rates are lowest? How do you start to figure out how much it might cost you to charge your vehicle every month? Detroit Edison (DTE), a Detroit, Michigan, utility company, has decided to experiment with charging rates for electric vehicles to help satisfy consumer anxiety about the issue.

Yesterday, the Michigan Public Service Commission (MPSC) approved two rate options for eligible DTE EV customers: one that provides a lower rate for charging during low demand periods (between 11 p.m. and 9 a.m. Monday through Friday) and another that provides for a monthly flat fee of $40 per vehicle no matter how many kWhs are used.

"As manufacturers begin to sell plug-in electric vehicles, it is important that Michigan's electric utilities be ready as well," said MPSC Chairman Orjiakor Isiogu. "The program approved today will help Detroit Edison evaluate the effect of electric vehicles on its electric system, offers off-peak rates that customers can use to charge vehicles, and offers the infrastructure required to charge these vehicles."

The experimental electricity rates will initially only be available to 2,500 residential customers. As part of the program, the users will be eligible for up to $2,500 of installation of a separately metered circuit and charging station, or will have up to $2,500 of installation costs reimbursed by the installing company if their station meets the program's needs. If participants want to take advantage of the grant money, they will need to sign an agreement with DTE that specifies the "terms and conditions regarding the use of such equipment."

So is the flat fee worth it? It appears that DTE off peak rates average about 9 cents per kWh, and on peak rates are about 16 cents per kWh. For the sake of comparison, if you were able to charge your vehicle completely off peak (I know it's unlikely, considering you'd need to charge it on the weekends), you'd spend about 2.25 cents per mile driven. At those rates, in order to make the flat $40 rate worth it, you'd have to drive more than 1,800 miles per month (21,600 per year).

I know my numbers are speculative because DTE hasn't announced their rates for the experimental program yet and I'm just going off of what they currently charge for off-peak usage, but even so, 21,600 miles per year is a lot of mile for a vehicle that goes 100 miles on a charge. It's possible, but you'd have to drive almost 60 miles each and every day. If that sounds like your driving pattern, and you live in Detroit, the $40 flat fee could be worth it. In any event, the program is enticing if only for the $2,500 charging station installation grant.

source: plugincars