Michigan Utility Customers Subsidizing High-End Electric Cars
State’s big utilities giving subsidies for plug-in charging stations
In a push to encourage drivers to shift from gas-powered cars to plug-in electric vehicles, Consumers Energy recently announced a program to subsidize the installation of charging stations. Dubbed the PowerMIDrive program, the Jackson-based gas and electric utility’s initiative pays EV owners $400 subsidies to install car chargers at home. It also provides businesses amounts ranging from $5,000 to $70,000 to put chargers in their parking lots.
Most of the payments so far have gone to individuals and companies in nine counties, subsidizing some 50 charging stations altogether. They are: Charlevoix, Muskegon, Kent, Allegan, Kalamazoo, Calhoun, Jackson, Saginaw and Midland counties.
DTE, Michigan’s other big utility company, has introduced a similar program in its territory, giving individuals $500 rebates for installing home EV chargers. Businesses can receive $2,500 per charging port and $20,000 per commercial charger.
Earlier this year, the Michigan Public Service Commission allowed the companies to cover the cost of the subsidies with a portion of the bills paid by all customers. This could raise fairness issues, since, with their limited range, plug-in EVs are generally regarded as beyond the means of most poor and working-class households.
Plug-in electric vehicles rely solely on rechargeable batteries for power. When their batteries are depleted, recharging can take anywhere between 30 minutes to 12 hours, making the cars impractical for longer trips. A survey by CarMax found that 42% of EV owners use a second car that they own for trips beyond the range of their EV — presumably, a second car powered by gasoline.
The same survey discovered that 65% of EV owners are older than 40, over 70% are college-educated, and almost 70% make more than $75,000 per year. A 2013 study by the University of California-Davis found that nearly half (46%) of the households that bought plug-in electric vehicles in California had incomes of higher than $150,000 (the highest category in the survey).
According to the U.S. Census Bureau, the median household income in Jackson County from 2013 to 2017 was $31,118, and only 16% of its residents had a bachelor’s degree or higher. Yet eight individuals and businesses there are receiving subsidies for eight charging stations. In Muskegon county, where four persons are getting charger subsidies, the median household income was $46,000 during the same period, and a mere 18% of residents had a bachelor’s degree. In Saginaw County, the median household income was $46,000 and just 21% of residents had a bachelor’s degree, yet five persons there are getting charger subsidies.
“It’s reverse Robin Hood: stealing from the poor to give to the rich,” said Jason Hayes, director of environmental policy at the Mackinac Center.
Consumers Energy said that the program is a preemptive strategy, and it anticipates increased EV use in the next decade. Katie Carey, director of media relations for Consumers Energy, cited a study by the Edison Electric Institute, which predicts that over 18 million EVs will be on the road by 2030.
“When I read that research, I can see pretty clearly that the demand for EVs by the public will increase,” Carey told Michigan Capitol Confidential. “Therefore, we, as their electric utility, will need to ensure the electric grid is prepared to capture the benefits for our customers from the growing electric vehicle market.”
Hayes has a different perspective.
“Go ahead and prepare,” he said, “but use your own money to do it. Consumers Energy shouldn’t rate base this unless they also want to rate base gasoline and diesel fuel facilities for all the other customers.”
Hayes added that he has no problem if the company wants to invest its private funds into EV infrastructure, “but when they use the force of the government to push me, an unwilling participant, into funding their business exploits, that’s a totally different thing.”
Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.