California Dreamin’ … Of Higher Utility Bills

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Last week the California Public Utilities Commission unanimously approved over $768 million to build electric vehicle (EV) infrastructure and EV use—and very kindly stuck ratepayers with the bill.

 

While news coverage—and the Commissioner—touted California’s leadership and vision, they failed to account for several realities.

 

The first is that electric vehicles are still largely restricted to wealthier households. A recent EIA report found that 67% of EVs were purchased by households with $100,000 or more in annual income. This echoes numerous other studies that have found that EVs are disproportionately purchased by wealthy households and therefore subsidies, tax credits, and benefits disproportionately accrue to those same households—effectively penalizing the low- and middle-class families whose tax dollars go to provide these benefits.

 

The utilities’ plans ostensibly sought to address this inequality by “locating infrastructure in disadvantaged communities, in an effort to make charging accessible.” Which would be admirable, except that it ignores a critical fact: EVs are overwhelmingly purchased by wealthy households because various constraints—the primary one being high prices—make EVs unsuitable for many as a primary vehicle. The likely outcome, therefore, are unused chargers sitting in neighborhoods of people for whom electric vehicles are either impractical or out of reach … but who are forced to pay higher utility bills all the same.

 

Similarly, the millions dedicated to increasing the number of EV charging stations are likely to make it more convenient for wealthy families to keep the Tesla charged, while making it harder for lower-income families to keep the lights on. As a recent study concluded, “EV subsidies also represent a wealth transfer from lower-income people to higher-income people and, therefore, could have negative consequences on overall income distribution.”

 

And California doesn’t need any help in the income inequality arena. After all, it has a poverty rate of over 20%—the highest state poverty rate in the nation, according to the US Census Supplemental Poverty Index. (This Index, which includes the cost of housing, food, clothing, and utilities, is considered a more accurate measure than arbitrary poverty lines.)  That’s one out of five residents who are already struggling to make ends meet … without the upcoming increases to fund this infrastructure overhaul.

 

Sadly, the current financial burden is, by all accounts, only a drop in the bucket. As an EarthJustice attorney stated, “I think this money is going to go quickly, and I think we’re going to see the need for even more investment.” That jibes with a recent study from the Manhattan Institute, which found that California’s price tag for widespread EV adoption may well exceed $100 billion.

 

So while some wealthy Californians will be living “the EV dream,” low- and middle-income taxpayers will be left footing the bill.