Ohm my Gosh: The Shocking Hidden Costs of Electric Vehicles

Hybrid Car

2011 Honda Insight hybrid

For most consumers, the idea of a vehicle that uses only, or mostly, electricity seems like a good way to save money in this time of high gas prices. But if you live in a state with high electricity rates, as I do, all-electric vehicles like the Nissan Leaf, or mostly-electric vehicles like the Chevrolet Volt, may cost you more than driving a hybrid like the Toyota Prius or Honda Insight. And maybe even more than an economical traditional small car.

 Here in California we pay about 35 percent more than the national average for electricity. We also use a multi-tiered system that charges households higher rates each for using more power.

 A Purdue University study released in January shows that the energy consumed by rechargeable vehicles is likely to mean that households that have these cars could be in for a shock, and I’m not referring to electrons. Where I live, in San Jose, we pay Pacific Gas and Electric12 cents per kilowatt hour, or Kwh (that’s equal to burning one watt for a thousand hours or a thousand watts for one hour) for the first 294 Kwh each month. Additional watts, up to 382 Kwh each month, are charged at the Tier 2 rate of 14 cents, . If a customer moves into Tier 3 pricing, the rate goes up to a whopping 29 cents. Yikes! That’s 2 ½ times the Tier1 rate. The idea is to discourage households from wasting all that energy, and PG&E isn’t grousing about the windfall either.

 That’s where the problem with rechargeable vehicles comes in. At Tier 3 and higher rates in the summer, it could cost customers in my area as much as 40 cents per Kwh to charge their cars. And even with rate plans that charge less for nighttime usage, it can be expensive to charge your car.

 California’s idea is to get folks to use less power in order to save on the state’s energy demands may backfire when it comes to inducing consumers to move to low-polluting electric cars. According to the Purdue study the plug-in Chevy Volt would increase average Americans’ electrical usage by 60 percent.

 In California, once you figure in the high sticker prices of electric vehicles – even after the income tax breaks that currently come with them – you would save money by instead buying a Prius, Insight, Honda Civic Hybrid, or even a regular high-mileage subcompact.

On the other hand, if gasoline prices rise to astronomical levels based on crude oil prices of over $170 per barrel, the picture will change in favor of all-electrics. In the meanwhile, Indiana, where households pay a flat eight cents per Kwh, might be the best example of places where electric vehicles make the most sense and the most cents.

 A bright note: California utilities are experimenting with programs that would charge – and, uh, bill, electric vehicles at a different rate from the rest of household use. This would encourage consumers to buy low-polluting vehicles and might even lower demand to the point where gasoline prices would moderate a bit.