Before the Public Utilities Commission of the State Of

Home , Crane Carrier Company, Kenworth, Mack Trucks, Peterbilt

1 BEFORE THE PUBLIC UTILITIES COMMISSION 2 OF THE STATE OF CALIFORNIA FILED 11/20/17 3 04:59 PM Application of San Diego Gas & Electric Application 17-01-020 Company (U 902E) for Approval of SB 350 (Filed January 20, 2017) Transportation Electrification Proposals.

Application 17-01-021 And Related Matters. Application 17-01-022

4 5 OPENING BRIEF OF CALSTART ON THE STANDARD REVIEW 6 TRANSPORTATION ELECTRIFICATION PROPOSALS FROM SAN 7 DIEGO GAS & ELECTRIC, SOUTHERN CALIFORNIA EDISON, AND 8 PACIFIC GAS AND ELECTRIC 9

19 Ryan Schuchard 20 Policy Director 21 CALSTART 22 2600 Tenth Street, Suite 407 23 Berkeley, CA 94710 24 Tel: (626) 744-5606 25 November 17, 2017 E-mail: [email protected]

1 / 11 26

27 BEFORE THE PUBLIC UTILITIES COMMISSION 28 OF THE STATE OF CALIFORNIA 29 Application of San Diego Gas & Electric Application 17-01-020 Company (U 902E) for Approval of SB 350 (Filed January 20, 2017) Transportation Electrification Proposals.

Application 17-01-021 And Related Matters. Application 17-01-022

30 31 OPENING BRIEF OF CALSTART ON THE STANDARD REVIEW

32 TRANSPORTATION ELECTRIFICATION PROPOSALS FROM SAN

33 DIEGO GAS & ELECTRIC, SOUTHERN CALIFORNIA EDISON, AND

34 PACIFIC GAS AND ELECTRIC 35 36

37 I. INTRODUCTION

38 In accordance with Rule 13.11 of the California Public Utilities Commission 39 (“Commission”) Rules of Practice and Procedure (“Rules”), and the April 13, 2017 “Scoping 40 Memo and Ruling of Assigned Commissioner and Administrative Law Judges,” CALSTART 41 submits this opening brief on the standard review proposals filed by the investor owned utilities 42 in A.17-01-020 et al. 43 CALSTART is a nonprofit organization that aims to accelerate the commercialization of 44 clean transportation technologies. CALSTART has over 175 organizational members including 45 vehicle and component manufacturers, transit agencies, goods movement operators, and other 46 commercial fleets. 47 Among CALSTART’s many activities, it leads the Electric Fleet Alliance (EFA), a 48 coalition of industry stakeholders who are seeking to deploy medium- and heavy- duty electric 49 vehicles. Members of the coalition include Anaheim Resort Transportation, Foothill Transit, the

2 / 11 50 San Diego Airport Parking Company, UPS, BYD, Efficient Drivetrains, Motiv Power Systems, 51 and Thor Trucks, in addition to Chanje, Clipper Creek, and Zenith Motors, three companies that 52 have joined since our filing on September 29. 53 In the following pages, we will refer to medium- and heavy- duty vehicles (MHDVs) and 54 medium- and heavy- duty electric vehicles (MHD EVs). This group is conventionally known as 55 Class 3-8 trucks, and includes on-road, off-road, people movement, goods movement, and 56 vocational work vehicles that have gross vehicle weight ratings (GVWR) of more than 10,000 57 lbs. 58

59 II. SCE AND PG&E MEDIUM AND HEAVY DUTY VEHICLE CHARGING 60 PROGRAMS 61 A. Introduction and SB 350 Transportation Electrification Policy, Goals and 62 Benefits

63 Testimony by CALSTART and other parties has established that significant large- 64 scale public investment in infrastructure and new rates that incentivize MHD EV growth in 65 California are needed now, without delay.

66 MHD EVs are currently on the road and available for purchase in California among 67 diverse classes and categories, as has been discussed in the proceeding and is further detailed in 68 the next section.1 A principal barrier to the widespread adoption of MHD EVs is their total cost 69 of ownership (TCO), which is comprised of the combination of vehicle, charging, and 70 operations-related costs. Currently, the TCO of MHDVs using diesel and natural gas tends to be 71 lower than for EVs on a per-mile basis, due in large part to fuel-related costs.2

72 Investor-owned utilities (IOUs), with authorization from the Commission, are in a 73 position to significantly resolve the high TCO of MHD EVs and hence promote their widespread 74 adoption by deploying publicly rate-based infrastructure and relatively beneficial rate packages 75 for vehicle charging. These types of investments and programs are needed for the success of, and

1 CALSTART (March 6, 2017). “Response of CALSTART in Support of the Application of Pacific Gas & Electric…” and CALSTART (March 6, 2017). “Response of CALSTART in Support of the Application of Southern California Edison…” 2 Ibid. 3

3 / 11 76 are supported by, public vehicle-based incentive funding programs, such as the Hybrid and Zero- 77 Emission Truck and Bus Voucher Incentive Project (HVIP), led by the California Air Resources 78 Board and administered by CALSTART.

79 The notion of “widespread adoption” of MHD EVs should be taken to mean that plug-in 80 electric drivetrains will be broadly available, sold, and deployed on the road in most or all sizes 81 and categories of MHDVs throughout the state, and that they are economically accessible to 82 public and private fleets, large and small.

83 The crucial widespread adoption of MHD EVs supports the core environmental benefits 84 of reducing greenhouse gas (GHG) emissions and petroleum use, and improving air quality.3 It 85 also serves to develop a new base of local manufacturing, jobs, and investments in California 86 that will strengthen the economy and reinforce the state’s position as a leader in clean 87 technology. This observation is made clear by the many California-based manufacturers and 88 suppliers who are members of CALSTART and the Electric Fleet Alliance, as well as who are 89 profiled in the next section.

90 91 B. Scope of Projects

92 It is evident that California’s MHD EV market is ready for PG&E and SCE’s 93 proposed infrastructure investments. Over the past few years, the battery technology industry 94 has made rapid advances that have given rise to market growth that was not widely predicted. 95 Class 8 transit has gone from being considered notable as a first point of entry for MHDV 96 technology to being a segment where electrification is gaining market share even faster than with 97 cars. As this has happened, the technologies and experiences associated with electric transit 98 buses have rapidly begun to be diffused into other MHDV categories. Just this week, Tesla 99 unveiled an all-electric Class 8 freight truck planned for production in 2019 that has 500 miles of 100 range and can climb major grades fully loaded at 60 mph (compared to 45-50 mph for more 101 conventional diesel trucks).4

3 CALSTART (August 1, 2017). “Opening Testimony of CALSTART on the Standard Review…” 4 See https://www.tesla.com/semi/

4 / 11 102 In the cross-examination of PG&E’s David Sawaya by Clean Energy (September 25, 103 page 201, line 27 through page 204, line 16), Mr. Sawaya outlined examples of some such MHD 104 EVs that are available in California. A wider set of MHD EVs that are either currently available 105 in California or scheduled to be available by 2019 include the following:

106 Heavy Duty (GVWR 26,001+ lbs) 107 » Class 8 transit bus: BYD, Complete Coach Works, Gillig, GreenPower, New Flyer 108 Industries, Nova Bus, Proterra 109 » Class 8 refuse truck: BYD, Motiv Power Systems, Crane Carrier Company, Peterbilt 110 » Class 8 terminal truck: BYD, Hoist Liftruck, Kalmar, and Orange EV 111 » Class 7-8 school bus: Blue Bird, Lion, GreenPower, IC Bus, Thomas/Daimler, 112 » Class 7-8 drayage and local freight truck: BYD, Crane Carrier Company, Cummins, 113 Freightliner, Kenworth, Mack Trucks, Peterbilt, Tesla, and Thor 114 115 Medium Duty (GVWR 10,001-26,000 lbs) 116 » Class 5-6 work trucks and buses: Amp Workhorse, BYD, Morgan Olson, and Zenith 117 Motors 118 » Class 4 shuttle and school bus: Ameritrans Bus, Motiv Power Systems, Starcraft Bus, 119 Phoenix Motorcars, Trans Tech Bus 120 » Class 4 work truck and delivery van: BYD, California Truck Equipment Company, 121 Chanje, Ford, FUSO 122 » Class 3 cargo and shuttle van: Zenith Mentors 123 » Class 3 utility truck: Bollinger 124 125 Many of the companies listed above are supported by California-based electric 126 powertrain and components suppliers including BAE Systems, Efficient Drivetrains (supplying 127 Blue Bird, Morgan Olson and Thomas/Daimler), Motiv Power Systems (supplying Ameritrans 128 Bus, Crane Carrier Company, Ford, Morgan Olson, Starcraft Bus, and Trans Tech Bus) and 129 TransPower (supplying Peterbilt). 130 The above list represents a very meaningful share of all MHDV categories. Perhaps more 131 significant, conventional large truck manufacturers such as Daimler, Mack, and Peterbilt are 132 investing in electric drivetrain capability by piloting and working closely with advanced

5 / 11 133 technology partners including the ones above. We expect that as infrastructure and attractive 134 rates for MHD charging become available, these types of companies, which serve the majority of 135 the truck market, could potentially be in a position to diffuse EVs within their portfolios and 136 provide dealership and service programs that reach mass markets. 137 The aforementioned vehicles focus on class 3-8 trucks and buses, but it is also significant 138 that electrification is happening in surrounding vehicle categories as well. For example, electric 139 trucks are being introduced in the “heavier light duty” classes, such as all-electric pickups by 140 Workhorse and Lightning Electric. Also, CALSTART and its partners are now working to 141 deploy light electric aircraft (Pipistrel) for full service operation in California. 142 143 C. Implementation of Projects 144 145 1. Program Design

146 It is evident that the full size and duration of PG&E and SCE’s proposed 147 infrastructure investment programs are needed, and we recommend that they be fully 148 authorized. The infrastructure programs proposed by PG&E and SCE address the high cost of 149 local grid and power supply upgrades ($500,000 – $600,000 or more) which fleets are currently 150 responsible to pay for on their own.5 The utilities’ proposed solutions are broadly accepted by the 151 industry and resolve a principal barrier to truck and bus electrification in their territories. 152 The full size of the programs is necessary because the potential market demand is large. For 153 example, in a single appropriation, California’s state legislature recently allocated $180 million 154 for commercial vehicles (AB 134). We estimate this investment could yield 900-1,000 MHD 155 EVs on the road, but to facilitate the greatest uptake, this and future investments need to be 156 paired with infrastructure that serves the breadth and diversity of the market. 157 In addition to the full size of the programs, the complete duration of the programs need to be 158 maintained, because vehicle technology manufacturers and fleets are planning over the whole 159 economically-feasible lifespan of vehicles, which can exceed a decade. Any shortening of 160 program commitments would undermine the stability that is needed to encourage fleets’ 161 maximum investments in MHD EV adoption. To that end, it would be helpful if the utilities and

5 CALSTART (August 1, 2017). “Opening Testimony of CALSTART on the Standard Review…”

6 / 11 162 Commission provided signals to the marketplace that additional waves of infrastructure 163 programs following the one currently being heard are already being considered. 164 165 2. Rate Design

166 In order to accelerate MHD EV adoption, utilities need to offer rates that broadly 167 entice commercial fleets. Such rates should be concerned with at least two different objectives:

168 Objective #1: Initial Deployments. Each fleet operator individually must weigh the 169 costs and benefits of piloting MHD EVs for the first time on their own. For fleet operators new 170 to MHD EVs, the cost of electrification is sensitive to issues with which they may have little 171 experience—in particular, demand charges and time of use, which can easily double the price of 172 fuel on a per mile basis, as described in previous testimony.6 Hence, a design feature that we 173 expect will help persuade fleets to pilot MHD EVs in the first place is rates that help to contain 174 the risk and complexity associated with grid-related fees by eliminating, putting a ceiling on, or 175 providing insurance against unexpectedly high demand charges. We believe that such a design 176 feature will benefit small and large fleets alike.

177 Objective #2: Large-Scale Adoption: Commercial fleet operators are typically drawn to 178 vehicle-fuel systems that ultimately have a superior TCO. Hence, for a fleet operator to phase 179 MHD EVs into its vehicle pool in large numbers after an initial trial deployment, the operator 180 would generally need to believe that doing so would offer expected cost savings. Such an 181 operator might be motivated by the prospect of playing an active part in managing control 182 strategies, storage, and/or distributed generation in exchange for very low rates. For a sufficiently 183 low average rate, the operator might be willing to not only bear the responsibility of managing 184 high demand charges on their own, but to create return value for utilities, for example, by 185 becoming a large-scale offtaker of surplus generation and/or offering inbound vehicle-to-grid 186 services. In essence, some fleet operators that are considering MHD EV deployments in larger 187 numbers will be motivated to save fuel costs by managing the very nuances that a newcomer to 188 MHDVs may want to avoid. New rate designs are needed to assist with this objective.

6 CALSTART (August 1, 2017). “Opening Testimony of CALSTART on the Standard Review…”

7 / 11 189

190 In addition to the primary objectives mentioned above, rate design that aims to achieve 191 widespread MHDV electrification should also take care to provide advantageous charging rates 192 for fleet operators in the following situations:

193 » Varied charging profiles: Fleets that have a combination of fast and slow charging, such 194 as a transit fleet with mostly slow in-depot charging but with targeted on-route fast 195 charging needs; 196 » Renters in multi-tenant leases: Companies that do not have control over the master utility 197 agreement, but that wish to make use of sub-metered rates, such as a delivery business in 198 an office park; 199 » Small businesses: Small companies that need to rely significantly on offsite charging at 200 third-party owned charging stations, such as a small delivery business; and 201 » Operators that seek full-service outsourcing: Fleets that wish to use a third-party operator 202 that would provide a single contracting point for a network of charging stations across 203 multiple utility territories.

204 In conclusion, utilities that aim to accelerate widespread electrification of MHDVs should 205 be working to provide rates that serve the objectives and that are considerate of the special 206 situations outlined above. (The objectives and situations outlined are not exhaustive.)

207 a. PG&E

208 We recommend that PG&E develop a rates package which encourages both initial 209 deployments and large-scale adoption, as discussed above. Doing so is consistent with 210 PG&E’s recommendation in its rebuttal testimony (p. 1-20), which we support. In encouraging 211 these initial deployments, we would welcome PG&E to either generally follow the example of 212 SCE in its proposed rage package (EV-7, EV-8, EV-9), or develop its own approach.

213

214 b. SCE

215 SCE’s proposed rate package appears to be a solid approach that supports initial 216 deployments, and we recommend that it be authorized. SCE’s rate package (EV-7, EV-8, 217 EV-9) that eliminates demand charges offers an important entry-level solution by reducing the 218 financial risk and complexity for fleets that are new to EVs.

8 / 11 219 As designed, the rate package under discussion would begin to phase the demand charge 220 back in from years five to ten. We believe that a phase-in during that timeframe is sensible, and it 221 is a reasonable hypothesis that the market will be ready at that time. However, such a phase-in 222 should be contingent on readiness, and there is significant uncertainty with respect to how the 223 industry will be prepared to manage demand charge challenges by then. Hence, we propose that 224 either SCE or another authority publish an annual or other intermediate assessment of the market 225 leading up to year five, and provide a determination and recommendation regarding whether the 226 phase-in schedule in the planned timetable still makes sense or if it needs to be revised. SCE 227 should then be authorized to act accordingly.

228 A key feature of SCE’s rate package is that it eliminates the risk and complexity of 229 demand charges, and keeps the overall rate cost-neutral by folding the expected demand charges 230 back into a relatively higher volumetric energy rate. The result is a rate that invites fleets to pilot 231 EVs with lower financial and administrative downsides, while being consistent with the principle 232 of cost causality, and not creating subsidies that create a burden on other rate classes. This is a 233 novel approach that we support. Additionally, a separate and distinct rate package is needed to 234 incentivize larger-scale deployments by giving fleets an opportunity to realize relatively low fuel 235 costs, as discussed earlier in this section. Therefore, we recommend that SCE, along with PG&E 236 begin to develop such rates, in addition to EV-7, EV-8, and EV-9.

237 238 D. Other Issues

239 Making widespread electrification of MHDVs a reality in California will require 240 thousands of fleets to soon be deciding to pilot MHD EVs, for them to then have successful 241 experiences, and for them to then again decide to adopt MHD EVs at a large scale. We believe 242 that these outcomes have the best chance of happening if utilities’ core outreach and marketing 243 programs are buttressed by an additional dedicated technology center dedicated to studying 244 market uptake and providing impartial, expert advice to commercial vehicle fleet operators. Such 245 a center would be led by an organization and staff that has deep expertise and relationships with 246 both commercial fleet operators and commercial vehicle technology in California, and which 247 would work to bring those fleet operators into close contact with the utilities in order to facilitate 248 the development of strong, positive uptake of the utilities’ programs.

9 / 11 249 We therefore recommend that the Commission either issue a funding solicitation, or 250 direct the utilities to issue a solicitation, for the development of a MHD EV technology center 251 focused on vehicle purchasing and adoption trends and dynamics that the utility would work with 252 closely. CALSTART is well-positioned to lead such a facility.

253 254 E. Conclusion

255 As we have discussed throughout the proceeding, commercial fleet operators do not have 256 an intrinsic interest in drivetrains that are electric as compared to internal combustion engines. In 257 order to make electrification of MHD EVs attractive, the combination of vehicles, infrastructure, 258 and fuel pricing needs to provide a superior value proposition on a TCO basis. Two of the 259 principle drivers of the existing high TCO of MHD EVs—the high cost of power supply 260 upgrades and lack of incentives relevant for both initial fleet adoption and larger scale 261 deployments—are factors that utilities are in a strong position to influence. 262 With the recommendations above, we believe that California’s IOUs will be in a position 263 to make significant contribution towards realizing the widespread adoption of MHDV 264 electrification. CALSTART continues to stand with the many other commenters representing a 265 diversity of climate, environmental justice, community health, and industry interests who have 266 called for expeditious approval of the PG&E and SCE infrastructure programs as proposed. We 267 also recommend that PG&E develop an “initial deployment” MHDV rate package, and that both 268 PG&E and SCE begin developing an additional rate package that provides an advantageous 269 value proposition for fuel costs that will encourage fleets to adopt vehicles on a large scale. 270

10 / 11 271

272 III. SDG&E RESIDENTIAL CHARGING PROGRAM

273 We recommend that SDG&E develop an infrastructure proposal for MDH EVs on a 274 similar scale and scope as those of PG&E and SCE, commensurate with the size of SDG&E’s 275 territory. We also recommend that SDG&E develop a rates package that is designed to both 276 encourage initial deployments and large-scale adoption, as we have suggested for PG&E. The 277 market situation in SDG&E’s territory is similar to that of PG&E and SCE’s in most meaningful 278 respects, and it is clear that native fleets and OEMs there, in addition to the state’s programs for 279 vehicle-side incentives, would benefit from such programs.

280

281 282 283 Dated: November 17, 2017 284 285 Respectfully submitted, 286 287 /s/ . 288 Ryan Schuchard 289 Policy Director 290 CALSTART 291 501 Canal Boulevard, Suite G 292 Richmond, CA 94804 293 Telephone: 626-744-5606 294 Email: [email protected]