Designing Distribution Network Tariffs in the US with an Application to Increased Electric Vehicle Adoption

Time-of-use (TOU) tariffs that vary the cost per kWh to reflect wide variations in generation and wholesale market costs give incentives to shift all electric vehicle (EV) charging to low-price periods. As EV penetration increases, such tariffs would substantially raise the local kW demand in those low-priced periods, which eventually would lead to increasing network expansion costs. A straightforward way to mitigate this problem is to separate energy charges from network charges, with appropriate rate designs for each. This paper uses a realistic case study to investigate the implications of combining TOU energy charges with various network tariff designs in the face of increased EV penetration. Our results provide support for the adoption in the US of ex-ante subscribed capacity tariffs (subscription charges), which give consumers incentives to reduce their peak kW demands. Reducing costs of EV ownership (a priority for many US states) need not be pursued at the expense of broader affordability goals. JEL classification: L51, L94, L97, Q41, D40

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Publication Details

Journal
The Energy Journal
Published
2025-09-09
DOI
https://doi.org/10.1177/01956574251365616
Primary Topic
Electric Vehicles and Infrastructure
Type
article
Field-Weighted Citation Impact
0.00
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article

Designing Distribution Network Tariffs in the US with an Application to Increased Electric Vehicle Adoption

Tim Schittekatte, Paul L. Joskow, Pablo Dueñas-Martínez, Richard Schmalensee et al.
The Energy Journal
Electric Vehicles and Infrastructure
article

Designing Distribution Network Tariffs in the US with an Application to Increased Electric Vehicle Adoption

Tim Schittekatte, Paul L. Joskow, Pablo Dueñas-Martínez, Richard Schmalensee, Graham Turk
article en

Abstract

Time-of-use (TOU) tariffs that vary the cost per kWh to reflect wide variations in generation and wholesale market costs give incentives to shift all electric vehicle (EV) charging to low-price periods. As EV penetration increases, such tariffs would substantially raise the local kW demand in those low-priced periods, which eventually would lead to increasing network expansion costs. A straightforward way to mitigate this problem is to separate energy charges from network charges, with appropriate rate designs for each. This paper uses a realistic case study to investigate the implications of combining TOU energy charges with various network tariff designs in the face of increased EV penetration. Our results provide support for the adoption in the US of ex-ante subscribed capacity tariffs (subscription charges), which give consumers incentives to reduce their peak kW demands. Reducing costs of EV ownership (a priority for many US states) need not be pursued at the expense of broader affordability goals. JEL classification: L51, L94, L97, Q41, D40

The Energy JournalVol. 46(6)
Massachusetts Institute of Technology (US), European University Institute (IT), Universidad Pontificia Comillas (ES)
Openalex Percentile: Top 76%
Electric Vehicles and Infrastructure
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