Ontario to Offer New Lower EV Charging Rates to Charging Station Owners

On May 1, 2024, Ontario’s Minister of Energy Todd Smith announced that he has asked the Ontario Energy Board (OEB) to explore options for an Electric Vehicle Charger Discount Electricity Rate to support the adoption of electric vehicles (EV). As stated in the announcement, the “new rate would reduce the cost of electricity for public EV chargers in areas where demand for the service is only beginning to emerge” with the goal of making EV charging more available and affordable.

On the same day, the OEB issued an invitation to stakeholders for a meeting on June 13, 2024, to “discuss a proposal for an electricity delivery rate for public EV charging stations that have a low load factor, which aims to further facilitate the integration of EV chargers with the electricity system.” In its invitation, the OEB points to a report issued by Power Advisory in April 2023 that discussed various rate options for EV charging aimed at increasing EV adoption. One of the recommended options is a “low load factor rate.” Effectively, this allows the EV charging station owner to pay less for electricity service than other customers with similar characteristics, presumably to pass along those savings to EV charging customers. The proposed new rate is aimed at incenting more EV charging infrastructure development and to expand the coverage of EV charging infrastructure. Each of those outcomes would be expected to encourage EV adoption. One application of the new rate structure could be for “fast charging” EV stations, which typically exhibit high peak demand requirements but may experience lower overall usage.

As set out in the OEB’s notice, OEB staff has developed a proposal for an EV charging rate that “improves cost causality and better supports the efficient integration of EVs in Ontario.” This will be a topic of discussion at the June 13, 2024, meeting. The OEB staff proposal is not yet available – when ready, it will be posted here.

This project fits within the OEB’s broader Electric Vehicle Integration initiative. Tasks already completed include residential rate design to accommodate and encourage EV adoption (see our previous post titled Ultra-Low Overnight Electricity Rate Supporting EVs to Become Available in 2023) and amendments to the Distribution System Code to make connection of EV charging infrastructure easier.

The Ontario government has announced an intention to have the new rate for EV chargers available by January 1, 2026. It is not yet clear how the lower electricity rates would be funded. Presumably, that is among the items that will be discussed through the OEB consultation.

Around the same time that the Ontario government and the OEB announced this new initiative to consider a lower EV charging rate for some facilities, a session was held at the annual CAMPUT conference which asked the question of what can regulators do to encourage public EV charging infrastructure. Through this session, it was clear that an overriding barrier to EV adoption is availability of public charging infrastructure. The provinces with higher levels of EV charging infrastructure (and, to be fair, higher purchase incentives) are the provinces with the highest adoption rates. Presenters at CAMPUT noted that if Canada is to meet its goal of full EV (or zero emissions vehicle) adoption for new cars by 2035, then there is a need for an immense growth in infrastructure – roughly a 16-fold increase in public EV chargers is needed. Whether there is a role for the federal government in this evolution is an interesting question. Regardless, provincial policies, such as the one just announced in Ontario to encourage EV charging infrastructure, will be important.