In this web post, we assess and make recommendations regarding the Governor’s proposal for Department of Transportation electric vehicle charging stations.
The 2018-19 Budget: Transportation ProposalsReport Feb 17, 2017
The 2017-18 Budget: Transportation Funding PackageReport Mar 2, 2015
The 2015-16 Budget: Transportation Proposals
The California Department of Transportation (Caltrans) is responsible for planning, coordinating, and implementing the development and operation of the state’s transportation system. These responsibilities are carried out in four programs. Three programs—Highway Transportation, Mass Transportation, and Aeronautics—concentrate on specific transportation modes. Transportation Planning seeks to improve the planning of all modes.
The Governor’s budget proposes total expenditures of about $10.9 billion for Caltrans in 2017-18. This is $1.3 billion, or 14 percent, higher than the estimated current-year expenditures. This increase primarily reflects the availability of new transportation revenues from the Governor’s proposed transportation funding package. Most of the proposed spending for Caltrans supports the department’s highway program, which includes $3.6 billion for capital outlay, $2.5 billion for local assistance, $1.9 billion for highway maintenance and operations, and $1.8 billion to provide support necessary to deliver capital highway projects. The total level of spending proposed for Caltrans in 2017-18 supports about 19,000 positions at the department and several thousand transportation improvement projects statewide.
LAO Bottom Line. The Governor proposes up to $40 million in 2017-18 for Caltrans to build electric vehicle charging stations at seven locations along the state’s highways, such as highway rest stops. In order to determine whether the administration’s plan is consistent with legislative priorities, we recommend that the Legislature require Caltrans to provide additional details on the cost and location of the proposed charging stations. We also recommend having Caltrans report at budget hearings on alternative funding sources available to pay for the proposed charging stations.
The Governor’s 2016 Zero Emission Vehicle Action Plan, among other goals, calls for the installation of 30 new public “direct current (DC) fast-charging stations”—electric vehicle charging stations that can recharge the battery of an electric vehicle to an 80 percent charge in 30 minutes—at highway rest stops or other Caltrans properties. The plan establishes a goal of constructing these charging stations by December 2018. To date, Caltrans has constructed one DC fast charging station that was funded with grants received from other public entities and the local utility provider.
The Governor’s budget includes provisional language to allow Caltrans to spend up to $40 million—$20 million from the State Highway Account (SHA) and $20 million from federal funds—to construct DC fast charging stations at seven locations in 2017-18. Specifically, the provisional language provides this funding from the State Highway Operation and Protection Program (SHOPP)—the state’s program for rehabilitating and operating state highways. The seven locations would provide a total of fourteen charging stations, or an average of two charging stations at each location. The proposal is the first year of a two-year effort to build charging stations at 30 locations as stated in the Zero Emission Vehicle Action Plan. Caltrans plans to request funding for the remaining 22 locations as part of the 2018-19 budget process.
The department indicates that the provisional language would provide flexibility as the precise amount of federal or SHA funding needed is not known at this time for a couple of reasons. First, the department plans to pursue various grants and other funding sources that would reduce the need for SHA or federal funds. Second, Caltrans is still in the process of developing per location cost estimates for the charging stations, which are expected to range from $1.1 million to $3.8 million for each location.
The construction of electric vehicle charging stations along the state’s highways would assist motorists who drive electric vehicles and would also support the state’s overall efforts to mitigate the environmental effects from motor vehicles. Accordingly, the intent of the Governor’s proposal is laudable. However, as we discuss below, the specific details of the proposal raise concerns.
Proposal Driven by Administration’s Plan. This proposal is driven by the administration’s policies, including its Zero Emission Vehicle Action Plan. The Legislature will want to determine whether it concurs with the plan’s goals to build publicly accessible electric vehicle charging stations, particularly in light of its priorities for limited state funding.
Lacks Key Details. The proposal also lacks certain key details, making it difficult for the Legislature to evaluate the proposal. Specifically, the proposal does not identify the 30 locations proposed for electric vehicle charging stations, including the 7 locations proposed for construction in 2017-18. Without this information it is impossible for the Legislature to determine the potential benefits from the proposal or to ensure that the overall scope of the effort will be effective. In addition, the proposal lacks specificity with regard to the associated costs for each charging station and only provides a large range of potential costs. Based on the range of costs identified, it appears that the construction of all 30 stations would range from about $30 million to about $110 million.
Use of SHOPP Funding Is a Policy Change With Broader Implications. State law establishes SHOPP as the state’s program of capital projects to rehabilitate and operate state highways. Caltrans generally does not use SHOPP funds to assist motorists with the operation of their vehicles, such as by providing fueling stations. As such, the Governor’s proposal would use provisional budget language to create an entirely new category of potential SHOPP projects. This approach is problematic because it circumvents various requirements in state law for Caltrans to plan and identify needs and priorities in SHOPP. Specifically, state law requires the development of a ten-year plan that identifies longer-term needs and goals, the identification of a four-year program of specific projects to be funded, and the review and approval of the program of projects by the California Transportation Commission (CTC). The proposed electric vehicle charging stations are not included in the current ten-year SHOPP plan, or in the four-year program of specific projects.
Thus, the proposed expenditures have not been evaluated under the same process as other SHOPP projects to allow for Caltrans and CTC to weigh the trade-offs of funding electric vehicle charging stations against other priorities. However, the trade-offs of the proposal appear significant because it would mean fewer highway repair projects would be funded from SHOPP. Specifically up to $40 million in SHOPP highway rehabilitation projects that would otherwise be funded in 2017-18 will instead be deferred. Funding the remainder of the planned charging stations in 2018-19 from SHOPP would result in deferral of additional projects, with a two-year total of up to $110 million in deferred highway rehabilitation projects. The department’s proposal does not identify which specific highway rehabilitation projects will be deferred, or provide a description of its process for selecting which projects to defer.
Other Funding Sources Might Be Available. The Governor’s proposal would provide up to $40 million in 2017-18 towards electric vehicle charging stations, with half coming from the SHA and half coming from federal funds. However, there are other funding sources that potentially could fund this proposal. For example, the California Energy Commission’s Renewable Fuel and Vehicle Technology Program provides grants to deploy technologies that shift California's fuel and vehicle types to help attain the state's climate change policies. This program has provided funding to state agencies to install charging stations in the past. Some other potential funding sources include cap-and-trade auction revenues, court settlements with Volkswagen and NRG Energy, as well as various utility programs. Using these other funding sources also involve trade-offs, particularly reducing the funds available for other eligible projects. However, given other demands on SHA and federal funding for SHOPP, it is worth fully exploring the feasibility of these and other funding sources.
The department indicates that it has been exploring the use of other funding sources, and its proposed budget bill language is intended as a backstop in case other funds are not identified to fully fund the costs of the seven charging locations in 2017-18. However, some alternative state funding sources might only be available if the Legislature makes the necessary appropriation in the budget.
Ensure Consistency With Legislative Priorities. We recommend that the Legislature determine whether the administration’s goal of building electric vehicle charging stations at highway rest stops is consistent with its policy and funding priorities prior to taking action on the Governor’s proposal. In doing so, the Legislature will want to have better information on the costs and benefits associated with the proposal to inform its budget deliberations. Specifically, we recommend that the Legislature require Caltrans to provide at budget hearings a more refined estimate of the total cost of a proposed project and identify the locations where the charging infrastructure will be installed.
Direct Caltrans to Report on Other Funding Sources. After receipt of this information, if the Legislature decides to approve the request, it will then want to determine an appropriate funding source. In order to assist the Legislature in identifying potential funding sources, we recommend that the Legislature require Caltrans to report at budget hearings about other funding sources it has considered and provide an update on its efforts to identify other potential sources of funding.