Rate-Design Best Practices for Public Electric-Vehicle Chargers

This policy brief by RMI argues that traditional utility demand charges are a significant barrier to the viability of public direct current fast charger (DCFC) networks. Based on an analysis of EVgo stations in California, the document recommends shifting cost recovery from demand-based charges to time-varying volumetric rates to support the societal objective of vehicle electrification.

• Utility demand charges—fees based on peak monthly electricity consumption—can account for more than 90 percent of a public DCFC station's electricity costs, depending on the tariff and utilization rate. This creates a financial disconnect because revenue depends on energy sales (kWh), which can vary by up to 70 percent monthly, while demand charges remain relatively stable with only about 16 percent variation.
• Traditional demand charges are ill-suited for public DCFC because charger operators cannot control when customers use the equipment, unlike the commercial or industrial customers for whom these charges were designed. RMI suggests that system capacity costs should be recovered through energy sales rather than separate demand charges to avoid placing an undue burden on operators with brief, occasional demand spikes.
• RMI identifies several best practices for electricity tariffs to promote a viable business environment for public DCFC: implementing time-varying volumetric rates (such as Time-of-Use rates) to recover energy and capacity costs, maintaining low fixed charges, allowing credits for grid services, offering location-based rates to utilize underused grid areas, and limiting or eliminating demand charges.
• The document proposes treating the creation of a public EV charging business opportunity as a societal objective. It suggests an alternative tariff design that starts with a cost attractive to drivers, subtracts a reasonable profit margin for charging companies, and recovers any remaining cost gap from the general customer base, recognizing the public good of reduced air pollution and the potential for EVs to provide grid services.

APA

RMI (2017). Rate-Design Best Practices for Public Electric-Vehicle Chargers. https://rmi.org/resources/rate-design-best-practices-public-electric-vehicle-chargers/

Chicago

RMI. Rate-Design Best Practices for Public Electric-Vehicle Chargers. 2017. https://rmi.org/resources/rate-design-best-practices-public-electric-vehicle-chargers/.

Wikipedia

{{cite report |author=RMI |title=Rate-Design Best Practices for Public Electric-Vehicle Chargers |date=6 April 2017 |url=https://rmi.org/resources/rate-design-best-practices-public-electric-vehicle-chargers/ |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{rmi2017ratedesign, author = {{RMI}}, title = {{Rate-Design Best Practices for Public Electric-Vehicle Chargers}}, institution = {RMI}, year = {2017}, month = apr, url = {https://rmi.org/resources/rate-design-best-practices-public-electric-vehicle-chargers/}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }