Electrifying Transit Issue #2: How Demand Charges Can Kill Your Fuel Savings
Electrifying Transit Issue #2: How Demand Charges Can Kill Your Fuel Savings

How Demand Charges Can Kill Your Fuel Savings

I love living in Oregon (30 years now) but I can’t pretend we are early adopters of electric buses.

I love living in Oregon (30 years now) but I can’t pretend we are early adopters of electric buses. Of Oregon’s roughly 2,000 public transit buses, 11 are electric, none prior to 2019.  Of our 6,700+ school buses, none are electric, though that can start changing, too, with strong benefits to community health.

Transit agencies in Indianapolis, Indiana and Louisville, Kentucky launched their transitions from diesel to electric in 2015 and 2016. They and others have been the pioneers here, not we in Oregon. This is humbling, counter to our cool self-concept, like having to acknowledge our state was founded on the exclusion of African Americans (I hate that fact).

This newsletter’s purpose is to help accelerate the electrification of transit in Oregon, with a focus on social equity. Everyone reading this has a role they can play in electrification. My job is to support and encourage you, in teamwork with many others.

When we electrify our transportation, we expect fuel savings and emissions reductions. As an electric vehicle (EV) owner, I’ve gotten delivery on those promises – about 65% decrease in fuel costs and zero tailpipe emissions, also a quieter, sweeter ride.* (Note: Oregon offers EV rebates, up to $5,000 for people with low/moderate incomes). 

Unfortunately, fuel savings are harder for a public transit fleet to achieve than individual EV owners. While they are big on paper (TriMet anticipates $400,000 in fuel savings over the lifecycle of an electric bus), they can disappear in practice, or even flip upside down. Regional Transportation District (RTD) in Denver, Colorado is paying .73/mile to fuel its three dozen electric buses, as opposed to .46/mile to fuel its diesel buses. Gulp.

To achieve fuel savings, transit agencies need to learn to speak utility, the language of the new fuel vendor. First, what kind of utility do you have?

Are you talking with an investor-owned utility (IOU)? In Oregon, you’ll be talking with an IOU if your bus yard pays its electricity bill to PacifiCorps (Pacific Power) or Portland General Electric (PGE).

IOU’s are in business to make a profit, just like diesel vendors. IOU’s are regulated (constrained), though, by Oregon’s Public Utilities Commission (PUC).* This regulatory environment forces the IOU’s, for example, to grow the ratio of clean renewable energy in their mix over time. And SB 1547 compels them to support the electrification of transportation.

In contrast to IOU’s, public Utility Districts (PUD’s) and municipal energy suppliers are not for profit. They have a local focus, and answer to a local board rather than the state’s PUC. They try to keep energy prices low for customers. They may or may not be doing anything yet to decarbonize their energy mix, or support electrified transportation. (You could encourage them to do these things!)

“Who is my utility customer rep? When can she/he come out for a chat?”  Do this when getting your first couple of electric buses is just a gleam in your eye, a thought in your mind. As in most new relationships, there will be lots to talk about. Powering your lights and office equipment only made you acquaintances. Fueling your buses with electricity will involve challenges and much higher stakes. It’s kind of like a marriage, but without other potential spouses.

 “How can we work together to avoid demand charges?” Demand charges are key. 82% of Denver, Colorado RTD’s high electricity costs to fuel its buses are due to demand charges.

Time-of-use rates matter too; overnight charging is generally cheapest. But demand charges are the make or break item. Utilities levy demand charges on customers based on the largest (peak) amount of energy the customer uses in a month. This lets the utility manage energy load and meet their capacity needs.

The higher/faster the level of your bus charging, the bigger the danger of demand charges. Level 2 charging (slow flow of electricity) probably won’t incur them. Direct/fast charging or lots of electric buses probably will.

Bus organizations need to have no demand charges, or minimal ones, to get the fuel savings they need to offset the high purchase costs of their electric buses. That can be hard for utilities to do. But in California, Southern California Edison and Pacific Gas and Electric (both IOU’s) are suspending demand charges for electric buses.

I liked John McFarland’s remarks at Roadmap last month; he’s a vice president at Portland General Electric. Paraphrased, he said everyone [not just those with money] must reap the benefits of electrifying our transportation system. I’ll go into that principle further in the next issue of Electrifying Transit.


*My husband Thor and I lease a Kia Soul for $202/month. As many of you know, I’m not a big car person. But I love this car, our first EV. Peppy and nimble! Thor and I share one car between us — thank you, Trimet and frequent line 2.

Alison Wiley (she/her/hers)

I am on the ancestral lands of the Multnomah, Chinook and Cowlitz peoples.

Whose land are you on?

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