Times may get harder for Colorado residents who struggle to pay their electric bills. The state’s largest utility monopoly, Xcel Energy, wants to increase the subsidy consumers pay to help wealthy Coloradans buy pricey electric cars.
Excel has no incentive to keep utility rates low because it has no competition. It has every incentive to spend because the state government rewards Excel financially whenever it builds new energy infrastructure.
Because of that equation, Xcel wants to spend $102 million to build more electric-car charging stations and to subsidize wealthy Coloradans to install home-based charging stations. To pay for it, Xcel wants to attach a “rider” on utility bills. “Rider” is a euphemism for a rate increase, and the Colorado Public Utilities Commission began hearings last week to consider the request.
If Xcel gets the green light it will take from Peter to pay his wealthier neighbor, Paul — again. Without this latest proposal, Colorado has the highest subsidy in the country to help the wealthy buy electric cars. In addition to a federal tax rebate of $7,500, those who can afford a Tesla or other battery cars get $5,000 at the point of purchase from Colorado taxpayers.
These incentives, funded by all consumers, are available only to those who can afford cars typically priced from $35,000 to more than $250,000. The Energy Information Administration reports that nearly 70% of electric-car owners have household incomes exceeding $100,000.
“EV owners are white males who are more educated, affluent, older, and more environmentally focused than are owners of internal combustion engine vehicles,” explains a 2018 study by Morgan State University in Baltimore. “EVs were most popular among Democrats and least among those not interested in politics.”
A 2018 study by TrueCar.com found the average household annual income of a Ford Focus buyer was $77,000. That income soared to $199,000 for the average buyer of the electric version of the same car — a cost nearly six times the median household income in Colorado’s rural Bent County and four times the household income in average rural counties. The wealthy urban household gets a car-buying subsidy; the lower-income rural household pays for it.
The study found the same trend among buyers of all brands of electric cars. The incomes of electric-car buyers, regardless of the make and model, are at least twice that of those who buy traditional cars and receive no assistance.
“Auto industry analysts have always considered EV owners to be a niche group, who have been thought to be more affluent than regular-car buyers,” explains an article in DMV.com.
Predictably, state registration records prove Xcel’s latest subsidize-the-wealthy scheme would mostly benefit the Denver-Boulder metroplex. Nearly $5,000 consumers in Boulder, where the median household income is $84,000, registered new electric cars in 2019. Denver consumers, median household income of nearly $70,000, registered 3,800 new electric vehicles.
Compare that to rural Baca County, median household income of $37,500, where no one registered an electric car in 2019. Same for Bent County, $34,300 median household income; Phillips County, $50,000; Kiowa County, $39,700; Cheyenne County, $55,000; Rio Blanco County, $55,500; San Juan County, $46,500; and Jackson County, $48,800. Repeat: not one electric car in at least eight rural counties.
All data supports what most consumers can easily observe. Electric cars are amenities of the privileged few — the people least in need of more subsidies at a time when too many average consumers struggle to survive the financial challenges of a worldwide pandemic.
Electric cars probably have a mainstream future as technology improves and prices come down. In the meantime, let’s stop increasing subsidies — at a cost to the middle-class and the poor — for the handful of consumers who can afford to buy them today.