Electric Cars: the Problem for Property Managers and the Future of Electricity Rates

A Rising Demand for Electric Vehicles ("EV")

Retail, commercial, industrial, hotel, and residential property managers beware.  As concerns over green house gases ("GHG") emitted by "internal combustion engine cars" (i.e. fuel-powered cars) continues to grow across the world, more and more people in Toronto, Ontario, and across Canada are turning to the environmentally friendly alternative of electric cars. Not only does an increase in the use of electric cars in Toronto mean an increase in demand for parking lots equipped with "charging-stations" but also an important increase in electricity demand (at rapidly increasing rates) amidst a contracting supply market. 

Challenges Facing Property Managers

The emergence of a technology is never without its challenges.  One challenge facing property managers is the (somewhat illogical) stance taken by some tenants to the effect that they need not pay for the electricity they consume while charging a vehicle because they are already paying for parking.  Another challenge is gas-fuelled vehicles occupying parking spots equipped with charging docks, a behaviour referred to as "icing". Yet another often cited problem with EV parking lots is ensuring EV owners move their car from the charging station once their car is fully charged. Some cities have experimented with valet-style EV parking spaces, where EVs are monitored and moved by a valet once charged. Finally, another problem cited by property managers is the logistical and retrofitting problem of not only deciding where to put plug-in spaces but also how to get the power through to those plug-in spaces. Indeed, traditional parking spaces were not designed with EV charging stations in mind.

Types of EV Parking Spaces

Under current market conditions, a Level 1 charging station is a connection to a standard 120-volt household current, which can take up to half a day to fully charge an electric vehicle ("EV") battery.  The more popular 'Level 2' (approx. $10,000 per unit) charging stations, for instance, run on 240-volt circuits and require several hours to top up an EV battery. Level 3 units (approx. $50,000 to $70,000 each) run on higher voltage and can provide up to 64 km of driving range for every 10 minutes of charging. 

Experimental EV Parking Rates in Toronto

Oxford Properties has been experimenting with different rate structures for electric car parking spots. Under their current pilot program, EV owners pay a flat $5 fee to hook up to Level 2 spaces, and pay an additional 15¢ a minute after the expiration of a grace period. Note that EV owners have access to Apps that notifies EV owners they have a certain amount of time left to charge their vehicle.

EV Cars and Ontario Nuclear Refurbishment Project

While the demand for futuristic, electric, clean cars and electricity continue to increase in Toronto, Ontario, and across Canada, Ontario's longstanding electricity supply problem will become even more pronounced in the years ahead. The reason is Ontario $25 billion project to refurbish 10 nuclear reactors at the Bruce and Darlington Nuclear Generating Stations.  As illustrated immediately below, this will lead to higher prices for nuclear generated electricity. Since approximately 60.1% of Ontario's electricity mix accounts for nuclear power, Ontario's nuclear project will cause a corresponding increase in electricity prices for the foreseeable future.  

EV Cars in the Face of Ontario's Contracting Electricity Supply Market

Before the 1990s, when energy projects became subject to environmental assessments, Ontario would increase its reliance on coal-fired electricity generators while refurbishing its nuclear generators.  Coal-fired electricity was then Ontario's 2nd most important source of electricity (in 2003, coal-generated electricity accounted for approximately 25% of Ontario's electricity mix).  However, the ensuing increase in acid rain and smog caused by an increased reliance on coal-fired electricity lead the Dalton McGuinty government to undertake a complete phase-out of coal-generated electricity (Source: the End of Coal). 

EV Cars and Ontario's Progressive Conservative Government

In addition to a complete phase-out of coal generated electricity, Doug Ford has recently passed legislation to scarp Ontario's Clean Energy Act that was passed by the previous liberal government. Along with the repeal of the Clean Energy Act came the cancellation of 758 clean energy contracts that would have provided alternative (and clean) source of electricity supply for Ontario.  While premier Doug Ford stated that quashing the Clean Energy Act would help decrease rising electricity rates in Ontario, other authoritative commentators highlight the fact that the Clean Energy Act was meant to not only empower citizens and communities to fight climate change but also to enable Ontario to take advantage of the declining cost of renewable energy.