ECOtality seeks to block NRG's electric car charging network in California

In late March California and NRG announced the settlement of a long-standing lawsuit stemming from electricity rate price gouging during the California energy crisis 10+ years ago. Because of the settlement NRG is required to set up a large electric car charging station network, effectively giving NRG's eVgo subsidiary a big boost to launch operations in California. Today, electric car charging station network operator ECOtality, filed a lawsuit calling the settlement illegal, essentially granting eVgo a monopoly position in electric car charging service and other claims, and calling for an injunction blocking FERC from approving the settlement, expected next week. At a Committee hearing convened last week by State Sen. Corbett, ECOtality's Vice President of Government Relations and Regulatory Affairs, Alana Chávez-Langdon, called on Sen. Corbett to convene a full review of the settlement.

ECOtality has been in the electric car charging station infrastructure business dating back to 1989. Today ECOtality operates the Blink Network, and manages the DoE supported EV Project which is the largest deployment of electric vehicle charging stations in the country. Through the EV Project over 24 million miles of electric car operating data has been recorded, and the consumption of approximately 1 million gallons of gasoline has been avoided.

At Sen. Corbett's Committee hearing last week Ms. Chávez-Langdon said the company welcomes competition in the electric vehicle charging market. She went on to say "We believe that such competition needs to, especially with public dollars, enter the market through an informed, transparent and independent process." She noted that in early April, "ECOtality joined with others in the Bay Area Strategic Council" to express concerns over the PUC and NRG settlement, and that after reviewing the final settlement, ECOtality believes "that there are still some concerns that exist" with the settlement, and she then called on the State Select Committee on Green Jobs, Solar, Wind and Clean Technologies to review the settlement in its entirety. Other organizations have also expressed concerns over the settlement, which NRG attempted to satisfy ahead of posting the FERC filing in late April. The lawsuit filed today makes it clear what ECOtality's concerns are.

Namely:

Relieves NRG of paying nearly $1 billion in damages stemming from the California Energy Crisis, effectively subsidizing NRG in making a business investment in California it was probably planning to make anyway.

The original issue being resolved is the California Energy Crisis, during which several companies exploited and gamed a flawed deregulation of California's electricity system, resulting in overcharging utility customers for electricity. The California Public Utility Commission (CPUC) calculated the damages attributed to NRG's subsidiaries as $931,042,585, and NRG itself listed a potential $940 million liability in SEC financial filings related to the case.

The settlement between California and NRG erases the damage liability, in return for which NRG is to pay a $20 million fee to the PUC and make $102 million in investments to launch the eVgo electric car charging network in California.

The company already operates the eVgo network in Texas, and planned to expand the eVgo network to other metropolitan areas around the US. ECOtality's lawsuit makes the obvious assumption, that NRG was already planning to launch eVgo in California, and alleges that erasing NRG's damage liability is tantamount to giving NRG a huge subsidy for an investment NRG was likely to make anyway.

Gives NRG/eVgo exclusive access to a large number of prime locations for electric car charging stations.

The settlement requires that NRG/eVgo build two categories of electric vehicle charging infrastructure. The first is a network of charging station locations called Freedom Stations, that will include one or two fast charging stations plus a few level 2 charging stations. The second is to install the wiring for at least 10,000 level 2 charging stations in at least 1,000 locations, called "Make Ready Stubs". Ownership of the Make Ready Stubs will be given to building owners hosting these locations, and NRG will have an 18 month period of exclusive rights to install charging stations in these locations.

This arrangement, according to ECOtality, positions NRG with a near-monopolistic position in California's EV charging market.

Because the building owners of sites hosting Make Ready's cannot choose a competing charging station network (for 18 months), NRG's competitors will be, according to ECOtality, effectively blocked from installing charging stations at over 1,000 locations. Make Ready site owners are unlikely, once NRG installs a charging station at a site, to arrange with competing networks to install competing charging stations at that site.

ECOtality notes that since the agreement was announced in March 2012, the company's sales efforts have met resistance from potential hosts of Blink Network sites who are under the impression, from NRG's press releases, that the Agreement may provide them cheaper alternatives.

That the PUC had no authority to make this agreement with NRG, and that earlier similar PUC agreements were struck down.

ECOtality contends that the settlement puts the PUC in the role of picking winners and losers in California's electric car charging station market. ECOtality notes the PUC has "constitutional and legislative" authority over a "variety of regulatory and planning responsibilities," but that this does not authorize the PUC to select one company to have a dominant position at the expense of other companies. In particular California’s Cartwright Act establishes a public policy of "favoring vigorous competition and condemning arrangements which restrain competition."

It's clear that ECOtality believes the settlement would restrain NRG's competitors.

Shifts a cost burden onto electric car owners for upgrading transformer and line capacity in apartment buildings.

This is a little wonky so hold tight. The issue is transformer and line capacity at each Make Ready site. The settlement agreement is silent on identifying who is responsible to pay for electrical capacity upgrades at each Make Ready site, and ECOtality suggests this cost will be paid by the electric car owner whose car triggers the need for an upgrade.

This is an existing problem around electric car charging stations in "multi unit dwellings" (apartments, condominiums) which are one of the primary targets for the Make Ready sites. The problem is that the existing electrical capacity in an apartment building might satisfy one or three or five more electric cars, but at some point the capacity will be saturated necessitating an electrical upgrade. Unfortunately the policies as currently written require the electric car owner whose car causes the electrical upgrade, to pay for the electrical upgrade. This in turn means that a random selection of electric car owners are unfairly footing the bill for electrical upgrades.

Monopoly style pricing at fast charging stations will force electric car owners to become eVgo network members.

In this case ECOtality is referring to the $7 to $15 fee that will be charged to non-eVgo-members desiring to use the fast charge station at an eVgo Freedom Station. As we've noted before this cost level is more expensive than the gasoline to drive the same distance. ECOtality suggests the cost is high enough to force people to become eVgo members in order to have a more rational fee to charge their cars.

NRG has not seen the lawsuit documents, does not have a response yet, and instead issued a statement stating that "NRG Energy is making a private investment in California that will build an EV infrastructure that will encourage EV adoption in the state and help grow an industry to the benefit of the state of California, the people of California, and all the companies supporting EV infrastructure." NRG's spokesperson also noted that "nothing in the agreement prevents anyone from making a similar investment in California’s infrastructure."