How Electricity Rates Affect EV Charging Costs?




One of the major financial benefits of driving an electric vehicle is reducing annual fuel costs compared to gas or diesel vehicles. However, the actual electricity costs to charge at home can vary widely depending on regional power rates, charging equipment types, and utility pricing models.

This guide will break down the key factors in electricity plans and billing structures that alter the costs to fuel electric vehicles. We’ll also provide actionable ways EV owners can optimize home charging habits and select optimal rate programs to minimize their charging expenses.

Overview of Charging Cost Calculations

Before diving into specifics, let’s establish how charging costs are calculated to understand variables that influence pricing:

Electricity Usage

Amount of kilowatt hours (kWh) required to recharge EV battery from current to full charge state. Ranges from 10-90 kWh for most models depending range.

Electricity Rate

The per kWh rate your electric utility company charges for home electricity usage including EV charging. Rates averages $0.14/kWh nationally but varies greatly by state and provider.

Total Recharge Cost = Usage x Electricity Rate

For example:

  • 65 kWh * $0.12/kWh Rate = $7.80 to fully recharge a typical EV battery
  • 22 kWh * $0.22/kWh Rate = $4.84 for shorter top off

Now let’s explore specifics on regional rate variance, utility billing models, and methods to reduce costs…

Regional Differences in Electricity Rates

According to the US Energy Information Administration, the average residential electricity rate as of November 2022 is $0.157 per kWh nationally. However, prices range from an average of $0.10/kWh in Louisiana up to $0.311/kWh in Hawaii – over a 3x variance!

So depending on where you live, the baseline rate to calculate home EV charging costs can be significantly higher or lower to start than the national benchmark.

Primary drivers of regional electricity rate differences include:

  • Power generation source mixes – Hydroelectric, solar, wind, coal, natural gas all have different base costs to generate and transmit. Renewables tend push rates lower.
  • State specific utility regulations and profit margin caps
  • Geographic density differences in infrastructure maintenance costs

When considering an EV purchase, understanding your regional electricity rates will help estimate potential charging cost differences vs national averages.

Below are the top five highest and lowest states for residential electricity rates:

Highest Electricity Rates
New York$0.244/kWh
Rhode Island$0.241/kWh
Lowest Electricity Rates

Key Takeaway: Louisiana EV drivers pay around 3x less per kWh than Hawaii owners – a difference that adds up fast annually. Understand your state’s rates!

Electric Utility Billing Plans & EV Rate Options

Beyond upfront regional rate variance, most electric utility companies also provide customers multiple billing plans and rate structures you can select from, usually with the option to change on an annual basis.

These plans alter how home electricity usage is measured and billed – impacting EV charging costs. While rates may adjust based on plan, the billing model itself can significantly influence charging expense.

Let’s explore the common utility billing plans and best options for EV owners to minimize costs:

Fixed vs Tiered Usage Charges

Fixed Rate – Single flat kWh rate for all usage each month. Predictable but no flexibility.

Pro: Simple, stable pricing regardless of usage.

Con: No financial incentive to shift EV charging off peak.

Tiered (TOU) Rates – Varying rates for usage buckets. (Ex: $0.12 for first 500 kWh, $0.20 for next 400 kWh etc)

Pro: Charging during lower tiers can significantly reduce costs

Con: Complex monitoring of usage tiers required

Tiered rates provide opportunity to manage charging schedule and curb other electric usage to stay within cheaper tiers as much as possible. Requires diligent monitoring of monthly usage pacing.

Time-of-Use (TOU) – Specific rates for Peak, Mid-Peak and Off-Peak hour usage. Cheapest overnight when demand low.

Pro: Strong financial incentives to charge EVs overnight on cheap TOU rates

Con: Requires manual charging schedule changes to align with TOU windows.

TOU provides best opportunity to optimize home charging costs but need ability to schedule overnight charging sessions manually or via smart devices. We’ll explore TOU optimization tactics shortly.

Demand Charges

Many commercial utility accounts include “demand charges” – premium rates for peak electricity load requirements above a set ceiling. Excess loads from multiple EVs fast charging simultaneously could trigger demand fees.

For residential plans however, demand charges rarely apply to EV charging loads except for some plug-in hybrids pulling over 10-15kW. Simpler billing plans without demand charges work best for at-home costs.

EV Specific Electricity Plans

A growing number of major utilities now offer specialty EV charging rates or plans as well – catering to optimize billing for electric vehicle owners.

For example:

  • Off-Peak Charging Plan – Ultra cheap TOU rates overnight for EV charging at ~$0.05/kWh
  • Flat Monthly EV Fee – $30-40 fee for unlimited home charging per EV

Shop electricity providers in your area to inquire about specialized EV billing programs that guarantee lowest charging costs.

Key Takeaway: Study your electric provider’s rate plan offerings in detail. Options with TOU and off-peak pricing can minimize charging costs through schedule alignment.

TOU Plan Optimization

We’ve established time-of-use (TOU) electricity plans often offer the most intelligent rate structures and money saving opportunities for EV drivers who can flexibly schedule charging sessions.

Let’s explore best practices to optimize TOU plans for cheapest at-home charging:

Off-Peak Evening Charging

TOU overnight charging from 12am-5am is always cheapest when base electric demand is lowest. However, plugging in around 8-9pm for off-peak charging can still save 50%+ vs peak daytime rates while the EV sits parked overnight anyway.

Managed charging schedules via connected devices allow setting precise hourly limits.

Delay Large Appliance Use

As able, shift heavy electricity usage like laundry, dishwashing and HVAC during peak evening hours to daytime to reserve off-peak capacity for EV charging without hitting higher TOU tiers.

Level 1 “Trickle” Charging

Small battery EVs and PHEVs may only need 110v outlets for cheap, slow level 1 charging. This avoids hitting higher kWh tier levels that 240v level 2 equipment power loads can more easily trigger overnight.

Minimize other overnight electric loads for most TOU headroom.

Solar Charging

Pairing EVs and TOU plans with rooftop solar synergizes perfectly. Direct DC charging from solar arrays allows cheap daylight EV fuels using while sending excess solar power to grid in peak afternoon hours for bill credits.

Key Takeaway: Coordinating charging schedule with TOU timing is crucial to maximize savings. Segment usage carefully within home energy budget to prevent peak rate tier jumps.

Charging Equipment Efficiency Differences

Beyond electricity rate plans, the charging equipment providing power to your EV also influences efficiency and costs. Two key factors on this front:

Charger Power Output – Rate that electricity is transferred to the vehicle battery. Faster charge speed allows greater mileage per hour plugged in but uses more peak wattage from source amperage.

Charging Losses – Heat and friction of charge transfer process causes power diminish between source and battery. Higher output speeds increase losses.

Essentially, EV battery chemistry only allows absorbing charge current efficiently up to certain speeds before losses accelerate. So maximum power equipment reaches diminishing returns for actually range recovered per hour and kWh utilized.

Let’s compare popular home charger configurations:

Charger TypePower OutputMiles/HourProsCons
Level 11.4 kW4-5 mi/hrCheapest to install; lower usageVery slow charge
Level 27 kW25 mi/hrFaster charge; widely supportedHigher install cost; electrical upgrades likely
Level 211-19 kW30-60 mi/hrHighest charge speedHighest electric load and bill impact

Key Takeaway: Ensure your EV model can efficiently utilize your home charger’s max power output before installing the fastest, most expensive option. Slower overnight level 2 charging is typically the best balance of recharge speed and affordable home electric capacity for most drivers without upgrades.

Managing Dynamic Public Charging Costs

While at-home electricity rates may be fixed or predictable month to month on set plans with your utility provider, public EV charging costs can be much more dynamic – changing station by station.

Several key variables lead to fluctuating public charging pricing:

1. Network Provider – Cost variance across major networks like Electrify America, EVGo, ChargePoint, Volta and others based on contact arrangements, hardware costs and regional energy prices

2. Charging Speed – Faster DC fast charging generally costs more per minute than level 2

3. Demand-Based Pricing – Similar to surge pricing, costs per minute may rise at peak use times when queue forms at popular stations

4. Membership Discounts – Networks offer subscription plans with reduced rates for regular drivers similar to gas fuel discounts

With so many factors adjusting public pricing minute to minute, it’s essential EV drivers utilize apps and tools providing visibility into location rates and real-time availability:

  • PlugShare – Crowdsourced maps of public stations with reviews, photos and user-reported status and pricing
  • Chargeway – Maps stations with uniform charging speed symbols and networks for simplistic filtering
  • EV Network Apps – Electrify America, EVGo and others have apps showing locations, pricing and status

Membership plans providing discounted charging rates, monthly charging credits and loyalty rewards also ease the variance of public pricing. Costco, Walmart+ and several EV automakers now even offer free charging perks.

Review options to find programs matching frequent travel routes for maximum public charging value.

Key Takeaway: Be prepared for dynamic public charging costs across networks and locations. Mapping apps help find best value while memberships and loyalty plans allow managing expenses.

Best Practices to Reduce EV Charging Costs

Now that we’ve covered the full spectrum of influences on potential electric vehicle charging costs, let’s summarize top techniques for reducing your EV fueling bills:

  • Understand TOU rates & program charger schedules to align usage during cheapest overnight windows whenever possible – Delaying charging just a few hours can slash costs over 50%
  • Use level 1 chargers whenever practical for PHEVs and shorter commutes to minimize kWh usage – Slow chargers use less peak home electric capacity
  • Ensure home charger installs properly size electrical service – Avoid required panel upgrades that increase costs
  • Use apps to map public charging locations showing real-time pricing and availability stats – Avoid stations with long queues raising dynamic per minute rates
  • Enroll in network membership plans for regular public charging with lower rates – PlugShare, Electrify America, EVGo and others offer public charging subscriptions to reduce costs similar to gas rewards cards
  • Shift most energy intensive appliance usage outside EV charging windows – Preserve off-peak rate headroom for vehicle charging to prevent plan tier jumps
  • Explore EV specific electricity plans from your utility – Fixed monthly fees, ultra low overnight rates and other new plans catering to EVs provide stability

Following these best practices allows optimizing use of off-peak electricity capacity at home while navigating dynamic public charging rates – ultimately reducing total annual costs to power your electric vehicle.

Recharging certainly remains far cheaper than gassing up overall. But being smart about program selection, charging strategies and minimizing peak usage during high tiers or times works together to maximize EV savings potential.


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