Electric rationing and higher electric costs - the price of the forthcoming electric vehicle charger regulation
From June 30th 2022, all newly fitted electric vehicle (EV) charge points must have smart functionality that can control recharge times and potentially can create dedicated EV tariffs.
On June 30th, The Electric Vehicles (Smart Charge Points) Regulations 2021 come into force, affecting all EV domestic and workplace chargers fitted after that date across Great Britain. The legislation will enable EV charger usage to be billed at higher electricity prices than domestic electricity by operating with a dedicated smart meter. Additionally, it will allow for the potential of 'electricity rationing' by deciding when EVs can be charged, helping to avoid overloading the National Grid at peak times as EV utilisation increases.
While the new regulations signal that electric rationing and separate pricing could apply to EV chargers at homes and workplaces, it does not necessarily mean they will happen immediately. However, it does signal the potential for evolution in the transition to a Net Zero environment.
The new regulation was subject to extensive consultation before being passed into law in December 2021. Challengingly, this was ahead of the significant increase in utility prices seen this year and the slowdown in UK economic growth forecast by the International Monetary Fund (IMF) on March 19th. Assessing the impact, Mark Coles, Head of Marketing at leading motor finance experts, MotoNovo Finance, observes;
"The crucial journey to Net Zero upon which the UK has embarked has implications for how we live and work. As we transition away from carbon-based fuels, a rapid switch to EVs will inevitably place strain on the National Grid, which in October talked of 'tight' supply levels at peak times. The new regulation is designed to address this risk by providing the capability to encourage recharging at low peak times. The challenge is that rapidly escalating utility prices have severely limited the availability of such tariffs."
The potential for higher cost EV home chargers tariffs is sure to be another concern for consumers reeling under record utility price hikes. In the short term, the Government may consider that the timing for dedicated EV charging is uncomfortable, having cut fuel duty by five pence per litre recently in a bid to ease the impacts of the increasing cost of living. However, the stark reality is that the move from fossil-fuel vehicles, which raised £37Bn for the Exchequer in fuel duty and vehicle excise duty (VED) revenues has to be replaced somehow as EV popularity increases.
As Mark concludes;
"One of the crucial appeals of an EV is lower running costs. On fuel costs alone, someone travelling 30 miles to work and back could save £11 a day or £1980 based on 180 days of commuting by switching from diesel to EV. The challenge is how much of this saving would we be prepared to sacrifice to reduce carbon dioxide emissions and support other vital areas of tax spending? Perhaps, even more importantly, when might we be prepared to embrace such a change in light of current inflation?"