electric rates

High electric rates could sink the Volt

That electric car may look good in theory, but in California it could cost more than feeding a big block Chevy.

That's the implication of a study released this week by Purdue University economist Wally Tyner, the James and Lois Ackerman Professor of Agricultural Economics. And it comes on the heels of the release in the state of Nissan's all-electric Leaf and the Chevy Volt, which can go 35 to 40 miles on a charge before the gas engine fires up.

Tyner said California's tiered electricity pricing system is the culprit. The rates, which were created to reduce energy consumption and thus greenhouse gas emissions, mean consumers who crank up their demand beyond a certain point get booted into the highest bracket and pay more.

"Almost everyone in California reaches the third pricing tier each month," Tyner said in a Purdue news release. "If they add a plug-in hybrid, they are charged the highest rate."

Adding a plug-in hybrid would increase the average use of electricity nearly 60 percent per household, according to the study, which was published in the online version of the journal Energy Policy. In California, most of that increase would be charged at the highest rate.

And Californians, according to Tyner, "pay some of the highest electricity rates -- an average of 14.42 cents per kilowatt hour, which is about 35 percent higher than the national average."

Tyner said states like Indiana, which charges a flat rate of about 8 cents per kilowatt hour, would be more economical to run an electric car.

Of course, there are a lot of variables. California could issue sweeping changes to utilities' pricing system. And gas prices, which have been rumored to reach as high as $5 per gallon this summer, could make those charging rates appear less lethal.

The price per barrel continues to hover in the $90 per barrel range, closing at $91.67 on Friday, according to oil-price.net. The L.A. Times said: "Oil prices would need to rise to between $171 and $254 per barrel to offset the price premium on the Volt, for both the car itself and the electricity needed to charge it."

Tyner said rates would have to drop for plug-in hybrids to compete. "People who view the Volt as green will pay $10,000 more over the lifetime of the car because it's green," he said. "Most consumers will look at the numbers and won't pay that."