High utility charges could derail MTA’s $1.1B electric bus transition

The MTA’s $1.1 billion plans to buy 500 new electric buses could be derailed unless New York state’s utility regulator cuts the authority slack on its electric bill, transit officials warned.

Gov. Kathy Hochul and her appointed MTA leadership have touted ambitious plans to convert the entire fleet of 5,800 to electric power, beginning with the new purchase. But powering just the existing 15 electric buses currently costs two to three times diesel or natural gas, officials wrote in Dec. 6. comments submitted to the state Public Service Commission (PSC).

State law signed by Hochul last year required the PSC to reduce the impact of peak “demand charges” on large-scale electric vehicle (EV) charging operators like the MTA. The commission has until Dec. 31 to come to a decision on how big of a discount to give.

But the leading “solution” on the table “would result in far higher cost to operate an electrified fleet when compared to the MTA’s current predominantly diesel and gas vehicles,” the authority warned.

“Such a major cost escalation will undoubtedly harm the MTA’s ability to provide services… possibly resulting in cutbacks, increased customer fares, and deferrals of other customer service-oriented initiatives,” the comment said.

Other states give massive short-term rate discounts to EV chargers to help build demand. California, for instance, gave commercial EV chargers a 100% discount on demand charges for five years, the MTA wrote.

New York’s proposal, in contrast, would only provide a discount 12% of the time and at significantly lower rates, transit officials said. To achieve those discounts, the MTA would be forced to pay a hefty price to develop “sophisticated energy management capability,” it said.

“This adjustment would do very little to defray the sharp escalation in operating costs it would face [of] running an electric bus fleet in New York City,” officials wrote.

“The incentives the proposed solution offers are wholly inadequate in reducing these existing cost barrier that constrain the MTA’s ability to convert its fleet, and do not even partially meet the MTA’s needs.”

A spokesman for the transportation authority declined further comment.

Electric vehicle industry advocates have argued that demand charges pose a substantial deterrent to widespread adoption. The charges are based on the peak amount of electricity used — no matter how long that peak was achieved.

“Someone might come along once or twice a day to use them, but somebody’s not always plugged into them,” said an individual knowledgeable of the PSC’s ongoing deliberation.

“We want to get to those traditional demand based rates, but when only 1% of the cars on the road are EVs, we just don’t have the charging base from a customer perspective that we need to get those usage numbers up.”