Here’s one more incentive to own an electric car in Hawaii: discounted electricity rates.

Hawaiian Electric Co. (HECO) will offer cheaper electricity rates to customers who charge electric vehicles at night during “off peak” hours, while charging above market-rates the rest of the time.

The electric utility filed a proposal Wednesday with the Hawaii Public Utilities Commission for a three-year pilot project beginning in October to set variable rates for electric car charging at homes and businesses.

HECO says the move is to “encourage early adoption of electric vehicles,” as well as help ensure that drivers don’t all plug in at the same time and overload the grid. Hawaii auto dealers welcomed the news.

“This is really an extraordinary announcement in that this is the beginning of getting customers comfortable with the whole concept of filling up your car in your garage,” said David Rolf, executive director of the Hawaii Automobile Dealers Association. The trade group’s members include 60 new-car dealerships in Hawaii that represent 135 automaker franchises.

“To make electric vehicles a reality, it takes not only making the vehicles affordable, but also having the ability to charge fairly rapidly and at an incentivized price, as well as ubiquitous charging stations,” Rolf said.

The program would reward customers who charge their electric vehicles between 9 p.m. and 7 a.m., when electricity usage is low. The program would also discourage charging during peak demand by imposing slightly higher rates. On Oahu, residential customers charging their electric vehicles would pay about 6 cents per kilowatt-hour less than normal rates. Meanwhile, customers charging cars during peak electricity hours would pay about 3 cents more per kilowatt-hour.

If approved, the program would only be open to 1,000 HECO customers on Oahu, 300 Maui Electric Co. customers, and 300 Hawaii Electric Light Co. customers on the Big Island. (HECO has a total of 295,282 customers on Oahu, another 67,500 in Maui county, and 79,800 on the Big Island.) The changes would go into effect on Oct. 1, 2010.

HECO’s proposal comes as several carmakers get set to release all-electric vehicles this year. This week, General Motors announced the electric Chevy Volt will retail for $41,000. Nissan will release its all-electric Leaf hatchback in November 2010 with a suggested retail price of $33,720.

In Hawaii, Korean car manufacturer CT&T plans to open
a $50 million electric car plant on 30 acres in Kapolei by the end of next year. Hawaii is part of a major U.S. push by the Hyundai Motor Co. offshoot, which hopes to have 40 U.S. plants producing 300,000 vehicles annually by 2015.

In many ways, owning an electric car makes a lot of sense in Hawaii. Gasoline prices are high, in large part because it has to be shipped here. Limited driving distances are also well-suited for electric cars. The Volt has a range of about 40 miles on its electric battery.

HECO’s new variable rates will be applied to all electricity used in a home, so residential customers will probably want to install separate meters and an account specifically for EV charging to avoid paying higher rates during the day.

“Our goal is to make Hawaii EV-ready as new, highway capable EVs are expected to hit the market in the coming year,” Robbie Alm, executive vice president at HECO, said in a statement. “We also want to send a message to automobile manufacturers to include Hawaii among the first markets where EVs are available … We realize there are only a few eligible EVs in Hawaii today, but we expect many more to come in years ahead and we are determined to be ready.”

To enroll in the program, customers will have to prove that they are eligible.

“We will have a system to verify that the customer has an authorized (highway capable) EV, that it is registered to the address where the service is requested to provide EV rates and using the (Vehicle Identification Number) to be sure the same EV is not being used to get cheaper rates for a variety of residences,” said Peter Rosegg, HECO spokesman.

HECO’s proposal is similar to programs other electric utilities across the country are preparing in anticipation of a wave of electric car sales.

San Diego Gas & Electric, for example, received approval in June 2010 to launch a pilot project to set variable rates for electric car charging. In approving that project, the California Public Utilities Commission said, “This is critically important as we contemplate a future with widespread electric vehicle usage, given the additional electricity demand these vehicles create and the associated impacts on the grid.”

San Diego customers will be offered a range from a low of 7 cents per kilowatt-hour during off peak hours to a high of 38 cents per kilowatt-hour during peak demand to charge electric vehicles.

Pacific Gas and Electric Co. in San Francisco also recently implemented discounted rates for its EV customers. The utility’s time-of-use charges range from 5 cents per kilowatt-hour between midnight and 7 a.m. and 28 cents per kilowatt-hour during peak hours from 2 p.m. to 9 p.m.

The proposed lower rates would further increase the gap between the cost to charge electric vehicles and fuel prices for gas-powered cars.

Electric cars use about .25 kilowatt-hours per mile. That means energy costs to power an electric vehicle would go from 6 cents per mile at HECO’s current rates to less than 5 cents per mile at the proposed lowered rates for Oahu customers. With the average driver logging about 9,000 miles a year, annual electric costs for charging an EV would amount to $430.

By comparison, with the average price of gas in Hawaii at $3.52 a gallon, a gas-powered car that gets 30 miles per gallon would cost 11.7 cents per mile to drive, or $1,053 a year.

The Nissan Leaf is expected to take about eight hours to fully charge using a standard 220-volt outlet, and the Chevy Volt about four hours.

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