Guest Columnist

Iowa's electric vehicle fee is ill-conceived policy

Cars are plugged into electric vehicle chargers in the Convention Center Ramp in Cedar Rapids on Wednesday, Sep. 12, 2018. In Iowa, energy for electric vehicles can be sold by an increment of time — commonly by the hour — or provided free of charge with the purchase of a parking place. The latter is most common locally, with free charging available for the purchase of parking in several Cedar Rapids parking ramps or at The Eastern Iowa Airport. (Stephen Mally/The Gazette)
Cars are plugged into electric vehicle chargers in the Convention Center Ramp in Cedar Rapids on Wednesday, Sep. 12, 2018. In Iowa, energy for electric vehicles can be sold by an increment of time — commonly by the hour — or provided free of charge with the purchase of a parking place. The latter is most common locally, with free charging available for the purchase of parking in several Cedar Rapids parking ramps or at The Eastern Iowa Airport. (Stephen Mally/The Gazette)

Iowa Gov. Kim Reynolds recently signed HF 767, which requires additional registration fees and fuel taxes for all types of electric vehicles. I appreciate the need for electric vehicle owners to pay their fair share of the Road Use Tax Fund (RUTF), which has been funded principally by fuel taxes and registration and title fees. However, I am concerned that HF767 was enacted too soon, and without consideration of the fact that that many, if not most, of the few electric cars in Iowa are used only for local driving.

With only about 2,000 EVs in Iowa in 2019, the solution for the proper means of taxing EVs is not an urgent matter, and it deserves further consideration.

EVs fall into two categories: Battery Electric Vehicles (BEVs) that get anywhere from 60 to 300-plus miles on a single charge, and Plug-In Hybrid Electric Vehicles (PHEVs) that get 20 to 50 miles from the battery pack before the internal combustion engine (ICE) kicks in.

HF767 was developed based on the 2018 Report on the Impact of Electric Vehicles to the Road Use Tax Fund. The following are the Recommendations of that report relative to BEVs and PHEVs:

Recommendation 1: Add a per kilowatt-hour excise tax for charging at non-residential charging locations. Effective July 1, 2020, begin collecting $0.026 per kwh for charging of vehicles at non-residential charging locations. This would not apply to charging of vehicles that occur at the residence where it is estimated 80 to 90 percent of all EV passenger car charging occurs.

Recommendation 2: Add a supplemental registration fee for passenger electric vehicles. Effective January 1, 2020, begin collecting a supplemental registration fee of $130 per year for BEV, $65 per year for PHEVs, and $9 per year for electric motorcycles. These rates reflect the average vehicle fuel tax generated in a year for those vehicle types with a downward adjustment to reflect the charging that typically occurs away from the residence (estimated to be 15 percent) that would be subject to the per Kwh fee.

Note that in Recommendation 2, the $130 and $65 rates are based on “the average rate for fuel tax generated per year for those vehicle types.” The $130 irate s about what a gasoline powered car at 30 mpg would generate in gas tax in 15,000 miles (the average yearly mileage in Iowa for such cars). Mid-size EVs cost about $9,000 more than comparable ICVs (Internal Combustion engine vehicles) which results in $90 more in registration fees. So, under the new law, the owner of a BEV would be paying an additional $220 ($130 plus $90) in registration fees which is the amount of fuel tax which an internal combustion driver would pay in driving over 25,000 miles.

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I purchased a new Nissan LEAF BEV in 2016. My EV is used only for in-town driving with occasional trips to nearby towns. I charge my car at home, and have never used a public charging station. My EV has been driven an average of less than 3,000 miles per year. I am happy to pay my fair share in support of the RUTF, but I don’t believe that I should be required pay for 25,000 miles of lost gasoline tax when I drive my EV only 3,000 miles.

It is clear that establishing an equitable fixed added registration fee for EVs is not possible because mileage must be part of the calculation, and it varies between EV owners. The only way to resolve this issue is the use of a mileage based fee for electric vehicles. This could be accomplished by use of a system such as Oregon’s OReGO or one based on odometer reading certifications as a requirement of the registration process. Changes to correct the inequities in the law as now written should be made before it takes effect in 2020.

• Donald Gallagher lives in Cedar Rapids.

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