By Ian Lund
The Montana Legislature’s Transportation Interim Committee is studying electric vehicles (EVs) this year. Its goal is to make EV owners help pay for highways and other vehicle infrastructure. Currently, Montana’s gas tax provides almost all the funding for maintaining our transportation infrastructure. Since EV drivers do not buy gas, they do not pay into the transportation fund. A common means of making up this difference is imposing higher registration fees on EVs. Thirty states have EV registration fees, ranging from a $50 fee in Colorado to an unusually high $235 fee in Michigan. The median EV annual fee is $120.
Here’s the real issue with transportation funding though: the gas tax, and therefore most of Montana’s money to maintain its roads, is tied to fuel consumption. The tax is levied per gallon pumped. As vehicle efficiency increases, total gallons of gas pumped decrease, even as vehicle miles traveled increase – 1.6% per year according to the Montana Department of Transportation (MDT). The result? Gas tax revenue is failing to keep up with inflation.
EV registration fees cannot solve the growing gap between gas tax revenue and funding to maintain our roads and bridges. With fewer than 2,000 EVs in Montana, they constitute less than 1% of all vehicles driven in the state. Even an unheard-of $500 EV registration fee would bring in less than $1 million annually, a far cry from what is needed to keep pace with rising transportation infrastructure costs.
The Transportation Committee is considering other ways to make EVs pay, such as a tax on miles traveled and on electricity used to recharge EVs. These would be complicated and expensive to implement, so registration fees remain the most expedient solution.
According to MDT, the average Montanan pays $156 annually in gas taxes. However, most people that drive light-duty or efficient hybrid vehicles pay much less, while drivers of heavier and less-efficient vehicles pay more. The current system encourages vehicle efficiency. MEIC supports a fair EV registration fee that reflects the benefits EVs provide to our transportation system without discouraging their adoption.
The Transportation Committee’s foray into EV policy brought up more EV issues than just the fees. NorthWestern Energy and auto industry representatives testified that Montana’s EV laws had a chilling effect on the EV charging landscape.
Good EV law should do two things. First, it should create a predictable and attractive regulatory environment for EV tech companies, such as EVgo and Chargepoint, who sell and manage charging services.
Second, it should activate public utilities’ (i.e., NorthWestern) natural interest to sell electricity and add to its rate base by allowing them to develop EV charging programs and pass those costs on to their customers. EV law should prescribe clear public benefits that utility investments ought to provide and should require the Public Service Commission to review and approve these programs. Programs could include at-home charging rebates, investments in public charging stations, or investments in stations for underserved communities. Current EV law in Montana prohibits utilities from doing any of this.
Montana’s current electric vehicle law also discourages private investment in EV charging at businesses because it does not allow a reasonable profit for companies that want to install EV infrastructure and sell electricity to EV drivers. MEIC recommends allowing reasonable markups on resold electricity for EV charging in order to create a business case for public charging installations.
This article was published in the March 2022 issue of Down To Earth.
