Five Takeaways on Electric Buses

In the past few months, a number of transit agencies have announced ambitious plans to convert their bus fleets to all-electric vehicles. In December, the California Air Resources Board issued a rule requiring all transit agencies to purchase only zero-emission buses by 2029. The president of New York City Transit recently announced a target of all electric buses by 2040. And Washington, D.C., which currently runs electric buses on the Circulator line, just passed the CleanEnergy DC Omnibus Amendment Act, mandating all-electric buses by 2045. A similar bill is pending before the Massachusetts State Legislature.

Electric buses are one answer to a little-discussed problem in public transportation: traditional buses have terrible fuel economy. Caught in stop-and-go traffic, regular old diesel buses average only to 2-3 miles per gallon, leading to high fuel costs and increased rates of asthma and other respiratory illnesses. These problems are particularly acute in low-income communities and communities of color, where a disproportionate number of bus garages are located.

Despite their benefits, the challenges to integrating electric buses in public transportation are significant, ranging from technological unknowns (will bus batteries hold up in cold weather?) to operational hurdles (how will increased charging times affect transit service?).

I wanted to focus today on one piece of the equation: the financial pros and cons of electric buses. A regular transit bus typically costs between $450,000 and $700,000, and purchasing an electric bus adds an additional $300,000 premium. The sticker shock can be alleviated by operational savings over the lifetime of a bus, but exactly how large those operational savings are depends on a host of factors.

This year at TRB, the annual nerdfest for transportation planners and engineers, a panel of speakers delved into the financial side of electric buses. I wanted to highlight five points I took away from the panel, many of which come from Kelly Blynn's excellent research on the topic.

1. The cost savings from electric buses are real

While there's variation depending on the location and how a bus is used, electric buses can already be cheaper than diesel or hybrid buses when the total cost of operation is taken into account. Electricity is often cheaper than diesel, and electric buses have lower maintenance costs than diesel buses, primarily due to the simplicity of electric engines and the benefits of regenerative braking, which puts less wear and tear on brake pads. As a result, the California Air Resources Board estimates that a battery electric bus purchased in California today is already cheaper than a diesel bus, at least in locations where utilities offer bus-friendly tariffs.

2. Utility tariffs are a big deal

In many of the scenarios that Blynn modeled, the financial viability of electric buses depends heavily on how the local utility structures its electricity rates. This is a topic that deserves a post of its own (and Miles Muller over at NRDC already has an excellent post on the subject), but the main takeaway is that transit agencies can often be hit hard by a fee known as demand charges when they plug in their electric buses.

Demand charges are a part of your utility bill that depend not on the total amount of energy you used that month, but the maximum amount of electricity you used during your peak hour of consumption. Demand charges are meant to reflect the fact that there is a difference, from a grid management perspective, between using one lightbulb for ten hours and turning ten lightbulbs on all at once. The latter can require a utility to upgrade the local distribution grid to handle the larger flows of electricity that are needed all at once.

As you might expect, plugging in an electric bus (or a whole fleet of them) can draw a significant amount of power, and the resulting demand charges are extremely expensive for many transit agencies.

However, a recent suite of innovative rate designs shows how utilities can support transit electrification while maintaining grid health. SoCal Edison, one of California's big three utilities, recently introduced a new Commercial Electric Vehicle rate that eliminates demand charges for a five-year phase-in period while the use of electric buses ramps up. After the first five years, SoCal Edison will offer substantially lower charging rates for customers who charge their vehicles during off-peak hours.

Off-peak charging rates can be a significant boon to transit agencies, whose buses are often on the road (and not charging) during the hours of peak electricity use anyways. Building momentum for heavy-vehicle charging rates is a key next step for many states.

3. Climate policies can help defray the cost of running an electric bus fleet

In a deeper dive into three states -- California, Kentucky, and Massachusetts -- Blynn looked at the presence or absence of climate-supportive policies, such as California's Cap and Trade program and the state's Low Carbon Fuel Standard (LCFS). Transit agencies which run vehicles on electricity can receive a share of the revenues from those programs (as much as $9,000 per year for each electric bus), which mitigates the cost of operating an electric fleet.

While carbon pricing policies, such as California's Low Carbon Fuel Standard, can make the math pencil out, one of the major takeaways for me was that the design of electricity tariffs is more important in Blynn's model than the presence or absence of a cap and trade program (at least at the levels they're currently set). It speaks to the importance of designing EV-friendly electricity tariffs if we're going to reverse the growth in emissions from transportation.

4. We need to start rewiring our bus depots

To charge electric buses, bus depots need to be retrofitted with high-capacity chargers, which often requires upgrading the depot's connection to the grid. All told, the bill can exceed $100,000 per charger (and various agencies are purchasing either a charger per bus or one for every two buses, which costs more upfront but allows the agency to charge their buses slowly and more cheaply overnight).

Upgrading bus depots requires coordination between transit agencies and thinking through how bus garages -- which are often already constrained in space -- will handle the new buses. California has taken on one piece of the equation by drawing electric utilities into the game. SB 350, passed in 2015, directs utilities to "increase access to the use of electricity as a transportation fuel." As part of the program, utilities have proposed shouldering a portion of the up-front costs of installing chargers in order to attract new clients and make it easier for heavy-duty vehicles to go electric.

5. There are still some kinks to work out

While the potential of electric buses is great, a number of technological hiccups are still giving transit agencies reason to pause. While some of the agencies piloting electric buses report complete happiness with their new vehicles, others have had to return buses to manufacturers, often because the batteries didn't perform as well as promised or unanticipated maintenance issues cropped up when the vehicles were placed into service.

Ironing out the kinks in electric bus technologies is critical, but this shouldn't cause transit agencies to hit the brake on bus electrification. The number of issues that need to be worked out -- from installing infrastructure to figuring out how to optimally charge buses -- means that agencies need to get moving. Learning by doing is ultimately the only way to ensure that we clean up city air and get on track to meeting our climate goals.

Transportation and Civil Rights in the Age of Uber

In the past few years, an increasing number of public transportation agencies have established partnerships with Uber or Lyft. For transit agencies, these collaborations have the potential to improve mobility and expand the reach of public transportation systems. For example, the Pinellas Suncoast Transit Authority in Florida subsidizes Uber rides that start or end at a bus stop, helping to solve the "last mile" problem of getting people from a transit line to their home.

While improving mobility is one driving force behind these partnerships, cutting costs is another. A recent paper from researchers at Stanford found that 74% of Uber and Lyft drivers, earn less than minimum wage. Studies like these are informing the New York Taxi and Limousine Commission's discussion of whether to establish an hourly minimum wage for Uber and Lyft drivers. In the absence of a living wage for drivers, cash-strapped transit agencies are turning to partnerships with Uber and Lyft as a way to reduce costs without cutting service.

While these partnerships have the potential to improve access to public transportation, there is one glaring problem: they most likely violate federal civil rights law.

Public transportation agencies must comply with Title VI of the Civil Rights Act of 1964. Title VI makes it illegal for recipients of federal funds to discriminate on the basis of race, color, and national origin. President Clinton's Executive Order on Environmental Justice expanded these protections to prohibit federal agencies from taking actions that disproportionately burden low-income communities. Critically, both Title VI and the the Executive Order on Environmental Justice apply not only to public transportation agencies, but to any contractors they employ as well.

Title VI requires public transportation to ensure that the benefits and burdens of their service are distributed equitably. For example, in 1994, the LA Bus Riders Union led a landmark lawsuit against the LA Metropolitan Transportation Authority, arguing that the LA MTA had violated Title VI by disproportionately spending money on rail service while neglecting minority and low-income bus riders.

Before implementing major service changes, public transportation agencies conduct equity analyses to ensure compliance with Title VI. For example, when an agency is considering adding new bus or rail lines, it will assess whether the new routes will equitably serve a range of neighborhoods, or instead are favoring areas that are predominately white and affluent.

Partnerships with Uber and Lyft challenge the traditional Title VI framework in a number of ways. As an initial matter, Uber and Lyft closely guard the data they have about who uses their services. I spoke with one transit administrator who said that the agency's partnership agreement does not include any provision granting the agency direct access to data about who is using the service. Instead, the ride-hailing company tallies the number of people who use the service, and then sends the transit agency a bill. The agency is aware of the total number of people who use the service, but knows little else about the demographics of their ridership.

Even transit agencies who have negotiated data-sharing agreements still face a number of challenges. Under the traditional framework, transit agencies conduct equity analyses whenever they institute a "major service change." But the service that Uber and Lyft provide changes constantly with each update to the app's pricing algorithm. And, as the TransitCenter has warned, without a conscious effort to incorporate equity-considerations into Uber and Lyft's algorithms, it's entirely possible that "following perceived market demand is likely to lead to disparities in transportation access."

Title VI enforcement occurs primarily through the federal agencies that disperse money to state and local actors. For public transportation, that agency is the Federal Transit Authority, which reviews the Title VI policies that public transportation agencies create and adjudicates Title VI complaints made against transit agencies. Currently, the Federal Transit Authority has been granting waivers to transit agencies that partner with Uber and Lyft under the Mobility on Demand Sandbox Program, allowing them to forgo the requirement of needing to demonstrate compliance with Title VI.

As some of these partnerships enter their third year, it's time to start generating long-term solutions to the challenge of ensuring that these partnerships live up to the equality mandate that Title VI requires.

It's entirely possible that many of these partnerships are enhancing equity in transportation. By delivering riders to bus and train stops who might otherwise not be able to access the transit network, these partnerships may be a boon to racial and economic equity. Alternatively, it's possible that transit agencies are subsidizing a private service that disproportionately benefits higher-income, white riders.

Going forward, facts, not faith, should inform our understanding of the Title VI implications of partnerships between transit agencies and Uber & Lyft.

Immobilization as a Form of Punishment

In July, a federal judge struck down a Tennessee law that revoked the driver's licenses of people who could not afford to pay court fines and fees. Tennessee's law demonstrates the lengths to which governments will go to enforce payments of taxes and fees that criminal defendants must pay, also known as court debt. Courts have at times invalidated some of the more extreme methods of debt collection. Debtor's prisons, for example, have been unconstitutional in the U.S. since 1983, although the practice still continues today.

Rather than imprisonment, Tennessee attempted to use immobilization as a means of making people pay their debts. The logic of immobilization, however, is equally faulty. As Judge Trauger explains in Haslam v. Thomas, denying indigent defendants the ability to drive is not an incentive to pay off debts, it's an impediment, making the law both harsh and self-defeating.

The story of James Thomas, one of the lead plaintiffs in the case, illustrates the problems with the state's scheme. Thomas was homeless in 2013, so he took shelter one night under a bridge during a rainstorm. For attempting to stay dry during a storm, Thomas was arrested and charged with criminal trespass. He pled guilty in exchange for a thirty-day suspended sentence, and was assessed $289.70 in court costs. On the day of his plea deal, Thomas told the county clerk that he was homeless and did not have the money to pay the court costs.

A year later, the Tennessee Department of Safety and Homeland Security (TDSHS) revoked Thomas's driver's license for "failure to pay litigation taxes, court costs and fines assessed by the court." The Department mailed Thomas a letter informing him his license had been revoked, which Thomas never received because it was mailed to his Nashville address where he no longer lived.

In 2016, Thomas went to TDSHS to get a new license, at which point he learned that the state had revoked his driving privileges for failure to pay his court debt. Moreover, TDSHS would only reinstate his license if Thomas paid both his court debt and an additional $65 reinstatement fee, an amount that is more than double the cost of a regular license in Tennessee.

Unable to pay back his debt, Thomas was left without a legal means of driving, and so he sued the state on behalf of both himself and a class of plaintiffs who have lost their licenses for failure to pay court debt. As the state conceded during the litigation, these debts can be substantial. Tennessee, like many states, charges individuals a series of taxes, fees, and fines for being involved in both civil and criminal litigation. These fees and fines, collectively called court debt, can range from $50 to several thousands dollars. Because the case deals only with the means of collecting court debt, it leaves unaddressed the need to reduce court debt in all its forms.

Despite the significant burden of repaying court debt, Tennessee has no system for screening defendants based on their ability to pay. Instead, the Department of Safety and Homeland Security automatically revokes the licenses of people who have more than a year of outstanding debt.

From 2012-2016, the state revoked over 146,000 driver's licenses for failure to pay court debt. Tennessee tried to defend the law on the grounds that it incentivizes people to pay off their debts. The numbers, however, show that this theory of repayment is dubious. Of the 146,000 licenses the state revoked, only 10,750 were later reinstated, or barely 7% of the total number. As the court explained: "[i]f Tennessee's revocation law were capable of coercing people into paying their debts in order to get their licenses back, it would be doing so. The overwhelming majority of the time, it is not."

Judge Trauger's opinion draws on a series of cases that have established various constitutional protections for the poor. For example, in Williams v. Illinois, the Supreme Court invalidated an Illinois statute which extended the maximum prison sentences for defendants who were unable to pay fines arising out of their convictions. The Court explained that because "only a convicted person with access to funds can avoid the increased imprisonment, the Illinois statute in operative effect exposes only indigents to the risk of imprisonment beyond the statutory maximum. By making the maximum confinement contingent upon one's ability to pay, the State has visited different consequences on two categories of persons since the result is to make incarceration in excess of the statutory maximum applicable only to those without the requisite resources to satisfy the money portion of the judgment"

Judge Trauger reached a similar conclusion in Haslam. She found that the license revocation scheme gave defendants with financial resources a choice ("pay or lose your license"). However, for indigent defendants, the law functioned essentially as a sentence enhancement, stripping them of their ability to drive based on their inability to pay, rather than their unwillingness to do so.

The opinion is also notable for its lengthy discussion of the importance of mobility in daily life. Judge Trauger delves into the statistics on transportation in Tennessee, where 93% of people drive to work, and public transportation is inadequate or nonexistent in much of the state. She makes clear that in Tennessee, as in much of America, driving is crucial for economic self-sufficiency, as well as for accessing basic necessities like medical appointments.

A classmate brought Haslam v. Thomas to my attention, and it resonated with me in part because of how it can inform our understanding of other restrictions on mobility. For example, forty-seven states have laws suspending or revoking licenses for failure to pay child support. Some of these laws provide exemptions based on ability to pay, but others do not.

In New Haven, where I live, the government has aggressively stepped up its use of towing and booting cars as part of its "Tax and Tow" program. New Haven was the second local government in the nation to employ the "bootfinder," a device that automatically scans license plates in order to identify cars with outstanding vehicle taxes and parking tickets. The city then impounds the car or affixes a boot to it in order to prevent the owner from using the car until the back-taxes are paid.

While tax collection is important, immobilization is a particularly severe form of punishment, a fact that is well-understood by the people who experience it. The city's former Assistant Assessor put it this way: "A person's house could burn down, and they'll deal with it. But if you tow their car, they go nuts. I've seen it happen here. You can always crash at a friend's house, but you can't necessarily always get to work."

Judge Trauger's opinion in Haslam captures the ways in which preventing people from getting to work is not only harsh, it's counterproductive if the goal is to enable them to pay down their taxes.

Haslam is one of a series of recent cases that have expanded constitutional protections for the poor. Last week, the Ninth Circuit ruled that localities cannot prosecute homeless people for sleeping outside when homeless shelters are full. As the court explained: "As long as there is no option of sleeping indoors, the government cannot criminalize indigent, homeless people for sleeping outdoors, on public property, on the false premise that they had a choice in the matter." And the Seventh Circuit recently found that panhandling is protected by the First Amendment.

Even though there is no constitutionally-protected right to transportation, it's heartening to see the strides being made to eliminate punishments that deprive people of essential needs like shelter and mobility.

Connecticut's Sweep of Energy Efficiency Funds

For 123 days last year, the State of Connecticut operated without a budget. For years, the state has struggled to right an ailing fiscal ship. The combination of a shrinking tax base, growing income inequality, and dire spending needs (Connecticut has one of the worst-funded public pension systems in the nation) made it difficult to forge any kind of grand budgetary bargain.

In an effort to close a $3.5 billion deficit, legislators appropriated a pot of money last year which may have never been theirs to begin with: an investment fund for energy efficiency and clean energy projects, paid for by customers of Connecticut's two major electric utilities. Ratepayers, energy efficiency companies, and environmental groups are now suing in federal court to get the money back, with oral arguments set for Thursday, 9/13.

The main question in the lawsuit is: if the state is short on cash, can it draw on money collected by utilities to pay for general budget needs? And behind this legal question lies a core policy concern: do we want the state to balance the budget by means of electricity rates, which are a regressive and often out-of-sight means of raising money?

The money in question came from two funds: the Connecticut Energy Efficiency Fund and the Clean Energy Fund. Together, the funds support projects that reduce peak demand for electricity, lower electricity costs, alleviate local air pollution, and lessen the state's dependence on fossil fuel power plants. In the process, the funds also spur local employment — to the tune of 34,000 energy efficiency jobs — and help the Connecticut Green Bank bring in $6 of private financing for every $1 of public money spent on clean energy projects.

The General Assembly created the two funds in 1998, when it passed a law instructing Eversource and United Illuminated to invest in energy efficiency projects. To pay for the projects, the legislature ordered the utilities to levy a surcharge on their customer's monthly electric bills. The state now argues that because the utilities are required by law to collect the surcharges, they are essentially a form of tax revenue which the state can spend as it sees fit.

The plaintiffs counter that ratepayers and taxpayers are not synonymous groups, and that even if they were, the state is barred from seizing ratepayer funds by both Connecticut statutes and the U.S. Constitution. Local electric utilities, like Eversource and United Illuminated, operate under a state-approved tariff. The tariff spells out what services the utility needs to provide and how much it can charge. The plaintiffs argue that the tariff is a form of a contract between utilities and their customers, and that the state cannot interfere with the ability of utilities to make good on their promises, including its promises to invest in energy efficiency and clean energy projects, without violating the Contracts Clause.

I'm not well-versed in state utility law, but if this were a case at the federal level, the plaintiffs's arguments would have some force (though not on constitutional grounds). The Federal Energy Regulatory Commission operates under a constraint known as the the Rule Against Retroactive Ratemaking, which forbids FERC from raising electricity rates after a tariff has been approved by the Commission. If a utility or the Commission wishes to make changes, they have to open a new rate case.

The Supreme Court and the Courts of Appeals have described the rationale behind the doctrine as providing "necessary predictability"¹ for regulated parties, as well as "prevent[ing] discriminatory rate payments."²

Both rationales are on display in the current case. On the predictability front, both Eversource and United Illuminated have already made commitments on the assumption that the $145 million in the funds would be available for them to spend. For example, Eversource and UI submitted energy efficiency bids into New England's regional electricity market, which allows them to receive payments if they reduce the overall amount of electricity that the New England region needs. However, if the utilities fail to deliver on their promises of reduced energy demand, they can face stiff financial penalties.

Discrimination is also an issue. While the majority of people and businesses in Connecticut are customers of either Eversource of United Illuminated, the state also has a number municipal utilities which were not subject to the surcharges. The plaintiffs have argued that the state has no rational reason to treat customers of Eversource and United Illuminated differently from customers of the municipal utilities if the point of the surcharges was to raise general tax revenue. This Equal Protection argument faces an uphill battle, because there are a host of plausible reasons for treating small municipal utilities differently than large investor-owned utilities.

My favorite argument in the case never made it past the complaint stage. In their initial complaint, the plaintiffs argued that sweeping the surcharges into the general fund constituted an illegal form of taxation on tax-exempt organizations.  501(c)(3) non-profits and other organizations are not supposed to pay state taxes. The plaintiffs argued that by using electricity rate money to fund the general budget, the state was indirectly taxing these tax-exempt organizations through their electricity providers, and so the surcharges would be illegal (at least as applied to 501(c)(3)'s). Unfortunately, that argument seems to have been jettisoned before the summary judgment phase.

Oral arguments are set for this upcoming Thursday at the New Haven Federal Courthouse. If you're in New Haven, I'd recommend checking it out. For more information on the case, see the complaint and the plaintiff's motion for summary judgment.