Supercharging Revenue

[MikeDog77]

I know Tesla has said that Supercharging Revenue would be used to pay for the cost of supercharging. Obviously a lot of M3 owners need to "fill up" in order to cover the cost for the energy for S and X owners. But now that Tesla is doing away with free super charging for life, and at the same time adding 300,000+ M3 per year, it got me thinking. How much revenue is it generating.

I have had a M3 for 7 months and have paid $84 for Tesla super charging. I drive a lot, but so do most Tesla owners. So that works out to roughly $150 per year. So we are taking about $15 million per year per 100,000 cars that are paying for supercharging. So we could easily see Tesla with 20-30 million in 2019 supercharging revenue.

I would think that the cost of adding a super charger is not too much(if anyone has an idea please let me know). But 20-30 million sure does pay for a lot of electricity and probably some expansion. And this number will grow exponentially as they continue to add cars to the road and superchargers to more locations.

 

[cpa]

At one time it was bantered about on this forum that construction costs for an 8-stall Supercharger ranged from 150K-200K. (I am recalling from memory.) Now most traditional Superchargers are at least 10 stalls with many approaching 20, plus the two large sites in California at 40 stalls. Then there are the newer urban-style Superchargers that typically range from 12-20 stalls. Those construction costs are probably slightly lower, but that is just a guess.

There are numerous reports that there are individuals who have not been charged for Supercharging even though they do not have the grandfathered "free, unlimited" or the annual 400kWh per year allotted to recent S and X purchases. The reasons for not charging a fee are largely speculation, from certain sites where the landlord foots the electric bill to transmission issues between the Supercharger and Tesla's database of our credit cards, to internal decisions by management.

I highly doubt that Tesla is going to earmark the cash it collects from us when we Supercharge. If your arithmetic assumptions are correct, heck, if the actual revenue is triple what you calculated, that sum is still immaterial to the cash that Tesla receives over an entire year. My best guess is that the Supercharger department prepares a budget for construction, maintenance, repairs, electricity, and miscellaneous expenses that gets approved by the Board, while another department (perhaps operations) estimates the cash generated from Supercharging fees that gets deposited into one of Tesla's general operating cash accounts.

Probably the accounting department will generate a management report to reflect operating revenue from Supercharging and the resulting period costs of Supercharging each month on a national and statewide level to determine if the fee charged by state and/or country needs to be increased. When this program was first announced, Tesla decided to assess 20 cents/kWh in California. Several months later, Tesla increased the fee to 26 cents, where it has remained.

 

[mociaf9]

It doesn't make any sense to consider the revenue from charging fees without also considering the operating expense of the purchased electricity (and probably other O&M expenditures for the network, too). Electricity doesn't grow on trees.

 

[boiler81]

Tesla decided to assess 20 cents/kWh in California. Several months later, Tesla increased the fee to 26 cents, where it has remained.

I can't rationalize how Tesla can charge $0.26/kW in CA supercharging rates and $0.24/kW in WA state when the power rates in WA are a third of CA rates. Everybody should pay for operating and infrastructure cost, but why does Tesla feel it's OK to gouge user of WA superchargers?

 

[Lloyd]

I can't rationalize how Tesla can charge $0.26/kW in CA supercharging rates and $0.24/kW in WA state when the power rates in WA are a third of CA rates. Everybody should pay for operating and infrastructure cost, but why does Tesla feel it's OK to gouge user of WA superchargers?

You can't compare just standard electrical rates. Look at the demand charges also for the power needed to operate a supercharger.

What are demand charges?
Demand charges are the portion of a customer's bill for electric service based upon the peak electric capacity (in kilowatts) demanded or required by power-consuming equipment. Utilities like Seattle City Light collect demand charges to maintain infrastructure which ensures reliable power during times of peak usage.

Why have demand charges increased for City Light's Downtown Network?
Demand charges are driven by infrastructure costs. The marginal costs of equipment, labor and network design—essential elements of power infrastructure—have all risen in recent years. The costs associated with maintaining City Light substations and installing ducts and vaults for the Downtown Network have also gone up. Additionally, the portion of distribution costs recovered through the demand charge for Downtown Network customers was increased from 15 percent to 20 percent, the same portion of distribution costs customers outside of the Downtown Network have been paying.

How much have demand charges for Downtown Network risen?
City Light's 2017 retail rates included higher peak demand charges for Downtown Network customers, increasing from $4.54 to $7.48 per kW for medium customers and $4.05 to $7.62 per kW for large customers.

How will this impact bills for my building?
Customers with steady use (high load factor) will see lower bill impacts, and customers with more intermittent use (low load factor) will generally see higher bill impacts. The average bill increase expected for 2017 is about 4 percent for medium customers and about 5 percent for large customers in the Downtown Network. These percentage increases are consistent with the rest of City Light’s service territory. While demand charges (per kW) have increased, energy charges (per kWh) have decreased, providing a billing offset. Downtown Network energy charges decreased by 4.2 percent for medium customers and decreased by 4.3 percent for large customers.

How does the demand charge increase compare to the charges from other utilities?
City Light's 2017 demand charges for Downtown Network customers are very competitive even when compared with non-network customers at other utilities.

Utility Demand Charges
Demand (kW) SCL 2017 Adopted Non-Network SCL 2017 Adopted Network Snohomish PUD Tacoma Power PSE Winter PSE Summer
10 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
500 $3.36 $7.48 $4.95* $7.50 $13.36 9.31
5,000 $3.05 $7.62 $4.95* $7.50 $13.36 9.31
20,000 $3.05 $4.95* $7.50 $13.36 9.31
*The first 100 kW per month of billing demand are free

How can I budget for the new demand charges?
To see how your City Light bill might change with the new demand charges, pick an exemplary month from 2016 (energy use varies greatly depending upon time of year) and use this bill calculator to approximate what it will be in 2017.

To see examples of potential bill changes, consider the charts below for medium and large customers.

Medium General Service - Network Rates, Monthly Bill Impacts
Customer
Description Load
Factor Annual
kW Annual
kWh Monthly Bill
2016 Monthly Bill
2017 Change % Monthly Bill
2018 Change %
Boutique 21% 776 207,160 $1,730 $1,860 7.5% $1,967 5.8%
Theater 29% 3,880 946,080 $8,028 $8,702 8.4% $9,197 5.7%
Real Estate 36% 7,682 2,547,600 $20,570 $21,708 5.5% $22,998 5.9%
Hotel 42% 2,503 1,070,640 $8,370 $8,671 3.6% $9,202 6.1%
Shopping Center 44% 7,975 3,428,400 $26,788 $27,741 3.6% $29,439 6.1%
Bank 49% 1,133 466,400 $3,662 $3,804 3.9% $4,036 6.1%
Office Building 66% 1,261 519,900 $4,082 $4,239 3.9% $4,497 6.1%
Hotel 69% 9,901 5,572,800 $42,384 $43,184 1.9% $45,895 6.3%


Large General Service - Network Rates, Monthly Bill Impacts
Customer
Description Load
Factor Annual
kW Annual
kWh Monthly Bill
2016 Monthly Bill
2017 Change % Monthly Bill
2018 Change %
Event Space 20% 12,559 3,005,102 $24,512 $27,360 12% $28,896 5.6%
Retail/Office Tower 30% 43,443 12,810,465 $103,694 $112,738 9% $119,294 5.8%
Office Tower 43% 27,507 9,338,622 $73,606 $78,981 7% $83,657 5.9%
Retail Store 49% 27,292 11,157,363 $85,704 $90,479 6% $95,955 6.1%
Hotel 67% 24,093 13,113,897 $95,011 $98,348 4% $104,468 6.2%
Data Center 84% 37,314 24,718,431 $173,656 $177,625 2% $188,863 6.3%


Where can I get more details about City Light’s rates and the rate-setting process?
Visit our rate details page.
CURRENT RATES
Click here to find current rates by jurisdiction and customer class.

CONTACT US
Question about your bill?
Email [email protected]

 

[nwdiver]

I can't rationalize how Tesla can charge $0.26/kW in CA supercharging rates and $0.24/kW in WA state when the power rates in WA are a third of CA rates. Everybody should pay for operating and infrastructure cost, but why does Tesla feel it's OK to gouge user of WA superchargers?

As Lloyd pointed out commercial service is not a simple volumetric fee like you're used to paying at your house. Not sure about WA and CA but for commercial service here in NM it's ~$10/kW + $0.03/kWh. So a busier SC would actually cost less per kWh. If you take the Centrailia SC it could peak at 1000kW on a weekend so they have to pay $10k/mo just based on the weekend peak then be idle for during the week. The demand fee of $10k/mo would apply whether the SC charged 10,000 cars or 100.

 

[boiler81]

So if we assume demand rates are a wash, (which they are likely higher in CA), the WA commercial rate($0.0884) is half of the CA rate($0.1728) yet we both pay nearly the same at Tesla Superchargers...WA supercharger users are being charged too much.

Commercial Electricity Rates by State
(cents per kWh for latest month available)

State Average rate: October 2018 Average rate: October 2017; % increase/ decrease; % of U.S. average Rate rank
Alabama 11.24 11.61 -3.2% 104.7 39
Alaska 19.85 18.6 6.7% 184.8 50
Arizona 10.85 10.89 -0.4% 101.0 36
Arkansas 7.05 8.38 -15.9% 65.6 1
California 17.28 16.9 2.2% 160.9 49
Colorado 10.62 10.16 4.5% 98.9 35
Connecticut 16.8 16.73 0.4% 156.4 46
Delaware 10.21 9.89 3.2% 95.1 28
DC 12.18 11.98 1.7% 113.4 41
Florida 9.32 9.58 -2.7% 86.8 19
Georgia 9.5 10.01 -5.1% 88.5 21
Hawaii 29.85 26.67 11.9% 277.9 51
Idaho 7.82 8.12 -3.7% 72.8 2
Illinois 9.26 9.16 1.1% 86.2 18
Indiana 10.4 10.56 -1.5% 96.8 30
Iowa 9.32 8.56 8.9% 86.8 20
Kansas 10.61 10.68 -0.7% 98.8 34
Kentucky 9.54 9.8 -2.7% 88.8 22
Louisiana 8.19 8.94 -8.4% 76.3 6
Maine 12.34 12.02 2.7% 114.9 42
Maryland 10.6 10.63 -0.3% 98.7 33
Massachusetts 16.92 16.07 5.3% 157.5 47
Michigan 11.21 10.79 3.9% 104.4 38
Minnesota 10.45 10.64 -1.8% 97.3 32
Mississippi 10.4 10.14 2.6% 96.8 31
Missouri 8.54 8.92 -4.3% 79.5 9
Montana 10.28 10.22 0.6% 95.7 29
Nebraska 8.76 8.45 3.7% 81.6 10
Nevada 7.85 8.67 -9.5% 73.1 3
New Hampshire 16.08 15.2 5.8% 149.7 45
New Jersey 11.77 11.35 3.7% 109.6 40
New Mexico 10.15 9.97 1.8% 94.5 26
New York 14.98 15.02 -0.3% 139.5 43
North Carolina 9.06 8.65 4.7% 84.4 14
North Dakota 9.18 9.19 -0.1% 85.5 16
Ohio 10.12 10.27 -1.5% 94.2 25
Oklahoma 8.02 8.24 -2.7% 74.7 5
Oregon 9.03 9.04 -0.1% 84.1 13
Pennsylvania 8.79 8.86 -0.8% 81.8 11
Rhode Island 16.93 15.4 9.9% 157.6 48
South Carolina 9.83 10.22 -3.8% 91.5 23
South Dakota 9.88 9.88 0.0% 92.0 24
Tennessee 10.19 10.32 -1.3% 94.9 27
Texas 7.93 8.14 -2.6% 73.8 4
Utah 8.41 8.67 -3.0% 78.3 8
Vermont 15.31 14.71 4.1% 142.6 44
Virginia 8.31 8.26 0.6% 77.4 7
Washington 8.84 8.78 0.7% 82.3 12
West Virginia 9.07 9.68 -6.3% 84.5 15
Wisconsin 10.91 10.47 4.2% 101.6 37
Wyoming 9.21 9.95 -7.4% 85.8 17

 

[mociaf9]

So if we assume demand rates are a wash, (which they are likely higher in CA), the WA commercial rate($0.0884) is half of the CA rate($0.1728) yet we both pay nearly the same at Tesla Superchargers...WA supercharger users are being charged too much.

Commercial Electricity Rates by State
(cents per kWh for latest month available)

State Average rate: October 2018 Average rate: October 2017; % increase/ decrease; % of U.S. average Rate rank

California 17.28 16.9 2.2% 160.9 49
Washington 8.84 8.78 0.7% 82.3 12

You've misunderstood the structure of commercial electricity rates with demand charges. Under such a billing system and for a given service size, electricity will be cheaper on a per kilowatt-hour basis the more it is are used. Basically, the demand charge is a significant fixed cost that is based on the size of the electrical service and, given that size, using more electricity will "spread" it out over more kWh. Because Californian superchargers are, on average, used more heavily than those in Washington (or other places) their effective rates will appear lower than a superficial comparison of the respective variable portion of their rates. This will be somewhat offset by a difference in the demand charges for the same level of service, but with a high enough usage even that effect will tend to be minimized unless the difference is quite significant. You can't really just look at statewide average commercial electricity rates to get a good idea of Tesla's cost of running a supercharger.

Here's Tesla's statement about their prices:

Tesla is committed to ensuring that Supercharger will never be a profit center.

So, assuming you're willing to take them at their word, if they are charging that much for use in WA it isn't because they are overcharging. And if you look at the prices charged for the rest of the country the cheapest is only $0.20/kWh (though when the rate is based on $/minute prices there will be some with an effective price that is lower so long as they are getting a fast charging rate). IMO, a difference of a few cents per kWh really isn't much to get worked up over. Even if you fully charged a Model 3 from 0% to 100%, you'd only be paying an extra $3.75 compared to the cheapest rate Tesla offers anywhere in the country.

 

[nwdiver]

You've misunderstood the structure of commercial electricity rates with demand charges. Under such a billing system and for a given service size, electricity will be cheaper on a per kilowatt-hour basis the more it is are used. Basically, the demand charge is a significant fixed cost that is based on the size of the electrical service and, given that size, using more electricity will "spread" it out over more kWh. Because Californian superchargers are, on average, used more heavily than those in Washington (or other places) their effective rates will appear lower than a superficial comparison of the respective variable portion of their rates.

^^^ Bingo ^^^

 

[Sybaseguru]

Tesla will have to account for their superchargers in their annual accounts - they are not allowed under accounting rules to lump the income in with sales. Its the same principle that a software company has to separate support revenues from sales revenues (where it can end up 50:50). With so many model 3's coming on board and being charged it will be a significant income stream, and will be very valuable when there is a shortfall in sales at sometime in the future when the market matures. Assuming $20k per stall to build and 5 hours usage per day and 10c profit per kwh, the profit per stall is $20k pa - payback in 1 year and thereafter fill the bottom line!

 

[cpa]

Tesla will have to account for their superchargers in their annual accounts - they are not allowed under accounting rules to lump the income in with sales. Its the same principle that a software company has to separate support revenues from sales revenues (where it can end up 50:50). With so many model 3's coming on board and being charged it will be a significant income stream, and will be very valuable when there is a shortfall in sales at sometime in the future when the market matures. Assuming $20k per stall to build and 5 hours usage per day and 10c profit per kwh, the profit per stall is $20k pa - payback in 1 year and thereafter fill the bottom line!

What accounting rules are you referring? Sales from continuing operations are sales from continuing operations. Sales are only separated for discontinued operations and very, very rarely extraordinary items. Published financial statements are quite brief; there is not a whole lot of detail. Management may decide to break sales out is slightly more detail in their annual letter to shareholders, but the income statement will have one item: Gross Sales or Total Revenue. This amount will include car sales, service and repair, Supercharger electricity sales, Tesla store sales, solar panels and storage batteries, and any other miscellaneous items that generate revenue.

Your analogy regarding the software business does not apply. There are complex rules concerning revenue recognition because the revenue earned from the sales of support services is recognized over a period of time instead of immediately as with the actual software product itself. I confess that I have not read an audited financial statement for one of these companies, but I highly doubt that the income statement separates their gross sales into discrete categories unless the company chooses to do so.

 

[floatplane]

Can you clarify for me is the demand charge based on the actual peak power used that month (and so will vary each month) or is based on the rated power and so be constant every month?

 

[Lloyd]

Can you clarify for me is the demand charge based on the actual peak power used that month (and so will vary each month) or is based on the rated power and so be constant every month?

Demand charges vary for each month depending on the peak usage. Demand charges have nothing to do directly with rated power. Indirectly you have the potential to have greater demand charges with a greater rated power for a service.

Making Sense of Demand Charges: What Are They and How Do They Work? - Renewable Energy World

 

[mociaf9]

Can you clarify for me is the demand charge based on the actual peak power used that month (and so will vary each month) or is based on the rated power and so be constant every month?

Demand charges are usually based on the highest kW usage for any 15 minute period in a billing cycle. So, if the supercharger were totally shut down for an entire cycle, then their demand charge would be 0.

Commercial/industrial electrical plans also sometimes have a fixed monthly service fee that might be based on the size of the electrical service and that charge would be constant irrespective of actual usage during the cycle. But those charges, if they are levied at all, are generally pretty minor (<$50).

 

[user212_nr]

It doesn't make any sense to consider the revenue from charging fees without also considering the operating expense of the purchased electricity (and probably other O&M expenditures for the network, too). Electricity doesn't grow on trees.

No kidding. Many franchises will have 4 million dollars revenue and expenses $3,970,000. They make $49 out of $50 (approx) and then pay insurance, interest, etc. If the owner doesn't work there, he looses money.

2:41 "that type of business is what we call buying a job"

All this arguing about demand-charges and prices, and yet we have no idea how much profit if any they are making on each sale. I thought they were taking a loss, and I'd imagine that even with higher prices they do not make any profit. At best they break even not considering the upfront cost