LOUISVILLE, Ky. (WDRB) -- Kentucky Gov. Andy Beshear likes to call the Bluegrass State the "the electric vehicle battery production capital of the United States." But Kentucky is about to add red tape that will make it more expensive and complicated for a business, church or library to offer electric vehicle charging to the public.
Starting in January, anyone who installs a publicly available EV charger will have to quantify the amount of electricity dispensed from the charger — even if it has no separate meter — and pay a monthly usage tax to the state.
The new tax is meant to capture revenue from drivers who otherwise wouldn't contribute to Kentucky road funding, but critics say it will discourage the installation of public electric vehicle charging stations while also double taxing Kentucky EV drivers, which lawmakers in the Republican-dominated General Assembly say they didn't intend.
All charging stations, including those that are free to use at churches, farmers markets, YMCAs and shopping centers, will have to pay the new tax so long as they were installed after July 1, 2022.
"The biggest concern is that it basically is not going to bring in the revenue that makes it worth the expense, so you're going to see people stop providing public chargers," said Lane Boldman, executive director of the Kentucky Conservation Committee, which lobbies state government on environmental issues.
The new EV electricity tax was included among dozens of other tax changes in the Republican-controlled legislature's fiscal bill, House Bill 8, in 2022.
Sen. Jimmy Higdon, R-Lebanon, the chairman of the Senate Transportation Committee, said the goal is to capture revenue for state road funding from EV drivers passing through Kentucky.
Since EVs do not use gasoline, their drivers do not pay the state gas tax, which provides the primary means of funding roads and bridges. Kentucky and at least 31 other states have made up for that, however, by assessing a flat, annual fee ($120 in Kentucky) for state-registered EVs.
Meanwhile, Kentucky is one of only seven states that separately tax the electricity consumed at public EV charging stations, according to research by the National Conference of State Legislatures.
The idea of taxing EV-related electricity grew from lawmakers' desire not to give a "free pass" to EV drivers whose cars are registered in other states if they use Kentucky roads, Higdon said.
"The legislative intent of what we did was to capture those out-of-state travelers and not the in-state," he said.
Public charging not keeping pace
The tax arrives at a time when more charging stations are needed to meet automakers' and the federal government's ambitious goals for electric vehicle growth.
Kentucky is playing a key role in the blossoming industry, with two massive EV battery plants for Ford vehicles under construction in Hardin County and Toyota planning to produce its first U.S.-made EV at its factory in Georgetown.
But while car companies ramp up their EV offerings, the availability of charging stations remains one of the biggest hurdles for consumers considering an EV.
"(T)he beleaguered public vehicle charging infrastructure has not kept pace. If anything, it is falling further behind," automotive intelligence firm J.D. Power concluded in a report last month.
EV chargers fall in two camps. "DC Fast" chargers, like Tesla's Supercharger stations and federally funded plugs that will be installed along interstates and major highways, can charge a vehicle in about half an hour. Then there are "Level 2" chargers that most anyone can put in a home garage or public parking lot. The Level 2 chargers are much slower but also much less expensive than DC Fast chargers.
The Louisville metro area is home to more than 60 free, community chargers at churches, businesses and other neighborhood sites thanks to the efforts of EvolveKY, a nonprofit that handles the installations.
The community groups that shoulder the expense of hosting an EV charger typically scrape together $5,000 to $6,000 for the installation and about $50 to $75 a month in additional electricity charges, according to Mike Proctor, a board member of EvolveKY.
Adding red tape
The problem with Kentucky's new electricity tax isn't the money, Proctor said. The hosts of Level 2 chargers will owe about 21 cents in tax for every hour they're plugged into a vehicle, he estimates, based on the tax rate of $0.03 per kilowatt-hour.
The problem, he said, is the red tape involved with complying with the tax.
Community chargers typically do not come with an electric meter that would allow a church or park or library to know how much of their electricity consumption comes from the charging station. Usually, the EV electricity is part of the facility's existing electric bill that includes lights, air conditioning and any other appliances on site, Proctor said.
"We have been dealing with the most inexpensive (chargers) because if someone is trying to get a charger out in the community and doing this like a "free WiFi" perk, we want to get it in as inexpensively as possible," Proctor said.
Louisville Metro Council member Andrew Owen, D-District 9, at an electric vehicle charger his office helped install in a Metro-owned public parking lot on Frankfort Avenue in Clifton. Aug. 21, 2023
And the new tax requires that someone obtain the usage, fill out a form and mail a check each month to the state.
Louisville's newest free EV charging station was installed in July at the Metro government-owned parking lot along Frankfort Avenue in Clifton.
Metro Council member Andrew Owen, a Democrat who represents the area, said the Greater Louisville Sierra Club paid about $6,000 for the plugs while his office agreed to fund the monthly electricity costs.
Owen said he wasn't aware of the charging tax until contacted for this story, and he isn't sure how Metro government will measure the electricity or who will handle the monthly paperwork. (Even government entities such as cities, counties and libraries will owe the tax if they host an EV charger, state officials confirmed.)
"I think it's absolutely a barrier to this kind of investment, which is not good," Owen said.
Higdon, the chairman of the Senate transportation committee, said lawmakers did not intend to "double dip" by charging Kentuckians both the flat, annual EV fee and the new tax on the electricity consumed at public chargers.
He said he expects lawmakers to entertain "tweaks" to the policy when legislature reconvenes in early 2024, and that he "certainly could support" exempting free chargers from the new tax.
"In a perfect world, everybody — all Kentucky residents that had electric cars — will be charged up at home or when they go to work. And only the people passing through Kentucky would be using these charging stations where the $0.03 per kilowatt (-hour) is being charged," Higdon said. "It's not a perfect world."