North Carolina Charges Annual Fee for All-Electric Vehicles
In January 2014, North Carolina started collecting a $100 annual fee from all-electric vehicles registered in the state. North Carolina began billing these customers separately because they do not pay road use and maintenance taxes attached to gasoline sales.
- Similar measures have been passed in other states, including Colorado, Nebraska, Virginia, and Washington
- Owners of hybrid vehicles that use a combination of gasoline and electricity are not required to pay the special fee
- The tax impacts nearly 1,600 all-electric vehicles registered in North Carolina
Technology advances are forcing an evaluation of long-standing public policy. In the transportation industry, electric vehicles require decision makers to develop an alternative to gasoline taxes. In the past, a volumetric approach was a simple and equitable mechanism to collect taxes for road maintenance, as fees were proportional to use. Electric vehicles have broken this alignment and new models are required.
In the electric industry, the growth of net metering and distributed generation allows customers to reduce or eliminate net consumption of grid-supplied electricity. As a result, customers do not pay fixed costs included in volumetric rates. In addition, current regulatory models may not adequately value the benefits and costs of distributed generation. This dynamic will require regulators to look beyond the convenience of volumetric rates in order find new models to ensure equitable treatment of net-metered and non-net-metered customers.
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