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New Law Clarifies Legal Status of EV Charging to Unlock $78 Million in Federal Funding

March 26, 2024
6 minute read

New Law Clarifies Legal Status of EV Charging to Unlock $78 Million in Federal Funding

March 26, 2024
6 minute read

Authored By

Mark Bender

Mark C. Bender

Special Counsel

John Clancy

John L. Clancy

Shareholder

Practices

On March 20, Governor Evers signed 2023 Wisconsin Act 121 (the Act) into law which aims to provide clarity to the electric vehicle (EV) industry in Wisconsin and help the state capture nearly $80 million in federal funding to deploy EV charging infrastructure along the state’s highly traveled corridors.

The National Electric Vehicle Infrastructure (NEVI) program allocated $78 million in federal funds to Wisconsin to build out the EV charging system along federally designated Alternative Fuel Corridors within the state. The NEVI funds will be awarded to private-sector businesses to construct EV charging infrastructure, providing up to 80% of the costs of the project. However, the final regulations implementing NEVI require that recipients communicate the price of electricity provided through NEVI-funded EV chargers, or in other words, sell electricity through NEVI-funded chargers, by the kilowatt-hour (kWh).

In Wisconsin, any person or entity that provides electricity directly or indirectly to the public must be permitted and regulated as a public utility and be subject to oversight through the Public Service Commission. Prior to Act 121, state law did not directly address whether EV charging stations, owned by a person or entity other than a public utility, could sell electricity through the charger to the public based on the amount of kWh consumed without being considered a public utility.

Act 121 clarifies which entities can sell electricity through EV chargers while avoiding classification as a public utility. Act 121 creates a new exemption from regulation as a public utility for persons or entities that provide electricity through any level of EV charging station, provided that the charging station require a fee based on the amount of kWh the user consumes. The Act also requires that all electricity supplied at the EV charging station must be supplied by the local electric utility or cooperative.

Additionally, Act 121 defines three levels of EV chargers:

  • Level 1: a device with one or more charging ports and connectors for charging EVs that operates on a circuit up to 120 volts (V) and transfers alternating current (AC) electricity to a device in an EV that converts AC to direct current (DC) to recharge an EV battery.
  • Level 2: incorporates the definition of “AC Level 2” under federal law, which is a charger that operates on a circuit from 208V to 240V and transfers AC electricity to a device in an EV that converts AC to DC to recharge an EV battery.
  • Level 3: incorporates the definition of a “DC fast charger” under federal law, which refers to a charger that enables rapid charging by delivering DC electricity directly to an EV’s battery, and analogous successor technologies.

The Act creates several restrictions for state and local governments who wish to construct and utilize EV charging stations. The Act broadly prohibits a local government from owning, operating, managing, or leasing a Level 1, Level 2, or Level 3 EV charging station, but creates certain exceptions, including:

  • A local government may own, operate, manage, or lease a Level 1, Level 2, or Level 3 charger used solely to charge the local government’s own vehicles;
  • A local government may own, operate, manage, or lease a Level 1 or Level 2 charger, installed before March 22, 2024, that is available to the public free of charge;
  • A local government may own, operate, manage, or lease a Level 1 or Level 2 charger, installed after March 22, 2024, that is available to the public and the local government charges a “reasonable fee” for the electricity;
  • Local governments may authorize another person to own and operate an EV charging station available to the public on local government property provided that the person is an electric utility or cooperative, or supplies electricity under the new exemption created by Act 121 and charges a “reasonable fee” for electricity.
  • Local governments may not condition building permits, conditional use permits, or other approvals on a private developer installing, or allowing installation of, EV charging stations. However, this restriction does not prevent a municipality from enforcing a contractual agreement with a developer.

A municipal utility may also own and operate an EV charging station that is available to the public and may charge a fee based on the amount of kWh sold, provided that the EV charging station receives any required PSC approvals, and provided that no revenue generated by the EV charging station is transferred to the municipality’s general fund. Additionally, no tax revenue may subsidize costs associated with an EV charging station, other than using specific, state-approved or federal grant money.

Notably, effective Jan. 1, 2025, the Act imposes a new $0.03/kWh excise tax on electricity delivered by any Level 3 charger, or any Level 1 or Level 2 charger installed after March 22, 2024. The excise tax appears to apply whether or not the EV charging station charges for the electricity. The Act specifically states that governmental entities are subject to the tax, but chargers at private residences are not. All revenue raised from the excise tax will be deposited into the state’s transportation fund, the same fund where revenues from the motor vehicle fuel tax (commonly referred to as the “gas tax”) are deposited. To prevent double taxation issues, the Act creates a sales tax exemption for all electricity sold at any Level 3 charger, and any electricity sold through a Level 1 or 2 charger installed after March 22, 2024.

For more information on this topic, or to learn how Godfrey & Kahn can help navigate the new regulatory landscape, contact a member of Godfrey & Kahn’s Energy team. Godfrey & Kahn has assisted private entities, nonprofits, local governments, and tribes package federal grants with other grants and tax incentives, including federal tax credits for clean technology projects and utilizing “Elective Pay” for tax-exempt entities, state and/or utility grants, New Market Tax Credits, or other private funding to drive down the cost of clean technology projects. With the Inflation Reduction Act providing numerous expanded funding opportunities available for clean technology deployment, we can work with you to help fully fund numerous types of projects.

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