Federal Energy and Fleet Management: Plug-in Vehicles Offer Potential Benefits, but High Costs and Limited Information Could Hinder Integration into the Federal Fleet

In 2010, we reported that agencies efforts to incorporate plug-in hybrid vehicles into the federal fleet face a challenge posed by the patchwork of existing federal requirements that cover energy usage and vehicle acquisitions. In deciding whether to acquire plug-ins, agencies must also consider how this decision will affect their ability to meet these requirements. These requirements are intended to further several important objectives, including reducing petroleum consumption, decreasing greenhouse gas emissions, improving energy efficiency in facilities, and encouraging the use of alternative fuel vehicles and alternative fuel in the federal fleet. However, the current set of requirements (1) does not provide agencies with a means to set priorities for these objectives, (2) can be costly, and (3) are sometimes in conflict with one another. Therefore, we recommended that the Department of Energy (DOE) propose legislative changes that would resolve these conflicts and set priorities. In response, DOE developed a legislative proposal identifying conflicts and overlaps in policies and proposed language that it submitted to the Office of Management and Budget (OMB) to resolve these conflicts. As a result, OMB has been given language to share with Congress that could resolve statutory conflicts for the federal fleet and clarify congressional and executive priorities regarding agencies' energy use, fleet management, and vehicle acquisition decisions.

In our June 2009 report "Federal Energy and Fleet Management: Plug-in Vehicles Offer Potential Benefits, but High Costs and Limited Information Could Hinder Integration into the Federal Fleet" we found that with the advent of electric and plug-in vehicles, agencies lack information critical to making informed vehicle acquisition decisions that will help them to meet various federal requirements and goals related to reducing greenhouse gas emissions and petroleum consumption. We recommended that Department of Energy (DOE) develop guidance for agencies that specifies the elements that agencies should include in their plans for acquiring the mix of vehicles that will best enable them to meet their requirements and federal energy-conservation goals. In June 2010, DOE issued the Comprehensive Federal Fleet Management Handbook, which contains guidance for agencies with regard to identifying optimal electric vehicle strategies. The Handbook includes guidance to federal fleet managers to consider whether electric or plug-in vehicles are suitable based on fleet location and characteristics, whether charging stations are available or can be installed, and whether such vehicles are competitive with other alternatives on a life-cycle cost basis. The guidance also asks agencies to consider whether coal-based electricity is used in an area in order to evaluate the emission reduction potential of using such vehicles. This guidance will help agencies make vehicle choices that will both meet the requirements of the agency, and have the biggest impact on agency goals of reducing emissions and petroleum consumption.

In our June 2009 report "Federal Energy and Fleet Management: Plug-in Vehicles Offer Potential Benefits, but High Costs and Limited Information Could Hinder Integration into the Federal Fleet," we found that requirements for reducing energy at federal facilities and requirements for reducing petroleum use in federal fleets may come into conflict with the advent of electric or plug-in vehicles. We recommended that Department of Energy (DOE) develop guidance for agencies on how electricity should be measured and accounted for in meeting energy-reduction goals related to federal facilities and alternative fuel consumption. In April of 2010, DOE issued "Guidance for Federal Agencies on E.O. 13514 Section 12, Federal Fleet Management," which contains directions for agencies on how to measure and report electric vehicle electricity consumption. The guidance states that electricity used to charge vehicles will be counted toward agencies' alternative fuel use requirements. Further the guidance states that "electricity consumption for EVs must be metered separately from facility consumption" or "electricity consumption may be monitored on the vehicle itself and then subtracted from a facility's electricity consumption totals" so that such electricity usage does not count against a facility's requirement to reduce its overall energy intensity. This guidance clarifies for agencies how to account for electricity relative to goals for their facilities and for their fleets, and encourages the use of electric and plug-in vehicles where they may have the biggest impact on reducing emissions and petroleum consumption.

In June 2009, we found that, plug-ins have high upfront costs, but could become comparable to gasoline vehicles over the life of ownership if certain factors change, such as a decrease in the cost of batteries and an increase in gasoline prices. However, agencies are not required to use life-cycle costing in evaluating which vehicle to purchase, and consequently vary in the extent to which they do. Furthermore, since plug-in hybrids and all-electric vehicles are new to the marketplace, much of the information about their lifetime ownership costs is unknown and costs will vary greatly depending on how agencies plan to use them. For example, plug-in hybrids used only within the all-electric range will use no gasoline at all, while plug-in hybrids used for long-distance driving may not offer fuel economy much better than a conventional hybrid or highly fuel-efficient gasoline-powered vehicle. We therefore recommended that, for plug-in vehicles that are newly offered, the Administrator of the General Service Administration (GSA) should provide guidance for how agencies should address uncertainties about the vehicles? future performance in estimating the life-cycle costs of plug-ins, so agencies can make better-informed decisions in acquiring vehicles. In response to our recommendation, GSA conducted a workshop on March 17, 2011 with fleet managers to go over issues preventing the acquisition of such vehicles, and, according to GSA, has provided forums to educate federal fleet managers on the upfront and life-cycle costs of plug-ins and all-electric vehicles. In addition, cost comparison data and information on these vehicles has been included in GSA?s product guide and acquisition package. The Fiscal Year 2012 product guide contains such information for several plug-ins and all-electric vehicles. Finally, GSA is conducting a pilot to evaluate the usage of 116 plug-ins, which should provide the agency with additional information regarding the comparative costs of these vehicles. With the additional information made available and being collected, agencies will be able to make better-informed decisions regarding the acquisition of plug-ins and all-electric vehicles.

In June 2009, we found that plug-ins and all-electric vehicles will be expensive relative to other vehicles until battery costs come down and challenges such as achieving economies of scale are met. These high upfront costs will prevent agencies from including them in large numbers in their fleets without additional funding. Furthermore, agencies will also be hindered from incorporating these vehicles because of uncertainties regarding their performance, the maintenance and reliability associated with the vehicles? batteries, and the resale value of the vehicles. In order to mitigate these risks and allow agencies to experiment with how well the vehicles perform within their fleet, we recommended that the Administrator of the General Service Administration (GSA) explore the possibility of arranging pass-through leases of plug-in vehicles directly from vehicle manufacturers or dealers. However, GSA was unable to find any non-government sources able to provide these vehicles. In addition, GSA determined that, due to the Statutory Price Limitation, which dictates that GSA award vehicle contracts to the lowest price vehicle in each category, these vehicles would not be available to the government to purchase. An amendment to the Continuing Appropriations bill in May 2011 allowed an exemption from the Statutory Price Limitation, and GSA was able to provide initial awards for several plug-ins and all-electric vehicles. In response to the recommendation, these vehicles are now available for agencies to purchase through GSA Automotive, lease through GSA Fleet, or lease directly from a commercial vendor. Furthermore, in response to the recommendation, GSA ordered 116 plug-in vehicles for a pilot program. GSA has worked to identify potential locations and infrastructure needs for the vehicles and noted agencies and areas that have expressed interest. GSA?s efforts to make these vehicles available in multiple ways will allow agencies to experiment with how well the vehicles meet their fleet needs, while reducing the risks associated with high upfront costs, and uncertain performance and reliability.