Clallam PUD opposes carbon fee initiative

CARLSBORG — Clallam County Public Utility District commissioners have resolved to oppose a state ballot measure that would slap a fee on large carbon polluters.

District commissioners voted 3-0 Monday to approve a resolution against Initiative 1631, saying the measure would result in increased costs, decreased local control and compound regulatory requirements “all without an actual reduction in carbon emissions for our state’s energy sector.”

“I think you have to be honest and forthright about the whole situation,” PUD Commission President Ted Simpson said in a special meeting Monday.

“It’s going to cost us money.”

The Carbon Emissions Fee Measure would impose a pollution fee of $15 per metric ton of carbon released into the atmosphere beginning in January 2020.

The fee would increase by $2 per year, adjusted for inflation, until the state’s greenhouse gas reductions goals of 2035 are met and 2050 goals are on a trajectory to be met, according to the 38-page initiative (tinyurl.com/PDN-Initiative1631).

If the carbon fee initiative is approved, Washington would become the first state to adopt a carbon fee and first government in the world to do so by ballot referendum, according to an Aug. 15 report in The Atlantic (tinyurl.com/PDN-Atlantic) and to Ballotpedia at ballotpedia.org.

Under state law, the measure is a fee and not a tax because the revenue cannot be spent on government expenses or public program, but rather is dedicated to specific accounts related to investing in climate and environmental projects.

The fee is projected to generate $2.3 billion in its first five years, according to Ballotpedia.

Revenue from the fee would go into three specific funds to support environmental initiatives. The accounts are:

• Clean air and clean energy investments such as solar and wind power.

• Clean water and healthy forests to address impacts of climate change.

• Healthy community investments such as education to expand awareness and increase preparedness for the environmental, social and economic impacts of climate change.

A 15-member, governor-appointed Public Oversight Board would administer the spending.

Supporters of the measure say it would create thousands of jobs and reduce pollution in the state.

Opponents say it would result in increased gas prices if oil refineries pass the fee onto consumers.

Clallam County PUD officials say the carbon fee initiative would increase the district’s annual fuel and shipping costs by $20,000 in 2020 and by $51,000 by 2035. Those estimates do not account for inflation or cover administrative, manufacturing or other unknown costs, according to the resolution.

The actual cost of building infrastructure to support a greater load of renewable energy would far exceed the estimated rise in transportation costs, PUD officials said.

“There’s impact on any utility of upgrading their system to accommodate the charging of batteries for electric cars,” Simpson said.

“If our intention is to decrease carbon emissions and go to electric vehicles, you’re not going to do it on the system we have. It’s going to need to be upgraded.”

Officials with Franklin County Public Utility District, which is smaller than Clallam County PUD, have estimated that total cost of Initiative-1631 would be $700,000 to $1 million per year.

“If Franklin’s number is right, a $1 million [increase] for us would be a 2 percent rate increase, approximately,” Clallam County PUD General Manager Doug Nass said.

Nass added that part of the PUD’s mission is to provide reliable low-cost power to its customers.

Clallam County PUD provides electricity to all of Clallam County except the city of Port Angeles, which has its own utility. The PUD has 26,500 electric customers and 31,500 meters.

The Benton and Franklin County PUD boards have each passed resolutions opposing Initiative 1631, the Tri-City Herald reported Sept. 11 (tinyurl.com/PDN-TriCityPUDs).

Clallam County PUD gets 88 percent of its electricity from hydropower through the Bonneville Power Administration and 10 percent from nuclear power, Nass said.

One percent of the PUD’s energy comes from coal and 1 percent comes from natural gas, according to its website.

Nass said rural utilities would be disproportionately affected by Initiative 1631 because of the higher transportation costs.

“From a gas standpoint, that’s about 14-cents-a-gallon of gas increase on the first year,” Nass said.

Another downside to the proposed initiative, Nass added, is a loss of local control.

“It kind of takes away more local control from the commission, our elected officials,” Nass said.

“That really impacts us from the a standpoint of we have no say in what happens.”

PUD Commissioner Will Purser said most small utilities would need to hire staff or consultants to recover carbon pollution fees from the Public Oversight Board.

He added that I-1631 could be “pancaked” with other regulatory requirements like the Energy Independence Act, the voter-approved 2006 initiative that required local utilities to provide more and more energy from non-hydro, renewable sources.

Commissioner David Anderson, who was appointed Sept. 18 to fill the remainder of former Commissioner Hugh Haffner’s term, said the carbon fee initiative is “complex” in its approach.

“It seems like a cap and dividend, or a tax and dividend program would be much more simple and would be more likely to actually reduce carbon,” Anderson said.

“I don’t see where I’m confident this is even going to reduce carbon by all that much. By the time you look at all the machinations that have to occur — and it’s not that specific as to what the metrics or the goals are going to be — but you’ve got a lot of bureaucracy added in.”

Nass said the initiative is “almost incentive to not reduce the carbon” because its continues to generate revenue.

Anderson compared the measure to taxes on tobacco.

“Governments love them, because they don’t really want people to quit using tobacco because it’s a lot of revenue,” Anderson said.

“You can see that happening here.”

Initiative 1631 is being supported by Clean Air Energy WA, which reported $5.3 million in contributions including $1.2 million from The Nature Conservancy, according to Ballotpedia.

The measure is being opposed by Western States Petroleum Association, which reported $15.9 million in contributions including $7.2 million from Phillips 66.

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Reporter Rob Ollikainen can be reached at 360-452-2345, ext. 56450, or at [email protected].

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