Clallam County Public Utility District officials, Initiative 732 proponents talk finances

The Nov. 8 ballot measure to address climate change by taxing carbon pollution was debated at a Port Angeles Business Association meeting.

PORT ANGELES — Clallam County Public Utility District officials and proponents of Initiative 732 differed on the monetary impacts of the Nov. 8 ballot measure at an election forum this week.

The proposal, intended to address climate change by taxing carbon pollution, was debated at a Port Angeles Business Association breakfast meeting, with ballots being mailed to voters Wednesday, Oct. 19.

On hand were Mike Massa, a Seattle-based spokesman for I-732, and a host of representatives from the Clallam County PUD, which is opposed to the proposal, including PUD spokesman Mike Howe, who gave the main presentation.

“We have a moral obligation to act on climate change,” Massa told more than 50 meeting participants.

“We have an economic obligation to do that in a way that makes sense for households and businesses.”

I-732 includes a tax cut for businesses, a statewide sales tax reduction and expanded credits for low-income working families.

Under the measure, a tax of $15 per metric ton that would be imposed on carbon emissions in July 2017 would increase to $25 per metric ton in July 2018.

The tax would increase 3.5 percent plus inflation yearly until the tax is $100 per metric ton.

The tax would apply to persons or companies selling or burning coal, oil or other fossil fuels.

It also would apply to electricity producers, but 0nly on the electricity they produced from fossil fuels.

Massa estimated voter approval of the initiative would cost $40 a year for the owner of an electrically heated, 2,000-square-foot home in the Clallam PUD.

He said I-732 would cost the owner of a same-size home without electric heat $20 year.

The cost is based on the mix of fuels — hydro, nuclear, fossil — the PUD used from 2010 to 2014, Massa said Wednesday.

Ratepayers would see an average estimated increase of 0.2 cents per kilowatt hour on their bills, he added.

Howe said at the meeting that fossil fuels account for about 2 percent of the electricity produced by the utility, which gets 88 percent to 89 percent of its electricity from hydroelectric generation and 10 percent from nuclear power.

“The rest is market-driven,” Howe said. “That’s where the tax comes in.

“We have concerns about of pancaking of regulations,” he added.

PUD senior Commissioner Ted Simpson, at the meeting also attended by fellow commissioner Hugh Haffner and General Manager Doug Nass, touted the district’s long-running conservation efforts.

Simpson said Wednesday that pancaking is “adding environmental regulations on top of environmental regulations on top of environmental regulations.”

Massa said the $2.2 billion in carbon taxes imposed on the use or sale of fossil fuels and fossil-fuel-generated electricity would create revenue of $2.2 billion that would pay for tax-cut sweeteners to generate economic growth.

They include an increase in the Working Families Tax Credit for low-income families, a 1 percentage point cut in the state sales tax to 5.5 percent by July 2018, and the virtual elimination of the business and occupation tax for manufacturers in a reduction from 0.484 percent to 0.001 percent.

The state Office of Financial Management has estimated that general fund revenues would decrease by a net amount of $797.2 million in the first six years of the initiative.

Massa said Wednesday that the Office of Financial Management’s analysis was flawed, asserting I-732 actually would generate $163 million in net revenue over six years.

“No one can forecast the budget over six years to more than 1 percent, so for all practical purposes, I-732 is revenue-neutral to the extent that anyone can forecast,” he said.

Massa added that Nippon Paper Industries USA’s paper-making plant at Ediz Hook, which produces electricity from forest-originating biomass fuel, would see little impact and with the tax breaks “could come out ahead.”

In their resolution opposing the measure, PUD commissioners estimated I-732 would cost the district — depending on water levels for hydro power — $500,000 to $1.8 million in 2017 in tax expense to ratepayers.

That will increase to between $1.2 million and $4.1 million in 2025.

Simpson said Wednesday he did not know what the cost would be for PUD customers based on the estimated increases contained in the board’s resolution.

“The tax isn’t the problem for the PUD,” he said. “The problem is how to spend the tax.

“Instead of spending that money to generate green jobs, they are sending it to the general fund.”

The Jefferson County PUD, which has not taken a position on I-732, also obtains about 2 percent of its power from fossil-fuel generation.

EES Consulting Inc., which is doing a rate study for the Jefferson PUD, suggested in an Oct. 6 email to General Manager Jim Parker that the impact on wholesale power market prices could be limited.

“Power is produced in many other states,” Steve Anderson, EES manager of project evaluations, said in the email.

“The bottom line is that we don’t really know what impact a Washington-state-only carbon tax would have on wholesale market prices.”


Senior Staff Writer Paul Gottlieb can be reached at 360-452-2345, ext. 55650, or at