EDITOR’S NOTE: Corrects that projections from the Washington PUD Association say I-732 would increase the cost of power within the first year between $500,000 and $1.8 million for the Clallam County Public Utility District.
CARLSBORG — A carbon tax initiative that will go before voters Nov. 8 could, if approved, raise the cost of electricity, Clallam County Public Utility District commissioners were told.
Clallam PUD officials estimated Monday that if Initiative 732 passes, it would lead to an increase in electric rates of between 1 percent and 4 percent in the first year.
“I-732 would impact the way we pay for electricity,” said Mike Howe, Clallam County PUD spokesman.
“The reason for the cost increase is because the initiative assigns a carbon liability for market purchases of electricity made by the BPA [Bonneville Power Administration] and included in the electricity the PUD buys at-cost from BPA.”
I-732 would encourage cleaner energy solutions by taxing, per ton, carbon dioxide pollution from fossil fuels, according to nonpartisan grass-roots group Carbon Washington.
The tax would start in 2017 at $15 per ton of CO2 emissions and jump to $25 in 2018.
Moving forward, the tax rate would annually increase by 3.5 percent plus inflation up to $100 per ton, according to the proposal.
“The initiative would affect public utility districts, including Clallam PUD, by applying the carbon tax to certain resources used to serve customers,” Howe said.
“For Clallam PUD, that means it is imposed on PUD customers using electricity.”
The seller of the electricity, in this case the PUD, would be held liable to the state for payment of the tax.
PUD resolution
PUD officials are fine-tuning a resolution in reaction to Initiative 732.
The commissioners are anticipated to gather public comment and take a formal stance on the initiative at their next meeting at 1:30 p.m. Monday in the Lake Crescent boardroom of the main office, 104 Hooker Road.
Although Clallam PUD supplies its electricity via nearly 99 percent carbon-free resources, mainly from renewable hydropower, Howe said, I-732 assumes some level of carbon dioxide emissions.
BPA, which is part of the U.S. Department of Energy, is a federal nonprofit agency that provides about one-third of the electrical power used in the Northwest.
The electricity purchased to meet demands comes from a “pool of unspecified electricity resources” that could be anything from wind, solar or natural gas, Howe said.
I-732 would assume a certain amount of CO2 emissions from the “unspecified” resources, he said, “so even if everything we purchased in addition was water, there would still be assumed carbon.”
Cost increase
Based on projections from the Washington PUD Association, I-732 would increase the cost of power within the first year between $500,000 and $1.8 million for the Clallam County Public Utility District.
By year two, cost estimates range between $900,000 and $3 million.
In 2025-26, the tax liability is projected to be between $1.2 million and $4.1 million.
The wide range in cost estimates reflects the variation between the low water and high water mark of BPA.
“The cost is projected to vary depending on how much hydropower is available and the need for market purchases,” Howe said.
“We are projecting the tax would be imposed on between 4 percent and 14 percent of the electricity we purchase from BPA.”
“I-732 is not alone,” Howe said.
Coinciding with the initiative, a Clean Power Plan and Clean Air Rule are both in development.
“This is scary because if you talk about a $100-per-ton carbon cost just from I-732 and then you add EPA’s Clean Power Plan and all the other initiatives, we could really have a huge increase to our customers and with no benefit because we’re already 99 percent clean,” PUD Commissioner Will Purser said.
The Clean Power Plan rule adopted in 2015 is intended to meet federal carbon reduction requirements for electricity generation nationwide.
The state Department of Ecology is developing a plan in response to the rule, which is overseen by the U.S. Environmental Protection Agency.
Final plan by 2018
The plan is in draft form, but Ecology is required to submit a final plan to the EPA by Sept. 6, 2018.
However, the U.S. Supreme Court put the Clean Power Plan on hold after an array of states, utilities and other industry groups asked the high court to freeze the rule while legal challenges play out in a lower court, according to Ecology.
Until Ecology officials receive clarification on the EPA’s authority from the courts, they’ll continue to work on the plan.
Ecology officials also are developing a Clean Air Rule aimed at helping to meet the state carbon reduction goals set by the 2008 Legislature.
In late January, Ecology officials withdrew the draft rule after receiving feedback and will seek additional public comments.
The revised rule is scheduled for release in late spring in preparation for adoption in the summer.
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Alana Linderoth is a reporter with the Olympic Peninsula News Group, which is composed of Sound Publishing newspapers Peninsula Daily News, Sequim Gazette and Forks Forum. Reach her at alinderoth@sequimgazette.com.
