Initiative 1631 likely would affect Clark Public Utilities’ River Road Generating Plant in Vancouver, utility officials say. (Alisha Jucevic/The Columbian files)Photo Gallery
Clark Public Utilities’ costs and electricity rates would increase if Washington voters approve charging a direct fee on carbon pollution to fight climate change, utility officials say.
Those are general predictions. But there’s uncertainty about the specific impact of Initiative 1631, called “The Protect Washington Act,” on the utility, according to its general manager and two of its three commissioners.
One thing is certain: If approved, the initiative would affect the utility’s natural gas-fired River Road Generating Plant near the Port of Vancouver and 100 other carbon emitters statewide, such as oil refineries and fuel distributors.
Initiative 1631 would charge industrial emitters that use or sell fossil fuels in the state for every metric ton of carbon emissions. The fee starts in 2020 at $15 per metric ton and increases $2 a year. It stops in 2035 if the state meets its goals to reduce greenhouse gas emissions. The fee would raise roughly $1 billion the first year.
If passed, money raised by the fee will pay for projects aimed at cutting pollution and protecting the environment, from solar power and zero-emissons vehicles to projects that store carbon and improve forest health.
The fee would cost Clark Public Utilities about $10 million the first year in added carbon costs, increasing annually to nearly $52 million through 2050, according to a memo produced for its board of directors. That’s based on the fee formula and River Road’s annual carbon output: 750,000 tons a year.
The carbon fee’s potential impact to the utility’s annual operating budget — which is now $378 million — would start at 3 percent in 2020, the first year collection would start, the memo says. For most residential ratepayers, that 3 percent — if it is passed along as a rate increase — would be about $3 a month, officials said.
In an interview Thursday, general manager Wayne Nelson stopped short of saying the carbon tax would require a rate increase. But his remarks tended to point that way.
“Whenever you ladle on another cost to the utility, that just increases the cost structure,” Nelson said. “And that just goes into the rate discussion as to whether or not we have enough money to afford or be able to pay for all the costs we incur throughout the year to provide the services we do.”
If the initiative is approved in November, the utility’s commissioners would consider its impact in discussions in December 2019 for the 2020 budget, Nelson said.
“Bottom line,” he said, “if that initiative imposes an additional cost on us, we have to put that into the calculation as to what our total cost structure looks like and we budget based on all the costs we are facing … it adds pressure to the rates, it doesn’t mean we have to raise rates.”
About 60 percent of the utility’s electricity is purchased from Bonneville Power Administration, and most of that is from renewable sources, such as hydroelectric power. The River Road plant, which the utility built and which came online in 1997, contributes up to 40 percent of Clark Public Utilities’ electrical supply. Depending on market conditions, the utility may purchase power from other sources. It also sometimes has excess electricity that it sells into the electrical grid.
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A spokesman for the Yes on 1631 campaign, Nick Abraham, said Clark Public Utilities and other entities hit by the carbon tax could treat the expense as an opportunity. Abraham said the initiative provides the utility, and others that have to pay the tax, with a mechanism to spend the tax revenue on an energy conservation or renewables projects.
While that’s true, Nelson said, he is concerned about what he called “the bureaucracy” the initiative would require. He said the initiative would create several boards that would consider proposals from Clark Public Utilities and others. He said there would be no assurance that the utility’s desired use of tax money for a conservation or renewables project would ultimately be approved in a competitive arena for project approvals.
Neither utility staff nor its commissioners will take an official stand on the initiative. Nelson said the memo presented last week to commissioners was not intended to argue in favor or against the proposal. However, he said a resident at the commissioners’ meeting contended that it was an anti-1631 statement.
Nelson says he told the resident: “If I was a proponent, I would take these numbers and tell the people who feel strongly enough about carbon that this is not a big enough rate increase. That you shouldn’t be too concerned about it.”
While Clark Public Utilities will not take a position, four other public utility commissions in the state have come out opposed to the initiative, said Dana Bieber, spokeswoman for the No on 1631 campaign.
Two of the three commissioners on Clark Public Utilities’ board stopped short of saying how they would vote on the initiative.
Commissioner Jim Malinowski said he generally supports carbon taxes as a policy tool, but Malinowski, who has an electrical engineering background and worked three decades at Pacific Gas & Electric in roles including manager of transmission planning, said he’s not certain how he’ll vote. But he had some advice for Clark County voters.
“People have to recognize the initiative will cause our rates to go up,” he said in an interview. “If you think it’s important that we reduce the use of fossil fuels, and you’re willing to pay the price, then you should vote for it. If you think the rates aren’t justified, you should vote against it.”
Commissioner Jane Van Dyke said in an email, “Clean air, clean water, and clean energy are important for everyone.” Van Dyke’s statement also noted the potential cost to ratepayers.
Commissioner Nancy Barnes could not be reached Thursday.
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