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A tax on the energy utility for excessive residential electricity use.

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Presentation on theme: "A tax on the energy utility for excessive residential electricity use."— Presentation transcript:

1 A tax on the energy utility for excessive residential electricity use

2 History of the Excessive Electricity Use Tax 2006 California’s Global Warming Solutions Act was signed – setting a goal of 25% reduction in carbon emissions by 2020 (returning them to 1990 level) In 2006, Arcata adopted a Community Greenhouse Gas Reduction Plan, which established an emission reduction target of 20% below year 2000 levels by 2012. Greenhouse Gasses: Gases that “thicken the earth’s blanket” thereby trapping heat in the atmosphere. 4 primary Greenhouse Gases Carbon Dioxide – reaching 400 ppm Methane Fluorinated Gases Nitrous Oxide

3 Why Focus on Electricity Electricity generation is the dominant industrial source of air emissions in the United States today. 40 percent of man-made carbon dioxide emissions comes from the production of Electricity (EPA Air-Emissions Cit.)

4 Background... Between 2000 and 2006, electricity usage in the residential sector of the City of Arcata increased 9,236,897 kWh. This represents a total increase of 30% and a per capita increase of 24%. Meanwhile, per capita electricity consumption in the rest of the State of California has remained constant for the past 30 years.

5 Why a Ballot Measure? Outreach and education Price increases had been put into place. Implemented Incentives Free CFL exchange Appliance Rebates Solar rebates and tax incentives

6 Goals of the Tax Energy Reduction – to meet the City’s Greenhouse Gas Emission Reduction Goals. Create a disincentive to use “Excessive Electricity”. Develop a funding strategy to implement projects which offset the environmental effects from the increase in residential electricity usage.

7 Arcata’s Tax Details Residential Households Only Meter’s that exceed 600% of baseline or 3x the average household in Arcata. 45% tax or approximately 16¢ per kilowatt hour. Will the City know which houses exceed baseline by 600%? No, The City will not know which houses are paying the tax. PG&E will bill and collect the tax. PG&E provides Arcata with aggregate data, but not individual household data – unless the household goes into default on payments. Of the 9,500 meters in Arcata 633 meters use this excessive electricity Note: Baseline is 50-60% of the average use of customers in a given PG&E territory

8 The monthly cost that the ELECTRIC portion of your bill has to exceed for the tax to be levied Based on 600% above baselineNon-CARE Customer CARE Customer Winter - (with gas heat)$710$284 Winter - (with electric heat)$1,743 $700 Summer - (with gas heat)$626$251 Summer - ( with electric heat)$1,012$406 Winter: November – April Summer: May- October

9 Revenue Based on 2011 Sample Year # of Customers Total kWh over 600% Baseline Rate of 45% Including Care6336,476,332$1,249,000 Excluding Care2,642,706$823,000 Net Energy Revenue above 600% of baseline in 2011 = $2,776,122 (Non-Care = $1,829,390)

10 Potential Program Costs Ballot Measure Costs Typically negligible since General Election ballots. $10,000-$12,000 if this was the only measure on a general election ballot. PG&E implementation costs $500k-$800k - estimate (plus interest if we borrow the funds) To establish a billing system for PG&E to bill based on usage instead of classification (Residential, Commercial, Industrial) All UUT’s charge a straight percentage.

11 Steps for an Interested Community Determine your community’s priority – is there interest in a Tax for Excessive Electricity Usage? Where is excessive electricity use occurring? Data – work with PG&E or your Utility to review the data Look at trends for a few years back Develop a specific scenario for staff to verify and scope with the community general tax or specific tax, permanent or fixed-time tax Identify Exemptions (if any) i.e. small home businesses, PV system homes

12 Steps for an Interested Community Develop a Resolution to place the measure on the on the next General Election ballot. Develop a Resolution that modifies (or establishes) the Utility Users Tax and outlines any specific Exemptions from the Tax. Provide the City Attorney with background data necessary to develop an impartial analysis of the ballot measure.

13 Arcata’s Ballot Language Shall the City of Arcata impose an electricity users tax rate of 45% on residential customers whose electricity usage exceeds 600% over the established Baseline Allowance with the sole exemption for households receiving an extended Medical Baseline from the electricity service supplier, and automatically terminating in twelve years? Passed on November 6, 2012 – 68 % to 32% Or 5,314 votes to 2,501 votes


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