Council directs quicker action on electrification fee; staff to use social cost of carbon and start joint committee on incentives

Staff told the Environmental and Climate Committee that the city council reviewed a proposed electrification fee design and asked the council to set the fee level early next year while staff start a joint committee process on nonfinancial incentives and exemptions.

A city staff presenter said the fee model being recommended uses the social cost of carbon as a multiplier and would be applied per gas appliance, following an approach similar to a model used by the city of Ashland. "We presented that to council yesterday and... we really did land on just only one viable way that the fee could be developed," the staff presenter said, explaining the social cost of carbon approach used in the calculation.

Staff told the committee that the council signaled a preference to determine the fee level themselves in a February meeting before the joint committee finalizes exemptions and incentive design. The presenter said a majority of council members supported moving the fee forward, though not all supported that timetable.

Committee members asked about sources of opposition on the council. Staff and the city attorney described two main concerns raised by some councilors: how to ensure incentives favor high-efficiency electric equipment rather than low-efficiency electric replacements, and whether current electricity generation emissions (from Pacific Power) could make some electric technologies worse for greenhouse-gas emissions in the near term than efficient gas alternatives. The city attorney explained that the social cost of carbon approach is legally defensible because it ties the fee to damages associated with greenhouse-gas emissions, while other possible bases for a fee may be harder to justify under municipal fee-setting authority.

Staff said next procedural steps include returning to council in February to set a fee level, convening the joint committee to focus first on nonfinancial incentives and then on exemptions, and later presenting recommendations on revenue use. Committee members requested more technical details on emissions assumptions and on options for exemptions and incentives before the joint committee meets.

No final policy decision was made at the ECC meeting; staff will provide additional materials and a timeline to the committee and begin the joint committee process in January or February.