Excessive Electricity Use Tax

In November 2012 the City of Arcata citizens passed Measure I, electing to levy a tax on excessive electricity use in residential households.  Passing with a vote of 68% to 32%, the measure will assess a 45% tax on residential household meters that use more than 600% of baseline electricity or more than an average of 3 residential households from 1 meter. 

What is the goal of the proposed tax?

 The goal of the tax is to assist the City in meeting its adopted greenhouse gas emission reduction goals, to align the City of Arcata with emerging California energy policy, and to create a disincentive for excessive or as PG&E describes it “egregious” (footnote 1) energy use in residential neighborhoods.

 In 2006, the City passed the Community Greenhouse Gas Reduction Plan, which established an emission reduction target of 20 percent below year 2000 levels by 2012. The excessive electricity use in the residential sector poses a serious challenge to the City’s efforts to decrease the amount of locally-generated greenhouse gas emissions.  Electricity use within Arcata’s residential sector has grown at an alarming rate. Between 2000 and 2006, electricity usage in the City increased by approximately 9 million kilowatt-hours.(footnote 2)  This represents a total increase of 30 percent. Furthermore, over this time per capita electricity consumption in Arcata has increased 24 percent,(footnote 3) while per capita electricity consumption for the rest of the State has remained constant over the past 30 years. (footnote 4)  An assessment of electricity use, conducted by the Schatz Energy Research Center, has revealed that the increase in use is attributable to a relatively small number of residential units that are consuming a significant amount of electricity.

     

How much would my current bill have to be for the tax to apply to me?

The electricity portion of your monthly PG&E bill  would have to exceed the following monthly amounts for the tax to be levied. (Based on 2013 PG&E rates)

Based on 600% above Baseline   Non-CARE customer   CARE Customer   
Winter - with gas heat $720 $284
Winter - with electric heat $1,728 $700
Summer - with gas heat $626 $251
Summer - with electric heat $1,012 $406

Who will be taxed?

The High Energy Use Tax would affect residential households whose electricity usage is over 600% of baseline or 3 times the average residential electrical usage in Arcata.  There are 9,500 residential meters in Arcata.  In 2011, 633 households utilized electricity that exceeded 600% of baseline.  This excessive usage totaled over 6.4 million kilowatt hours of electricity.  Households which continue to utilize this level of energy will be taxed at a rate of 45% 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 through its State Energy Franchise Contract will bill and collect the tax to the appropriate households and forward it to the City.  While PG&E does provide Arcata with aggregate data from time to time, the City never receives individual household data. It is possible for the City to be notified of accounts who enter payment default. 

How much revenue will the tax measure generate?

The City views this as a descending tax and anticipates that as households reduce their energy consumption the tax will zero out.  A tax increment of 45% on electricity usage for only those residential households that exceed 600% of the established baseline in 2011 would have netted $1,249,254.90 to the City. 

How much will the tax measure cost?

PG&E has quoted an implementation cost estimate of $600,000 to restructure the billing system to create a “new group” or category of customers who this tax will apply to.  The components of the cost estimate include:  Gathering and documenting system requirements; designing the technical specifications; implementing programming changes; and system testing.

Ballot Measure 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?"

Community Resources

City Council Staff Report -April 2013- Outlining Tax Measure Options

City Council Staff Report - June 2013 - Adopting Ballot Measure - Includes Ballot Language, Resolution and Ordinance Language

Measure I General Overview Powerpoint

 

Footnote 1: PG&E, May 2012 Testimony in support of application for the 2012, 2013, and 2014 Energy Saving Assistance Program and the California Alternate Rates for Energy Program.

Footnote 2: City of Arcata. 2008. City of Arcata Updated Greenhouse Gas Inventory 2006.  City of Arcata: Environmental Services Department [Internet]. 

Footnote 3: 2000 population figure of 16,651 from US census.  2006 figure estimated from the State of California Department of Finance Demographic Research Unit 2007 figure [Internet].

Footnote 4: California Public Utilities Commission [Internet].