Electricity Markets

Carbon tax rejected in Washington; Nev. gives initial nod to competition

Voters in Washington State rejected a carbon tax, while Nevada voters opened the door to electric utility competition as a result of ballot initiatives November 8.

Known as Initiative 732 (I-732), the carbon tax, which would have been the first carbon tax in the U.S., lost 58 percent to 41 percent. The measure called for a $15 per ton tax on carbon for the first year, $25 per ton for the second year, and up to $100 per ton thereafter under an inflation based index.

The effort faced tough going after unions and several environmental groups announced they either opposed or took no stand on the measure.

The Sierra Club, which took a "do not support" stance on the tax, said in a prepared statement that it did not come to the decision lightly.

The environmental organization cited a finding from the state Department of Revenue that the tax would result in about $200 million in lost revenue per year for four years. Separately, environmental think tank Sightline Institute estimated an annual revenue loss of about $80 million from the tax.

The initiative also offered too few direct benefits to those hardest hit by climate change, communities of color and low-income groups, according to the Sierra Club.

"The initiative fails to affirmatively address any of the stated needs of those communities: more investment in green jobs, energy efficiency, transit, housing, and renewable energy infrastructure," the Sierra Club said.

Carbon Washington, however, contended that the tax was designed to maintain revenue neutrality. The initiative would have operated under a tax swap. Over two years, Washington's sales tax would have dropped while the carbon tax was phased in. The proposal also gave low-income families a rebate of up to $1,500 per year and eliminated a tax on manufacturers.

The organization said in a prepared statement that although the ballot measure failed, the climate change cause received an overall boost from the campaign.

"While we did not pass the nation's first carbon tax, many states around the country are looking at I-732 as a model and we expect a nationwide movement to take root in the years ahead," said Yoram Bauman, founder and co-chair of Carbon Washington.

The organization also said that it faced less opposition from business to the initiative than some predicted. It had anticipated $20-$30 million in opposition spending from business. Instead opposition spending amounted to about $1.5 million, Carbon Washington said.

Nevada voters back competition

In Nevada, a business-backed push for utility competition received a yes vote. But voters must approve it again in 2018 for the constitutional amendment to reach the Nevada Legislature.

If that happens, lawmakers would be required by July 1, 2023 to pass a law establishing a competitive market for retail electricity. As in other restructured states the incumbent utility, in this case Nevada Energy, would continue to provide transmission and distribution.
Called the Energy Choice Initiative, the measure also requires that the law must include provisions to reduce costs to customers and protect against service disconnections and unfair practices.

The ballot measure was pushed by data centers and casinos that have been protesting an exit fee charged by the utility when they purchase power competitively. Advocates for rooftop solar also supported the measure.

Those in favor of the measure argued that the change is necessary because Nevada pays some of the highest electricity rates in the West. They also argued that having a utility monopoly limits the ability of customers to purchase renewable energy and take advantage of new energy technologies, according to a summary posted on the website of the Secretary of State's office.

Those against the measure, however, argued that Nevada's average electric rates are 44% lower than California's, and 20% lower than the U.S. overall.

They also said that deregulation generally hasn't lowered rates and that renewable energy is thriving under the current system, with Nevada's largest utility ranking seventh nationally for adding solar last year, according to the summary.