Bend staff to develop local natural‑gas fee and incentive package after study of Ashland, Burlington models

City staff on Tuesday described a phased plan to study and design a local fee on fossil‑fuel building systems for new residential construction and to use the revenue to fund incentives to electrify existing buildings.

Cassie Lacy, senior management analyst in the city manager’s office, summarized research into similar policies in Ashland, Ore.; Burlington, Vt.; and Breckenridge, Colo., and presented Bend permit data showing that between 2020 and 2024 most new single‑family homes in Bend connected to natural gas.

“Last year, we launched a process to explore different policy options to reduce the use of natural gas in Bend,” Lacy said. She explained that the Environment and Climate Committee recommended pursuing regulatory restrictions on fossil‑fuel appliances in new construction or, if that is infeasible, a fee on natural‑gas appliances paired with incentives to electrify existing buildings.

What staff found: Ashland’s model charges a per‑appliance fee calculated from a social cost‑of‑carbon value multiplied by an average emissions factor and service life; Ashland estimates modest annual revenues and used an EPA social‑cost figure in its calculation. Burlington’s ordinance requires electrification or renewable energy and charges a carbon pollution fee when renewable options are proven infeasible, using a behavior‑driven per‑metric‑ton price (about $150/ton) and in some cases project‑specific emissions calculations. Breckenridge uses fees in lieu of required renewable generation for certain high‑energy outdoor systems.

Local baseline: Lacy presented city permit data showing roughly 95% of single‑family building permit applications from 2020–2024 included gas service, while large multifamily projects were predominantly all‑electric. She noted the permit dashboard counts applications, not housing units, and that staff plan to refine data to show units and the types of gas use (space heat, water heating, cooktops) in future reporting.

Key design questions: Staff said Bend must decide whether the fee’s primary purpose is to change developer/homebuilder behavior or to raise revenue for incentive programs. They also must choose whether to calculate fees using an average per‑appliance approach, project‑specific carbon calculations, or a behavior‑driven price. Lacy highlighted that Ashland and Burlington have municipal utilities, giving them more control over electricity costs — a local difference that affects program design.

Equity and scope: Lacy recommended focusing the first phase on new residential construction — where electrification is easiest and least costly — and defer commercial and existing‑building rules to later phases. The staff proposal includes exemptions for affordable housing and childcare projects and a plan to use a joint committee (Affordable Housing Advisory Committee, Bend Economic Development Advisory Board and Environment and Climate Committee) for public engagement and recommendations.

Next steps: The city is seeking a consultant to develop fee methodology and plans to return Oct. 22 with analysis and options. Staff anticipates a public engagement process beginning in November and aims for a fee policy by early spring, followed by an incentive program within months. Lacy said staff will collect local cost data on electrification upfront and will include utilities as ex‑officio members of the joint committee.

Responses and concerns: Councilors asked for clarity on the cost to homeowners — including installation and operation of heat pumps and water heaters — and for specific engagement with the housing, developer and environmental communities. Councilors also asked how the city will address reliability concerns during power outages; staff said those reliability issues are important but largely outside the immediate scope of the fee’s design and would be addressed as part of broader resilience and utility planning.

What was not decided: Council offered general support for the staff approach — starting with incentives and designing a fee — but did not adopt a specific fee or timeline. Staff will return in October with consultant analysis and an engagement plan.