Bend staff to study electrification fee, seek consultant and convene joint committee for policy design

City staff outlined a multi-step process to develop an electrification fee and related incentives after council direction earlier this year, staff said at the committee meeting.

Cassie (city staff member) summarized the background: the committee previously recommended prioritizing restrictions on natural gas in new construction and air-quality (NOx) regulation, but council directed staff to pursue an incentive/disincentive package and gave staff direction to advance a fee-based approach. "The council agreed with that ECC recommendation, and that's the direction that they gave us," Cassie said. Staff is now scoping a fee on natural gas appliances that could generate revenue to fund incentives for electrification.

Staff described next steps and timing: they have issued a request for proposals to hire a technical consultant to support fee design and analysis; Cassie will present preliminary findings and scoping questions to the council at an Oct. 22 meeting; public engagement with a joint committee of three advisory boards (the ECC, Bend Development Advisory Board and Affordable Housing Advisory Committee) is proposed to begin in November; and staff expects to present a fee proposal to council as early as March following the engagement and analysis.

Key design questions staff said they will ask include the fee's primary goal (behavior change versus revenue generation), which factors to include in the calculation (social cost of carbon, appliance-specific emission factors, building size or market cost to electrify), and how any incentive program should deploy funds. Cassie framed tradeoffs: "If you're really driving behavior change in the most successful form of that, you would have no revenue to create an incentive program," she said, noting the tension between deterrence and revenue for incentives.

Staff also noted legal risk and precedent: the city is watching other local efforts, including Ashland's recently adopted fee (not yet in effect) and litigation in Bay Area jurisdictions that banned gas in new construction. Ian Lighthizer (city attorney) confirmed staff are tracking legal developments closely: "We're tracking all of this, including the lawsuit, down the Bay Area," he told the committee, and said staff will provide legal advice as the policy is developed.

Why it matters: An electrification fee could be used to incent developers and building owners toward all-electric construction and to fund incentives for conversions of existing buildings. Committee members raised concerns about distributional impacts, legal risk, potential cost estimates, and implementation details such as how a permit-based fee would be structured and whether the city code requires backup resistance heat for some heat-pump installations.

Discussion and committee role: Staff proposed that a joint committee — ECC, Affordable Housing Advisory Committee and BDAB — plus ex officio utility representation (Cascade Natural Gas, Pacific Power, Central Electric Co-op) help shape fee design and the public engagement plan. Staff asked the ECC to nominate three members to serve on that joint committee; members who had participated in an earlier February joint session (Ray, Nick and Neil) were noted as potential participants. Staff said the analysis will include permit data, market cost-to-electrify modeling, projected revenue estimates and a review of exemption and implementation rules.

Ending: Staff will return to council next week for an update; if council supports the scoping, the consultant procurement and the joint committee process will proceed. The committee will get regular updates and may be asked to designate representatives to the joint committee.