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City administrator briefs council on Climate Commitment Act, flags rising compliance costs for municipal gas utility
Summary
City Administrator Chris Searcy presented a workshop on Washington’s Climate Commitment Act, telling council the municipal gas utility is marginally above the 25,000 metric-ton threshold that triggers program obligations and describing how allowance reductions and auction mechanics could increase city compliance costs from about $250,000 in 2023 toward potentially seven-figure levels in future years.
City Administrator Chris Searcy briefed the council on March 9 about Washington’s Climate Commitment Act (CCA), explaining how the cap‑and‑invest program works, how the city’s municipal natural-gas utility is treated as a covered entity, and what policy choices the council might consider going forward.
Searcy said the CCA, enacted by the Legislature in 2021, functions as a cap-and-invest program that requires covered entities to obtain annual carbon allowances equal to their greenhouse-gas emissions; the Department of Ecology runs quarterly auctions and also provides no-cost allowances to certain covered entities. “We are just marginally over the threshold of being pulled into the program,” he said, describing the city’s average emissions for 2023–25 as a little over 25,000 metric tons and noting that, to have a comfortable buffer, the city would need to get below about 22,500 metric tons.
Searcy outlined how no-cost allowances are being phased down (the first-year allocation was 93% of baseline and the no-cost allocations decline about 7% per year), how a growing share of allowances will be consigned to auctions, and how auction proceeds and allowance mechanics affect customer bills. He explained the program distinguishes between "legacy" customers (connected before July 25, 2021) who benefit from netting auction proceeds and no-cost allowances and "non-legacy" customers (connected after that date) who do not receive that benefit and therefore face a higher per-unit CCA charge on their bills.
Searcy said the city’s initial annual CCA-related cost was about $250,000 in 2023 and has grown (staff estimated mid‑hundreds of thousands more recently), and he acknowledged uncertainty about the longer-term trajectory because of market linkage with California’s program and uncertainty in allowance prices. “We could project out year by year… but until the uncertainty of linkage, the numbers are probably just gonna be way more scary,” he said.
Searcy also described options for municipal policy, including pursuing legislative carve-outs or alternative compliance paths for municipal gas utilities (Ellensburg has pursued related legislative work and received grant funding for decarbonization planning), and the council discussed whether to seek cost‑recovery from new development or pursue restricted-account approaches to spend allowance proceeds on decarbonization rather than participate directly in auctions.
No decisions were made; councilmembers asked for additional data and staff expects to return to the council at a later meeting (Searcy suggested coming back in May with follow-up material).
