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City administrator urges caution on Climate Commitment Act compliance costs for local gas utility
Summary
City Administrator Chris Searcy briefed the council on the Climate Commitment Act (CCA) impact for the city's natural gas utility, showing auction prices and possible customer charge increases, and recommended pausing major policy action until linkage with other markets and state Ecology rulemaking are clearer.
City Administrator Chris Searcy presented an update to the council on how the state's Climate Commitment Act (CCA) could affect the local natural gas utility and its ratepayers.
Searcy compared Washington's early auction prices (about $65 per metric ton) to California's earlier program (roughly under $30 per metric ton) and said the linkage of markets will materially affect allowance prices. He presented charts showing that, while statewide greenhouse gas emissions declined over a decade, reductions attributable to natural gas utilities were a modest fraction of that change. He said Washington is still reporting years behind on statewide emissions, which increases uncertainty about demand for allowances.
On direct customer impacts, Searcy described how the CCA charge per CCF (roughly per therm) has been small for older connections ("about 6 or 7¢") but larger for newer connections (as high as ~33¢ under some scenarios); he said a mid-range estimate might add roughly 35¢ per unit by mid‑to‑late 2020s under particular carbon-price trajectories. Searcy also noted the existence of an allowance price containment reserve (18.6M allowances shifted into the first compliance period), of which about 600,000 remain, and that rulemaking decisions by Ecology and the timing of linkage to California/Quebec markets will determine near‑term price dynamics.
Searcy recommended the city "sit back and watch" while the state completes rulemaking and market linkage, rather than propose immediate local policy changes; he said staff will continue to monitor auctions, Ecology rulemaking and potential customer programs (incentives for heat pumps) that might be considered in the future.
Why it matters: A sustained increase in allowance prices would raise operating costs for the municipal natural gas utility and could be passed to ratepayers unless mitigated. Staff highlighted that many open questions (market linkage, Ecology actions, allowance reserves) mean near‑term cost projections carry uncertainty.
Key quotes: "The last one was about $65 a metric ton," Searcy said describing a recent Washington auction price.
"If you go to the upper dash line... it would be much more expensive, much quicker," Searcy said when describing an unmitigated price path.
The council recessed into an executive session to discuss bidding strategy for the CCA auction under RCW 42.30.110(1)(q). No policy decision was adopted during open session.
