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City staff briefs council on Climate Commitment Act impacts for natural-gas utility; recommends watching market linkage
Summary
City Administrator Chris Searcy told the council that near-term costs from the Climate Commitment Act for the city's natural-gas utility appear manageable but could rise sharply in future compliance periods depending on auction prices and linkage with external markets; staff recommended monitoring developments rather than immediate policy action.
City Administrator Chris Searcy briefed the council on the Climate Commitment Act (CCA) and its potential effects on the city's natural-gas utility, comparing Washington's program and market dynamics to California's earlier experience.
Searcy presented charts showing historical trends and modeled future compliance costs. He said Californias program began earlier and that utilities there saw a modest decline in reported emissions in the early years followed by a flat trend, which raised questions about how much decarbonization actual gas utilities delivered. He noted auction settlement prices in Washington have been significantly higher than Californias, citing a recent Washington auction near $65 per metric ton versus roughly $30 in California, and warned that linkage with other markets (California, Quebec) would materially affect allowance prices and compliance costs.
Searcy told the council that the city's current exposure in 2026 looks modest (an illustrative customer charge increase on the order of a few tenths of a dollar per therm in some scenarios), but that under upper-price scenarios the CCA charge could rise sharply over time. He also explained the state's allowance-price containment reserve had already been drawn down and that rulemaking could reallocate allowances into earlier compliance periods beginning in 2027; that, he warned, reduces near-term buffers and increases price uncertainty. He recommended the council "sit back and watch" linkage and statewide reporting developments and that staff does not seek immediate policy direction to pursue aggressive customer transitions, though staff will explore incentive options for customers who voluntarily reduce gas consumption.
Why it matters: The CCA affects utility operations and customer rates. The city's decisions about bidding strategy, customer incentives and whether to pursue local programs (e.g., heat-pump incentives) will depend on market linkage, allowance prices and state rulemaking.
Provenance: Staff presentation and Q&A with council ran from SEG 861 through SEG 1146; executive-session briefing on bid strategy under the CCA followed.
