Ashland finds windfalls in EV credits
Thanks in large part to the number of electric vehicles registered in Ashland, the city has found a six-figure revenue stream in the midst of a possible multi-million-dollar tax shortfall.
Ashland City Council voted unanimously Tuesday to sell credits the city’s electric utility has earned through the Oregon Clean Fuels Program. According to numbers provided by Ashland Climate and Energy Analyst Stu Green, the credits could be worth more than $300,000 per year.
The city has 2,876 clean fuel credits that can be monetized through an Oregon Department of Environmental Quality exchange. At the most recently published rate of $120 per credit, the credits would be worth $345,120.
Green said the value of the funds can fluctuate, with “desperate” buyers paying more for the clean energy credits at compliance time.
“If you hold out on price that certainly limits your market,” Green said.
More than 97% of the credits the city earned as a municipal electricity provider stem from the number of electric vehicles registered in Ashland’s service area. The remaining credits are earned from municipal electric vehicle chargers installed around the city.
Ashland contains only 10% of Jackson County’s population yet accounts for 76% of the county’s electric vehicle registrations, according to the Oregon Department of Energy and an earlier news report.
In a report provided to the city, Green said he expects “slightly more credits” for calendar year 2020 over 2019. The Clean Fuels Program will last until at least 2025, and the city anticipates that the governor will extend the program into 2035.
Interim City Administrator Adam Hanks told the council that the revenue from selling clean energy credits comes with minimal strings and the credits could theoretically be rolled into the general fund — although restrictions could change in the future.
“We’re pretty close to an anomaly,” Hanks said, describing most of the clean fuels recipients as larger utility companies.
The council will decide where to spend the revenue at a later date, at a supplemental budget hearing to be held once the city finds a buyer for the credits.
“Nothing can be done without a second step until we monetize those credits,” Hanks said.
The council expressed different ideas on ways to take advantage of the windfall. Some said they want to reinvest the money in more clean energy projects, while others said the money could be used to stave off city layoffs in the face of an expected $6 million shortfall over the next biennium.
Councilor Tonya Graham touched on the “spirit of the law” that sparked the state’s creation of clean energy credits in the first place.
“We are still in the timeline of the 10 years to take really significant action if we’re not going to lock our children into a fate that they may not be able to adapt their way out of,” Graham said. “And so even though I know we’re up against COVID, we’re up against severe shortfalls in our revenue, it’s also important that we invest for the future that we need to provide for our children.”
Councilor Stephanie Seffinger asked whether the money could be used to avoid layoffs in the city’s clean fuels program.
“We were actually planning on using this to pay for me next year, Green said. “So there you go, that’s a savings already.”
Mayor John Stromberg suggested looking for ways to reinvest the funds in future programs, because based on the amount for one year, and the future potential, “that’s how you build financial empires.”
“We’ve got the engine going, and that’s what’s interesting,” Stromberg said.