Oregon Public Power Utility Gets OK To Monetize Clean Fuel Credits

by Peter Maloney
APPA News
Posted July 22, 2020

The Ashland, Oregon, city council has approved the monetization of clean fuel credits accrued by Ashland Municipal Electric Utility.

As of June 2020, the public power utility had 2,876 clean fuel credits. If monetized at the last published price of $120 per credit, the sale would yield $345,120 for Ashland Electric.

The City of Ashland, through its Electric Utility, participates in the Oregon Clean Fuels program, which aims to reduce the CO2 intensity of Oregon’s transportation fuels over time.

The city’s initial goal is to reduce greenhouse gas emissions on average by 8% every year from a 2015 baseline until 2050. The city also aims to reach carbon dioxide neutrality in its operations by 2030 and to reduce its fossil fuel consumption 50% by 2030 and 100% by 2050.

The clean fuel program was authorized in 2009 when the state legislature passed HB 2186, which set up the Environmental Quality Commission (EQC) to adopt a low CO2 fuel standard to reduce the CO2 intensity of the state’s transportation sector. Currently, the program aims to reduce the average CO2 intensity of transportation fuels used in Oregon by at least 10% below 2015 levels by 2025.

The clean fuel program was implemented in 2016. Ashland Electric began participating in the program in 2018 and began generating credits “in earnest starting 2019,” Stu Green, climate and energy analyst for the utility, said via email. In 2020, the credits the utility accrued became available for sale.

Credits generated through the program may be bought and sold using an online exchange hosted by the Oregon Department of Environmental Quality.

Ashland Municipal Electric Utility receives clean fuel credits based on the operation of city owned electric vehicle charging stations and the registration of electric vehicles within the utility’s territory. Electric vehicle registrations generate about 98% of utility’s clean fuel credits. Ashland ratepayers are more than five times as likely to drive an electric vehicle than the Oregon average, Green said.

With city council authorization to monetize its clean fuel credits in hand, Ashland Electric now has to submit a budget amendment to appropriate the funds. “There is a solid argument to be made that the funds should be reinvested in clean fuels projects, primarily electrification of fossil fuels,” Green said. Those types of projects will “decrease emissions, move us closer to our climate goals, provide benefits to ratepayers, increase utility sales, and benefit our general fund through an electric utility tax.” The city council could choose to use the funds to cover shortfalls, but “that is not the course of action that I recommend,” he said.

“I would like to see the funds stay in Electric and be used to incentivize more EV purchases, both for utility sales and to perpetuate the income from the clean fuel credits,” said Ashland Electric Director Tom McBartlett.

In the past, Ashland Electric offered incentives for new and used electric vehicles and for charging stations, but the funding pool was “quite small and ran out quickly,” Green said.

The utility still offers an electric vehicle charger incentive, but it is for commercial customers only. “The incentive program I am cooking up would be more generous and targeted at new/used vehicles less than $30,000,” Green said. “The clean fuel revenue is a critical part of getting the new incentives going.”