City of Athens Passes the Carbon Fee

Public information materials prepared and distributed by SOPEC to City of Athens voters.

Public information materials prepared and distributed by SOPEC to City of Athens voters.

On May 8, 2018, voters in the City of Athens approved the opt-out carbon fee to be charged on electric utility usage within the City of Athens. The fee was proposed as a local mechanism to adjust energy prices and account for some of the social costs of carbon that result from fossil fuel power plants supplying the utility grid. In addition, the approved ballot measure restricts all revenues collected from the fee for the future development of solar PV systems on publicly-owned buildings within the City of Athens. The City of Athens Carbon Fee marks the first carbon pricing regime in the United States that was democratically approved by voters and adopted through local ordinance using energy aggregation.

The carbon fee is based on widely recognized market policy principles. Eddie Smith, Executive Director of SOPEC, explains,

“The carbon fee is a local initiative to fill the long overdue policy void in the energy market. The fee accounts for a portion of the economic damages resulting from carbon emissions that are not paid for through energy prices. And by financially capturing some of these damages through a fee, voters in the City of Athens have created an appropriate incentive for customers to reduce their most marginal energy usage that provides the least value to their homes and businesses.”

To help customers reduce their usage, SOPEC provides online information for energy management tips, financing, and rebate programs to help customers conserve energy and adopt energy efficiency technology.

In addition, Eddie Smith explains,

“Although the carbon fee is intended to correct a market failure, the carbon fee remains a flexible and gradual local policy, which will ultimately lead to its success. The carbon fee provides an incremental measure for adjusting the expectations of energy users on the practice of carbon pricing while still providing flexibility for account holders who do not want to pay the fee.”

The fee will be collected beginning June 1, 2020, on all electric utility accounts within the City of Athens that are automatically enrolled in the governmental aggregation program administered by the Southeast Ohio Public Energy Council (SOPEC). Under Ohio law and SOPEC program rules, all customers may opt-out of the program, including the carbon fee, at any time without any additional costs or administrative requirements. Customers may opt-out by calling 1-877-726-0214 and providing their electric utility billing information.

In addition, the carbon fee only captures a small portion of the actual carbon damages resulting from the energy grid, and is therefore unlikely to cause a financial burden for most customers. The carbon fee was approved by voters at a rate of 2-mills per kilowatt hour ($0.002/kWh). With the average household in Athens consuming approximately 800 ‒ 900 kilowatt hours per month, the fee is expected to result in a small increase of $1.60 ‒ $1.80 for the average monthly residential utility bill. However, residential or small commercial customers who use more energy than 900 kilowatt hours per month, and do not reduce their usage, can expect to pay more under the carbon fee.

Finally, SOPEC is currently developing a Community Solar Program to administer program funding collected from the carbon fee for the build-out of solar PV projects on public facilities. Eligible site locations for solar PV systems include the facilities owned by the City of Athens, the Township of Athens, the County of Athens, the Athens City School District, and the Athens County Board of Developmental Disabilities. Other qualifying political subdivisions of the State of Ohio may also apply for solar PV development funds for facilities located within the City of Athens. SOPEC will be meeting with stakeholders and holding public hearings during Fall 2019 to review the proposed program rules.

For more questions about the City of Athens Carbon Fee or the Community Solar Program, contact the staff of the Southeast Ohio Public Energy Council (SOPEC) at 740-597-7955.

Eddie Smith