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The No on 732 Campaign is Misleading Voters

A prominent national energy economist says the No on 732 campaign’s claims that the price of electricity will increase by 20 percent in 2020 under Initiative 732 are “implausible.”

Seattle, WA – September 21, 2016 – Late last week the No on 732 campaign, sponsored by the Association of Washington Business (AWB), released the findings of a study they commissioned which aimed to demonstrate that I-732 could cause a “significant energy price hike.” Dallas Burtraw, a senior fellow at Resources for the Future (RFF) and one of the nation’s foremost experts on environmental regulation in the electricity sector, analyzed the No on 732 campaign’s claim that “the price of electricity [will increase] by 20 percent in 2020” and concluded, “a basic analysis of the electricity sector in Washington suggests that these estimates are implausible.” His full analysis can be found at http://www.rff.org/blog/2016/washington-state-s-prop-732-impact-electricity-prices-should-be-small. Burtraw can also be reached for comment at (202) 328-5087; [email protected].

According to Burtraw, “the average change in electricity generation costs from a $30 carbon tax would be 0.58 cents per kWh, compared to the average retail electricity price of 9 cents per kWh … this is far less than (about one-third) the 1.8 cents per kWh claimed by the No on 732 campaign.” Burtraw adds that a $30 carbon tax would “result in an increase in the average cost of electricity of 6.4 percent,” not 20 percent as reported by the No on 732 campaign.

Supporting this analysis and making these claims even more farfetched, today the Department of Commerce published an updated carbon tax model (CTAM). According to the new model, a $25 carbon tax in 2020, as proposed in I-732, would increase electricity prices by 5.3%. Carbon Washington previously identified a significant mistake with CTAM’s treatment of the 11.9-cent gas-and-diesel tax, and has repeatedly identified flaws in CTAM that create errors in the Office of Financial Management’s (OFM) fiscal note on I-732. The correction to CTAM that the Department of Commerce posted today is yet another push in the direction of showing that I-732 is revenue-neutral, and that Carbon Washington’s expertise and fact-based concerns about CTAM and the OFM fiscal note should be taken seriously.

In May, Energy Strategies, LLC, a Utah-based consulting firm responsible for the analysis, contacted the Yes on 732 campaign to ask for help understanding the state’s CTAM and the details of the policy. The Yes on 732 campaign complied with their request because we believe in the policy and the fact that I-732 will not create the outrageous price hikes being perpetuated by the opposition. “Had they shared their preliminary findings with us, we would have told them they were way off,” said Yoram Bauman, founder and co-chair of the Yes on 732 campaign. “The estimate provided by the No on 732 campaign is based on an incorrect representation of the electricity market. Putting forward faulty information is a disservice to voters, and their findings should be retracted.”

Yes on 732 campaign Executive Committee member Greg Rock has been studying energy policies and pricing mechanisms for over 15 years. “We’ve come to expect the AWB to get it wrong when it comes to climate science, like hiring a keynote speaker for their annual Policy Summit who says ‘I think it’s hot out there because the sun is hot.’ But for the AWB to get it wrong when it comes to the economics is really surprising. Anybody who knows anything about the electricity system in Washington State could see that this doesn’t pass the laugh test,” said Rock.

About Dallas Burtraw, PhD

Dallas Burtraw is a senior fellow at Resources for the Future (RFF), an independent, nonpartisan organization that conducts rigorous economic research and analysis to help leaders make better decisions and craft smarter policies about natural resources and the environment, and is one of the nation’s foremost experts on environmental regulation in the electricity sector. For two decades, he has worked on creating a more efficient and politically rational method for controlling air pollution. He also studies electricity restructuring, competition, and economic deregulation. He is particularly interested in incentive-based approaches for environmental regulation, the most notable of which is a tradable permit system, and recently has studied ways to introduce greater cost-effectiveness into regulation under the Clean Air Act.

Burtraw’s current areas of research include analysis of the distributional and regional consequences of various approaches to national climate policy. He recently served on the National Academy of Sciences Board on Environmental Studies and Toxicology and on the U.S. Environmental Protection Agency’s Advisory Council on Clean Air Compliance Analysis. He also served on California’s Economic and Allocation Advisory Committee advising the governor’s office and the Air Resources Board on implementation of the state’s climate law.

About Initiative 732

I-732 represents the most effective climate policy and the most progressive tax shift in decades in Washington and is designed to move the state toward two goals – cleaner energy and fairer taxes – with the following policy objectives:

• Tax pollution, not people. I-732 will add a $25 per ton tax to polluting fossil fuels
• Pay less at the cash register. I-732 reduces the state sales tax by one percentage point, putting hundreds of dollars a year back into the pockets of each household in Washington
• Support working families. The policy funds the Working Families Tax Rebate, providing up to $1,500 a year for approximately 400,000 low-income households
• Promote innovation and economic growth. I-732 supports business growth and job creation by effectively eliminating the Business and Occupation Tax on manufacturing

About Carbon Washington

Carbon Washington is a non-partisan grassroots group of scientists, economists, former elected officials, business owners and concerned citizens focused on seeking a solution to climate change that works for businesses and households around the state. The group developed Initiative 732 as a revenue-neutral approach to taxing carbon pollution while encouraging economic growth for families and businesses in Washington. To learn more about I-732, view endorsements from around the state, and get involved, visit YesOn732.org and follow on twitter @carbonwa.

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