Bend — one of Oregon’s fastest-growing cities — became the second in the state Wednesday evening to pass fees on natural gas appliances in new home construction, a controversial policy meant to curb greenhouse emissions in buildings to meet the City’s climate goals and help combat the effects of climate change.
The Bend City Council during a Wednesday meeting voted 5-1 in favor of the natural gas fees, named the Climate Pollution Fee. A second vote on June 17 is expected to make the move official, with fees starting in April 2027.
Mayor Pro Tem Megan Perkins voted against it, while Councilors Gina Franzosa, Ariel Méndez, Mike Riley, Steve Platt and Mayor Melanie Kebler voted in favor of the policy. Councilor Megan Norris abstained because she works for Hayden Homes, a developer that will be affected by the fee.
The new fee comes as the City pushes to build more than 33,000 homes in the next two decades to meet state goals.
“It’s really important what all those new homes are going to be built like for our future as a city,” Mayor Kebler said Wednesday evening. “This is a way to signal that we want those homes to be better for the long term, we want those homes to align with our climate goals.”
Supporters praised the Council for backing the fee — what they view as a necessary tool to nudge home builders toward electric power and green up a sector that accounts for about 28% of Bend’s carbon emissions.
Bend’s vote to make installing gas appliances more expensive comes as dozens of cities and other local governments across the country adopt policies to encourage electrification. The City of Ashland implemented a fee similar to Bend’s last year.
Advocates, particularly young people, told the Bend City Council Wednesday the action provides a glimmer of hope that policy can reduce impending harms of a warming climate, which in Central Oregon could include worsened wildfire seasons and dismal snowpack for winter sports.
“By passing this policy, you are sending a message to the young people of Bend that you care about our future and hear our concerns,” said Mikayla May, a junior at Caldera High School and climate advocate.
The Bend City Council pushed ahead with the fee despite ample warnings from industry and union leaders that the fee would make one of the most expensive housing markets in the state even less affordable, hinder energy reliability and hurt jobs.
“We are disappointed and concerned by the outcome,” Alyn Spector, government affairs manager with Cascade Natural Gas, told the Source. Instead of passing a fee, the utility, which serves about 40,000 customers in Bend, asked the Council to lean into it’s pilot program rolling out dual-fuel heat pumps, which can alternate between gas and electricity depending on which is more efficient at a given time.
The Northwest Coalition for Energy Choice, a group opposing local natural gas policies in the region, urged the public in a text message campaign prior to the vote to let the City Council know that voters would remember the “needless tax increase” during election season.
“We’re going to take some knocks, right here,” City Councilor Steve Platt said during Wednesday’s meeting. “But I’m proud of us sitting up on this dais, with warts and all on this policy, that we’re moving forward on an iterative process that we can respond to changes and the real community impacts year over year, with further community input to get it better and better as we go forward.”
The fee doesn’t apply to multifamily or commercial construction. City staff estimate the Climate Pollution Fee will cost developers who choose to put all-gas appliances in new homes between $1,300 and $3,000, depending on the size of the home and types of appliances installed. Those that produce greater emissions account for a larger portion of the fee. For example, installing a gas furnace in an average size home will likely cost about $1,500 while fees associated with a gas drier would be about $33.
Another factor is the social cost of carbon, a metric created by the U.S. Environmental Protection Agency to measure the monetary damages of carbon emissions through effects of climate change, such as severe floods or catastrophic wildfires.
The City Council has indicated fee revenue will be used to incentivize future electrification, but hasn’t officially determined what that will look like.
Advocates in Bend urged the City Council to set a much higher fee amount during discussions earlier this year. Bend’s estimated average fee amount is less than one-third of what Ashland charges builders for installing natural gas appliances, according to that city’s website.
And since it went into effect Jan. 1, Ashland’s fee has been mostly successful at deterring builders from using gas, according to Carra Sahler, director and staff attorney with the Green Energy Institute at the Lewis & Clark Law School in Portland.
Up until a few years ago, some local governments seeking to decarbonize buildings passed ordinances effectively banning natural gas in new buildings. But the movement shifted after a federal appeals court overruled a Berkley, Calif. ban on new gas hookups, saying it violated federal law.
Fees on gas appliances in new construction have more solid legal footing, Sahler said.
“This is a way for local government to say, ‘we’re serious about the things we put in this climate action plan,’” Sahler told the Source.
Bend’s climate goals, set in 2016, aim to reduce the city’s carbon emissions by 40% by 2030 and 70% by 2050.
But by how much Bend’s new policy will actually reduce emissions remains to be seen.
Although buildings of all types make up about half of Bend’s carbon emissions, nearly three-quarters of those emissions can be traced back to burning fossil fuels to create the electricity that powers Bend’s homes, according to the City’s 2021 greenhouse gas inventory. The success of Bend’s new policy to reduce emissions relies heavily on the assumption that Pacific Power, the City’s main electric supplier, will successfully transition to entirely renewable sources in the next few decades, as mandated by the state legislature.
Oregon utility regulators and watchdogs have said Pacific Power’s strategies haven’t clearly outlined a commitment to decarbonizing, although the utility company says it plans to meet the state’s mandate.
Part of Bend’s fee formula includes information about Pacific Power’s energy sources as it compares to Cascade Natural Gas, the area’s main natural gas provider, according to Cassie Lacy, an analyst with the City of Bend. That means the fee would be reduced should Pacific Power fail to fully decarbonize.
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