Arcata Electricity Tax — Guest Post

GUEST POST from a California observer of Arcata’s electricity tax. The writer, whom I thank, asked to remain anonymous. I don’t necessarily agree or disagree with opinions in the post, but find it thorough and thoughtful.  And whatever you think of an electricity tax, Arcata’s tax seems to have glitches.  Here is a better-formatted version:  Guest-post-from-a-california-observer-of-arcata_s-electricity-tax

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Guest: I’ve copied below a little essay I [the Guest Poster] wrote last year regarding what the nuts-and-bolts of this tax look like in terms of cultivation, and if it were applied to the rest of the county, what that looks like in terms of cultivation.

Here is an article on the tax before it went live:

http://www.times-standard.com/general-news/20130825/arcata-marijuana-growers-to-face-excessive-electricity-tax-officials-hopeful-new-tax-will-deter-growers/2

 

“The measure was drafted after the city learned electricity use increased by 30 percent from 2000 to 2006. Of the 9,500 residential meters in Arcata, 633 exceeded the 600 percent baseline, and 1,262 exceeded 300 percent of the baseline.”  So, we’ve seen a significant drop in number of meters over 600% baseline.  The article references a staff report from the city of Arcata, projecting over $ 1 million in revenue.  The tax cost some $650,000 to establish.

 

Thusfar, the city of Arcata has lost $370,000 to establish this tax.  Further, it’s not at clear to me that the tax has been effective.  I’d like to see numbers about PGE CARE users in the city over time.  Is CARE running the same # of users as before, but they’re all using their SMART meter to ensure they stay at 599% of baseline?  Has there been a sudden spike in homes switching over from gas heat to electric heat?

 

ESSAY:

 

Let’s dive right into the thick of it in terms of electricity use.  I’m going to switch to numbered bullet points in this letter, to aide keeping track of distinct and separate ideas.  I’ve provided a summary, and my opinions, first, followed by a lot of raw information.

 

SUMMARY:  At 600% of either of the zones in the county, a person could live in a residential unit and still grow there.  A number of variables (zone, electric or not electric heat, and others) would enter into the picture, but when I look at this picture I see a scenario where it can be said, “On average, most folks would be able to run an average of 10 lights perpetually, over the course of a year, and not be taxed.”  During the summer folks would run a few less, during the winter a few more.  It seems to average out.

 

To avoid the controversy of the low-end outliers who have no electric heat, this could be changed to 8 lights perpetually on average, with the acknowledgement that there are some outliers.

 

There are also additional issues here.  I feel the exceptions prove the rule.  These issues include that some residential properties have multiple houses on them but are serviced by 1 drop, and others have multi-unit designations, and so are able to circumvent matters by having multiple meters. All these are dealt with in yet a different way by PGE and CPUC.

 

OPINION- PART 1:  This sort of tax only really impacts smaller scale growers.  Many large scale indoor cannabis growers are either off-the-grid (using diesel generation) or have access to non-residential power drops (Agriculture, Industrial, Commercial, and others).

 

OPINION- PART 2:  Economics is important here.  A lot of the money generated by smaller scale indoor growers is spent locally.  Cannabis growing makes up over 50% of our local GDP.  The hydro stores capture a huge amount of sales tax.  This is a hard topic to discuss, but in all truth, a tax like this has the potential to devastate certain areas of this county.

 

OPINION- PART 3:  IF I were King, and I were implementing a residential grow tax in Humboldt County, I would consider basing it off of the NATIONAL average (30 kw/h per day).  600% of the national average is a flat 180 kw/h per day.  Everyone would be able to run 10x 1000w lights under such a setup without any problems.  Run at that level for 1 year, and then have PGE provide a new information breakdown.  A lot of the more rural spots that are consuming massive amounts of electricity really just need to change their PGE drop over to an Agriculture or Commercial drop.

 

IMPORTANT DATA POINT- 1:  This famous study, which was presented at HSU, determined that 1% of all residential electricity in America goes to cannabis growing.  In California, 8% of all residential electricity goes to cannabis growing.

 

http://evan-mills.com/energy-associates/Indoor.html

 

IMPORTANT DATA POINT – 2:  Nationwide average residential consumption.  This link to the US Energy Information Administration is great.  http://www.eia.gov/tools/faqs/faq.cfm?id=97&t=3

 

The average residential household in America uses, on average, 30kw/h a day of electricity.

 

RAW INFO-

0)  Why 600%?  Why not 650, 550, or 1000%?  This is not entirely clear in my review of the public record.  The real reason is PROBABLY the fact that this 600% electricity tax was intentionally timed to coincide with a PGE crackdown on abuse of the CARE program.  PGE received permission from CPUC to start kicking people off of CARE for 24 months if they exceeded 600% of baseline.

 

The CARE program is a low-income electricity subsidy program, that has indeed been badly abused by many growers.  CARE is a state mandated program, which the utility is required to operate.

 

1) Arcata Electricity Tax, Part 1– Abstract Overview– The Arcata electricity measure is based around a ‘baseline’ residential determination made by the CPUC- California Public Utilities Commission.  This baseline determination already exists, and is made on a region-by-region basis, and is then used by the CPUC to set the electricity rates statewide.  The baseline is determined around the concept of daily use.  Arcata taxes anything that is above 600% of baseline.

 

Within each baseline zone, a residential parcel is either Code B (registered as other-than electric heat) or Code H (registered as all electric heat).

 

The CPUC website on baselines is found here:  http://www.cpuc.ca.gov/PUC/energy/Electric+Rates/Baseline/mapsNtariffs.htm

 

PGE’s website on the topic is a bit more user friendly and is found here:  http://www.pge.com/myhome/customerservice/financialassistance/medicalbaseline/understand/

 

I’d encourage you to take a look at the PGE website, as it includes a very useful map with mouse-over features.

 

Humboldt County is split into 2 Baseline zones.  V and Y/Z.   PG&E’s baseline summer season is May 1 – October 31 for electric. PG&E’s winter baseline season is November 1 – April 30 for electric.

 

Let’s translate this. Arcata is zone V.  If you have non-electric heat, you get 12 kw/h per day in the summer and 13.6 kw/h per day in the winter for baseline.  If you have all electric heat, you get 19.4 kw/h per day in the summer, and 33.4 kw/h per day in the winter.

 

Zone V:

Non-electric heat

Summer: 12 kw/h per day

Winter: 13.6 kw/h per day

 

Electric Heat

Summer:  19.4 kw/h per day

Winter: 33.4 kw/h per day

 

2) Arcata electricity tax, Part 2– Applying the tax–  In Arcata:  If you DO NOT have all electric heat, if you use 72 kw/h per day in the summer and 81.6 in the winter, you get taxed.  If you DO have all electric heat, you get 116.4 kw/h per day in the summer, and 200.4 kw/h per day in the winter.

 

Zone V:

Non-electric heat

Summer: 12 baseline, 72 @ 600%

Winter: 13.6 baseline, 81.6 @ 600%

 

Electric Heat

Summer:  19.4 baseline, 116.4 @ 600%

Winter: 33.4 baseline, 200.4 @ 600%

 

3) Understanding how growers look at indoor grows.  From a grower’s perspective, indoor grows are viewed on a “per light” basis.  Each light covers a set amount of sq/ft (4×4 or 5×5 usually), and a grower expects to get a certain yield per light.  In general, the more powerful the light, the greater the yield.

 

There are many different types of grow lights, and lots of emerging technologies.  Ignore all of them.  For general purposes, there are only 600w grow lights and 1000w grow lights.

 

4) Understanding the electricity involved with growing.  Growing isn’t just lights, there is support equipment involved too.  A nice “rule of thumb” is that support equipment will add 20% in total electricity, per light.  Each 600w light really requires about 720w of total electricity to operate the designated space.  Each 1000w light really requires about 1200w of total electricity to operate the designated space.

 

5) Understanding the component of time for an indoor grow.  In order to flower indoors, most growers will run a ’12/12′ cycle, 12 hours of consecutive light, followed by 12 hours of consecutive darkness.  This is where we start ‘cooking with gas.’

Using the above numbers, we find that 12 hours for 1x 600w + support equipment comes out to (720 x 12)= 8.64 kw/h per day to operate.

Using the above numbers we find that 12 hours for 1x 1000w + support equipment comes out to 14.4 kw/h per day to operate.

 

6) Figuring out the electricity one has to grow with IN ARCATA & ZONE V.  Let’s presume that a house with a grow is using 10 kw/h per day for regular household activities

 

 

If a person has NO electrical heat, this provides with enough untaxed electricity to run 7x 600w lights, or 4x 1000w lights in the summer, with 9x 600w and 5x 1000w in the winter.

 

With the same presumption, if a house has ALL electric heat, it can run 13x 600w lights, or 8x 1000w lights in the summer, and 23x 600w lights, or 14x 1000w lights in the winter.

 

Zone V:

Non-electric heat

Summer: 12 baseline, 72 @ 600%, 62 available to grow, 7x 600w, 4x 1000w

Winter: 13.6 baseline, 81.6 @ 600% 71.6 available to grow, 9x 600w, 5x 1000w

 

Electric Heat

Summer:  19.4 baseline, 116.4 @ 600%, 106.4 available to grow, 13x 600w, 8x 1000w

Winter: 33.4 baseline, 200.4 @ 600%, 190.4 available to grow, 23x 600w, 14x 1000w

 

7) Figuring out the electricity one has to grow with IN ZONE Y/Z.

 

Now that we’ve walked through how to set up the chart I’m using, I’ll just provide the chart form for the other zones.

 

ZONE Y:

NO electric heat

SUMMER- 11. 7 baseline, 70.2 @ 600%, 60.2 available to grow, 7x 600w, 4x 1000w

WINTER-  13. 2  baseline,  79.2 @ 600%,  69.2 available to grow, 8x 600w, 4x 1000w

 

ALL electric heat

SUMMER- 14.1 baseline, 84.6 @ 600%, 74.6 available to grow, 8x 600w, 5x 1000w

WINTER-    30.7 baseline, 184.2 @ 600%, 174.2 available to grow, 20x 600w, 12x 1000w

 

ZONE Z:

NO electric heat

SUMMER- 7.9 baseline, 47.4 @ 600%, 37.4 available to grow, 4x 600w, 2x 1000w

WINTER-   10.6 baseline, 63.6 @ 600%, 53.6 available to grow, 6x 600w, 3x 1000w

 

ALL electric heat

SUMMER- 11.2 baseline, 67.2 @ 600%, 57.2 available to grow, 6x 600w, 3x 1000w

WINTER-  22.5 baseline, 135 @ 600%, 125 available to grow, 14x 600w, 8x 1000w

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Author: patoglesby

From 1982 to 1990, I worked in tax policy for Committees of the United States Congress. In recent years, I was Adjunct Lecturer at UNC-Chapel Hill's Business School and then Adjunct Professor at its Law School.

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