How Our Utility Users Tax Structure Encourages Greenhouse Gas Pollution

Each of our three cities, Albany, Emeryville and Berkeley, charges taxes on most utilities. These taxes generate a substantial portion of their general funds. The tax rate on each utility is the same, yet natural gas pollutes much more than electicity.

In Berkeley the utility users tax is 7.5% on gas, electricity and phones (including cell). However, because our electricity supply has become much cleaner, combusting a dollar of natural gas in our homes releases about four times as much greenhouse gas pollution as consuming a dollar of electricity. Our cities’ tax structures are providing an incentive to pollute more and works against their own pollution reduction goals.

Our League is seeking to rectify this in order to create a more level playing field between natural gas and electricity. This would support the economics of installing electric heat pump rather than gas-fired water and space heaters at the time of replacement. Heat pumps substantially reduce greenhouse pollution, and are almost competitive with gas-fired units now. Restructuring utility taxes to reflect greenhouse pollution would move the tipping point date closer, which we surely need as evidenced by the increasingly erratic weather (see below).

The first stumbling block is that PG&E’s billing system can only implement a single tax rate applied to both forms of energy currently. The Albany Council passed a resolution last December asking PG&E to add the capacity to tax each at a different rate, and asking the CPUC to make PG&E provide this capability. With our League’s support, and that of the Alameda County Citizens’ Climate Lobby, the Berkeley City Council passed a similar resolution last July.

If you know members of other local Leagues that might be interested in this topic, please let us know by emailing so we can reach out to them. The more cities that request this, the more likely it is to happen.

Note: Energy Tax Break for low income families: If you live in Berkeley and have an annual income less than about $37,000 you can apply for a refund of these taxes.

The graph of Berkeley Mean Annual Temperature Trend below illustrates how steeply our mean annual temperatures have been rising and therefore how urgent it is to make sure that all our regulations, fees and practices are modified to encourage energy saving and reduction of greenhouse gases.

—Preston Jordan, Action Director,

graph of Berkeley Mean annual temperature

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