The Grid Optimization Blog

Demand Side Management has gone to Pot!

Arcata California signs deal with PG&E to collect overusage tax on residents growing marijuana with indoor lighting.

There are few places prettier than the Northern California Coast about 300 miles north of San Francisco. The Eureka/Arcata area has redwood trees, rocky coast, whales, sea lions and, for the last few decades, lots of cannabis. Humboldt County is the home of Humboldt Gold, long favored by marijuana connoisseurs and shipped all around the U.S. The problem is the evil weed grows slowly in the often foggy redwood forests. So, the local pot farmers have turned to a higher power, or at least a higher technology, to satisfy the growing demand – indoor grow lights. As a result, hundreds of residential accounts are using well over 6 times the average household energy.

That doesn't sit well with Arcata city management but not so much because of the moral outrage at being a high production, illicit purveyor of stoner treats to the world. It's just that the area has always been pretty green, not only in actual color, but in all levels of politics. Producing illegal cannabis crop with natural sunlight is one thing, but causing extra greenhouse gas to be released from a PG&E power plant is a whole other matter.

”It borders on embarrassing when the city has done everything it can to be a leader in energy conservation and forward thinking in terms of climate change efforts, yet in the community we see this dramatic increase of electricity usage, and that's not consistent throughout the state, and so clearly we've identified growhouses as being a part of that problem,” Arcata City Councilman Mark Wheetley said. (reported in the Willits News)

In fact, according to PG&E over 4 percent of Humboldt County residents fall into that group. As Arcata's Environmental Services Director Mark Andre was quoted: ”For us, it's all about our greenhouse gas reduction plan, and how we can be successful with it, and we're having a hard time being successful with it with (hundreds of) houses using over 600 percent of the baseline.”

Well they certainly have a point there. Satisfying the cannabis craving of America with indoor farming consumes enough electricity to power 2 million homes, or about 1 percent of national power consumption, according to a Lawrence Berkeley National Laboratory researcher. In California, marijuana cultivation accounts for 3 percent of all electricity use and 8 percent of household use.

So are Arcata officials just blowing smoke? Or can they really reduce their share of climate-spoiling power generation due to accelerated nurturing of the ever-so-popular cash crop? They think so. This fall Arcata will begin collecting a 45 percent excessive energy use tax on residences exceeding the 600 percent baseline. The tax is expected to provide additional city revenue as well as encourage growers to turn off the lights and return to nature's outdoor bounty of sunlight (limited as it is on the foggy coast). Or the other choice is to take their agricultural activities elsewhere. Maybe all three (call them joint outcomes).

But it's not all that easy to collect the tax. How do you know who's using how much? That's where the local utility comes in. Arcata is striking a deal with PG&E. The utility will identify the over-users and collect the tax, presumably through the billing system. PG&E is charging Arcata $650,000 to set the system up.  ”This is the first time that we've worked on a new system like this,” PG&E spokeswoman Brittany McKannay said. There really isn't a precedent yet to determine or to speculate what the changes would look like.”

I don't think it's going to work as hoped because cannabis (or tobacco, alcohol or even chocolate) demand doesn't have much price elasticity. So growers can up their price a bit and continue business as usual. Also, meter tampering services may become a growing enterprise. Then there is just flat-out energy theft which would suddenly be more attractive. Britain already loses about $100 million of electric energy due to illegal pot farming.

But, however the outcome you have to admit this partnership between utility and community is quite an innovative. Maybe it'll light up our imagination with some other possibilities?

Discuss this Blog Entry 2

J. Williams (not verified)
on Sep 9, 2013

It is ironic that this turns out to be a clash of two religions: The Church of Green and the the Church of Cheech and Chong.

on Sep 9, 2013

A neighbor told me he complained to the local utility about his $500 electricity bills. the utility representative stated that bills that high in this type neighborhood were typically a function of lighting bills related to growing indoor cash crops.

In his case though, they came to the preliminary conclusion that single pane windows and an inefficient, undersized air conditioner were the culprits.

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