Energy Exactions

Abstract

Exactions are demands levied on residential or commercial developers to force them, rather than a municipality, to bear the costs of new infrastructure. Local governments commonly use them to address the burdens that growth places on schools, transportation, water, and sewers. But exactions almost never address energy needs, even though local land use decisions can create significant externalities for the power grid and for energy resources. This Article proposes a novel reform to land use and energy law: “energy exactions”—understood as local fees or timing limits aimed at addressing the energy impacts of new residential or commercial development. Energy exactions would force developers to internalize the costs of growth on the energy grid, generate important information about community energy needs and their externalities, decentralize risk taking, promote technological change in new sources of power supply, and stimulate useful forms of regulatory competition between local communities and state utility regulators. In the process, they would induce energy conservation in the development of new residential and commercial buildings. The Article defends the implementation of energy exactions by local governments. It then analyzes the potential legal hurdles energy exactions face, including their authorization, preemption by state utility laws, and implications under the Takings Clause of the U.S. Constitution. Energy exactions provide local governments a unique, pragmatic and valuable tool to integrate community values into energy grid planning, promote demand reduction, and enable new investments in low-carbon energy infrastructure.