Commerce Committee Kills Heating Oil Tax
It’s rare that lawmakers pronounce legislation “dead,” but that’s just what Sen. Gary LeBeau and Rep. Chris Perone did on Thursday when they killed a proposal to tax home heating oil and propane.
An excise tax of 1.5 cents per gallon in the first year and up to 3.5 cents per gallon in the third year was going to be used to create an energy efficiency fund for homeowners who heat with oil or propane.
But the chairmen of the legislature’s Commerce Committee decided now was not the right time and declared the bill dead.
“Our job as legislators, and especially as committee chairs, is to have an open discussion with all stakeholders of an issue making their case, and then determine whether that legislation will improve our state’s economy,” Perone said. “In these tough economic times we decided that this bill would not be helpful to the citizens of our state and to the overall economy in Connecticut.”
They called the goal of creating an efficiency fund for about 650,000 consumers “laudable,” but decided it may have been more of a stick than a carrot when it comes to conservation.
“I don’t think Rep. Person or Sen. LeBeau intended to tax their constituents, but that’s what this legislation would have done,” Chris Herb, vice-president of Connecticut Energy Marketers Association, said Thursday.
LeBeau thanked the home heating oil dealers, who testified in support of energy conservation and efficiency but against the tax. LeBeau told them killing the bill will give them another chance to come to the table with solutions for creating an energy efficiency fund.
“The governor’s comprehensive energy plan had two options for supporting this much-needed fund: a state levy or a volunteer contribution from home heating oil dealers,” LeBeau said. “Now is the time for them [oil dealers] to stand up for the customers and the environment they say they care about.”
But Herb, who wasn’t quite ready to declare victory, said he thinks LeBeau may have missed the message they delivered earlier this week during a public hearing on the legislation.
“Without a government tax or program, our oil dealers have reduced consumption by 35 percent,” Herb said.
He said lawmakers need to stand up for their constituents who already contribute to these efficiency programs through their electricity bills.
The Connecticut Energy Efficiency Fund is supported by all Connecticut Light & Power and United Illuminating customers on their electricity bills through the “Combined Public Benefits Charge” and also by Connecticut Natural Gas, Southern Connecticut Gas Company, and Yankee Gas Services Company customers through a conservation charge included in their rates.
Currently, the electric utilities can only spend up to $500,000 per year to provide energy efficiency services to help fuel oil and propane consumers.
“These customers must also contribute a higher ‘co-pay’ to take advantage of the very popular and successful Home Energy Solutions program,” a representative of Connecticut Light & Power testified.
Herb said taxing home heating oil to create an efficiency fund would be a double tax on anyone who pays an electric bill and uses oil heat. He said it would not create the equal playing field lawmakers sought.
Herb also expressed concern that lawmakers would raid the fund when faced with a budget deficit. He said it’s more likely that the fund would be used for deficit mitigation and not conservation.
But environmentalists said the fund was necessary because the one created by the state as a stopgap measure following the depletion of federal stimulus funds expires on June 30. More than a dozen environmental groups testified in favor of the bill Tuesday.
Department of Energy and Environmental Protection Commissioner Daniel Esty also submitted testimony to the committee. He said that while there is some “cross-subsidization of program costs by electric customers,” a voluntary assessment to raise millions of dollars would be necessary “if the goal is to provide non-regulated fuel customers with the same kind of benefits now available to natural gas and electric customers.”
Leticia Colon of Energy Efficiencies Solutions said that if no fund for oil customers is created, then her industry — which conducts the energy audits through the Home Energy Solutions Program — will have to face job cuts.
“If no mechanism to fund oil-heated homes is agreed upon, our industry faces employees layoffs as a result of a diminished opportunity and loss of revenue for HVAC contractors, insulators, and window installers,” she said.
There are about 650,000 households in the state heating with oil or propane. That amounts to nearly 50 percent of the households in the state.
Herb said he looks forward to continuing to work on the issue with lawmakers.