Gas and Oil Funds 02.07.05 Press
Connecticut Law Tribune
Is Capitol Ripe for Climate Change?
February 7, 2005
By Dan Levine
The Connecticut Climate Change Action Plan--55 steps designed to cut greenhouse gas emissions while saving money over the long term--was overwhelmingly endorsed as a concept by the legislature's Environment Committee January 31.
The real fights over climate change, however, will be fought on a variety of fronts, over big bills laden with publicity and quieter measures looking to sneak through the Capitol. And in most of those battles, business lobbyists whose clients believe they will lose money stand ready to tweak, alter and eviscerate the offending legislation.
For controversy, look no further than recommendation numbers 32 and 33. If passed, Connecticut would establish conservation funds for oil and natural gas. A business or homeowner who wants to upgrade to a more efficient heating system [but who cannot afford the one-time capital outlay] could receive a loan or grant from the conservation fund to help with the purchase. For the consumer, the benefit would be long-term savings from lower fuel bills. But a more efficient heating system would mean less fossil fuel burned, fewer emissions, and perhaps a more price-stable energy market.
The logic underpinning this idea--tackling energy costs and emissions by reducing demand--is nothing new in Connecticut. When the state deregulated its power industry, a new electricity conservation fund was born, fueled by a surcharge on ratepayers' bills. The fund estimates a savings of $4 for every dollar invested in more efficient lighting systems and other programs, according to its 2003 report.
"These funds work, and regulators understand how important they are," said Daniel Sosland, executive director of Environment Northeast, who also helped craft this facet of deregulation. Even such pro-business, anti-tax politicians like state Rep. Kevin DelGobbo [R-Naugatuck] believe the electric conservation fund makes sense. "The current...program is working very well and represents potential savings of consumer dollars over time," he said.
When it comes to setting up new funds for oil and natural gas, the revenue would come from a 3 percent surcharge on consumers' bills, resulting in a savings ratio nearly 2.5-to-1 for oil, and almost 5-to-1 for natural gas, according to the plan. But DelGobbo and industry groups like Connecticut Natural Gas, the Connecticut Business and Industry Association and the Connecticut Petroleum Council oppose the idea. They say energy prices are high enough, and a tax hike would cripple consumers.
However, the additional costs to consumers would be offset by using less fuel, Sosland said. And the industry's product could gain a competitive advantage if dealers are able to market efficiency upgrades to their customers as a means to long-term savings.
"No question there's a bottom line concern" on the part of the fuel industry, Sosland said. "They're in an industry trying to sell as much as they can. But I think the point is there are smarter ways to sell their product."
With budget problems forcing probable tax hikes in other areas, it will take a brave legislator to back what will be perceived as an energy tax. Not to mention the reality that legislators and the former governor already raided the existing electricity conservation fund to plug prior budget deficits. Instead of $88 million to help reduce electric demand, the fund was reduced 44 percent to just over $55 million. Politicos could do the exact same thing with any new oil and natural gas funds.
"That is probably the biggest single argument to sway legislators in the middle against establishing a fund like this" for oil and natural gas, said Robert Maddox, a former Republican legislator, now Northeast Regional Manager for Sterling Planet, a green builder. If anything, the oil and gas fund ideas may be used to leverage money to fully fund the existing electricity fund this year, and then be revisited in future sessions.
An interesting player in this whole saga will be newly installed DEP Commissioner Gina McCarthy. "I feel like my job is to lobby so the climate change plan is fully implemented," McCarthy said. "I need to keep challenging the issue."
The commissioner said she was up front with the governor about her support for ideas like the conservation funds. As the political fights unfold, it will be worth monitoring whether McCarthy will be able to sway the governor to take a strong stand in this arena, or if the commissioner's views will be ignored in favor of industry interests.
