By Rob Roper
The Vermont House Committee on Energy and Technology is taking testimony on the ESSEX carbon tax bill. Here are some questions our legislators (and all Vermonters) should ask regarding the bill.
What’s the real benefit here?
662. (1) Allocation to classes. The mechanism shall allocate the total revenues received by the collection date among three customer classes, based on the estimated percentage contribution of each class to those total revenues. The classes shall be commercial, industrial, and residential.
Question: What percentage of the total revenue collected (50 percent of the estimated $240 million when fully implemented, will be allocated to each class? How much will be available for residential customers versus commercial and industrial? What’s the real potential financial benefit to average Vermont families on their electric bills versus increased costs for driving and heating their homes? It would appear to be pretty minimal.
662. (iv) With the monthly bill to a customer who has demonstrated eligibility for this income-based rebate, the provider shall include a check to the customer if,…
662. (c) … A person seeking one or both of the rural residential and income-based rebates established under this section shall demonstrate eligibility. The Commission shall create a mechanism to be used for the self-certification of eligibility for these rebates.
Question: The implications here are that rural and low-income Vermonters will have to actively apply for these rebates and update that application on a monthly basis. Does this mean that Vermonters who don’t apply for these rebates will not receive them? And is this daunting logistical burden on low income and rural Vermonters really fair?
Cost of implementation
Question: Given the above language implying that rebate seekers must demonstrate eligibility and continue to do so on a monthly basis, tracking and verifying this information by the state and effectively communicating it to electricity providers would appear to be an incredibly complicated bureaucratic process on a level exceeding that of Vermont Health Connect — a program that has cost taxpayers hundreds of millions of dollars to implement. How much is this carbon tax going to cost to collect, distribute, continuously track and enforce? If, as the statement of purpose asserts, the goal is to “to return all of the revenues from that charge to customers on their electric bills,” where will the revenue come from to do this?
663. (a) The Auditor of Accounts of the State may conduct audits of the activities under this chapter to ensure that all of the monies raised by the carbon charge are returned to customers. The Auditor shall conduct two such audits… (b) The Auditor and his or her authorized representatives may at any time examine the accounts and books of a Vermont retail electricity provider 3 relating to this chapter, including its receipts, disbursements, contracts, funds, 4 investments, and any other relevant matters.
Question: What are the estimated costs of these audits? Again, as noted above, where will the money come from to pay for them?
663. (a) … A Vermont retail electricity provider shall show each rebate received by a customer pursuant to section 662 of this title as a separate line item on the customer’s bill…
(e) In addition to the duties specified in this 12 chapter, the Commission may specify such other duties of retail electricity providers that it considers necessary in implementing this chapter.
(c) … A Vermont retail electricity provider shall have the opportunity to recover in retail rates its necessary and reasonable expenses, other than rebates, in implementing this chapter.
Question: This language seems to understand that retail electricity providers will also have considerable cost burdens associated with implementing this carbon tax and authorizes them to raise their rates in order to cover these costs. What are the estimated costs to providers, and what are the implications for electricity rates? Is this really just a scheme of putting money into one pocket of Vermonters (if they apply for rebates) while taking it out of another?
Question: Will this carbon tax, especially in its early phases, cost more to collect than it will take in?
Other general questions
The Transportation Fund. If this carbontax works as intended and people use significantly less gasoline and diesel for transportation, what will be the impact on Transportation Fund revenues? Will revenue from this tax necessarily have to be utilized to pay for roads and bridges? Or will another tax have to be raised to offset losses in the T-Fund? In either case, how can this carbon tax be honestly called “revenue neutral”?
Winners and Losers. Global Foundries and the ski industry are named in the ESSEX Plan document as potential big winners in this scheme. Ben & Jerry’s has presented that it will be a big winner. Who are the losers? Landscaping businesses that rely on pick up trucks, lawn mowers, chain saws, etc.? Plumbers, electricians, contractors, etc., with vans and customers that require driving many miles? Are we looking at a program that subsidizes large, wealthy companies at the expense of small, blue collar workers?
Revenue Neutrality. Proponents of this carbon tax tout that it is “revenue neutral.” If the money to cover the costs of implementing this tax do not come from the revenues generated by the tax, where will they come from, and how much are they expected to be?
Climate Change. In its Statement of Purpose, this bill says one of its objectives is “to address climate change.” What real world impacts will this bill have on mitigating future temperatures and future extreme weather events in Vermont, if any?