Task force urges $275 million be spent on weatherization
By Peter Hirschfeld
Vermont Press Bureau | January 14,2013
Tim CAlabro / Staff File Photo
A Montpelier home is retrofitted with a new heating and ventilation system to make the home energy efficient.
MONTPELIER — In a report set to hit lawmakers’ desks later this month, a coalition of efficiency advocates and energy experts will ask the Legislature to raise more than $275 million over the next seven years to weatherize 62,000 Vermont homes.
The 65-member Thermal Efficiency Task Force has finalized recommendations that include everything from a new excise tax on heating fuels to tax credits for residents who button up their homes or buy more efficient heating systems.
While the excise tax — as much as 10 cents per gallon on heating oil — and “energy efficiency tax credit” emerged as the preferred public financing options, authors of the 97-page report caution that “no one single option should be pursued alone.”
The report also asks lawmakers to consider increasing the existing “efficiency surcharge” on natural gas.
“In order to address some of the principles of sustainability, equity, low-income protection and price signals, and to spread the risk, the (task force) suggests moving forward with a package of multiple funding options,” the draft report says.
Not everyone on the task force signed off on the proposals; fuel dealers in particular raised concerns about the plan.
Convened last year by the Vermont Department of Public Service, the task force was created to chart a path toward the weatherization goals established by lawmakers in 2008. Achieving the 80,000-home goal by 2020, the task force concluded, will require an additional $276 million in public funding between 2014 and 2020.
The group says Vermont, home to one of the oldest housing stocks in the country, is on pace to weatherize about 18,000 homes by the end of 2013.
Gov. Peter Shumlin has said he aims to expand thermal efficiency programs in the state; however, he has not indicated yet whether he’s willing to raise taxes in order to fund them.
The task force argues that it would make good economic sense to do so. Vermonters spent more than $600 million in 2010 on “fossil-based heating fuels,” the bulk of which left the state economy, the report says. And while the average Vermont home uses only half as much heating oil as it did 40 years ago, “Vermonters’ 2010 fuel bill was nearly twice as much as we were paying a decade earlier and prices are expected to continue to rise.”
Each home that undergoes projects like air sealing, insulation, and heating system replacements would see $1,000 in avoided heating costs annually, according to the report. Hitting the 80,000-home goal, according to DPS projections, would save Vermonters more than $2 billion in heating costs over the life of the projects and create “800 job-years.”
The report says the effort would have the added benefit of preventing 3.6 million tons of carbon dioxide from emitting into the atmosphere, the equivalent of taking 680,000 passenger vehicles off the road for one year.
“Raising $276 million in new funding for program costs and incentives over this seven-year period represents a major financial commitment on the part of the state,” the report says. “However, this investment ... will leverage more than $687 million in private sector financing and investment, stimulating job creation, lender activity and the recycling of funds in Vermont’s economy instead of sending Vermonters’ money out of state ... to pay for fossil fuels.”
While the excise tax and efficiency tax credit are the only “high preference” recommendations, the group’s “medium preference” options include an increase in the gross receipts tax for heating fuels, or imposing a 6 percent sales tax on residential heating fuels (they are currently exempt from the sales tax).
The group also suggests looking at a “ceiling mechanism” tax, wherein a surcharge would be assessed only when the price of heating fuels drops below a certain threshold.
The group also asks lawmakers to make sure natural gas — a regulated utility — is doing its part for the weatherization effort. Natural gas customers already pay an efficiency surcharge that is used to fund weatherization efforts.
“However, if the amount levied in order to raise the statewide goal requires an assessment higher than (Vermont Gas Systems’) current efficiency budget, then we suggest that the additional amount raised from natural gas be in line with the other fuels in order to support this statewide effort,” the report says.
The group wants to find ways to minimize the impact of any tax proposal on low-income Vermonters.