MASSACHUSETTS SENATE PUSHES 2 ½ Cent/Gal. Home Heating Oil Tax

by Ted Tripp
Senior Political Reporter

Taxachusetts is alive and well!

At the end of June, the Massachusetts Senate passed an omnibus, 72-page energy bill in an effort to micromanage the energy economy of the commonwealth better than the free market system. The Senate bill, S.2372, as amended (or S.2400 as sent to the House), is called An Act to Promote Energy Diversity. If Truth in Labeling was the adopted policy of our state government, the bill would be called: an Act to Increase the Cost of Energy to Every Single Person in the Commonwealth of Massachusetts.
A large part of the bill deals with increasing – or accelerating the increase – in the utilization of renewable energy for the production of electricity. This would, of course, increase the cost of electricity to every household and business in the state.
Using government data, Electric Power Monthly (http://tinyurl.com/jejuf3h) shows that New England already has by far the highest electricity costs of any region of the country. For April 2016, Massachusetts ranked as the second highest cost state in the contiguous 48 states, with a residential rate average of 20.64 ¢/kw-hr, a commercial rate of 15.56 ¢/kw-hr, and for industrial, 12.96 ¢/kw-hr.
Much of the bill addresses long term contracts with renewable energy, particularly off-shore wind projects which have shown to be outrageously expensive (for example, Cape Wind). Dan Dolan, president of the New England Power Generators Association, told the Berkshire Eagle: “We are extremely disappointed and concerned about key provisions in this energy bill, which carves out nearly 50 percent of Massachusetts’ electricity market in the form of subsidized long-term contracts.” He added, “Not only will this lead to a dramatic increase in electricity costs for Commonwealth businesses and consumers, it will hurt local energy innovation and undermine billions of dollars in new investments being made here today.”
The bill also doubles the rate at which utilities must add renewable energy as a portion of their total energy requirements to meet the CO2 reduction goals stipulated in the greenhouse gas reduction legislation of 2008. After all, Massachusetts must lead the way in saving the planet from Global Warming, even if the global temperature hasn’t changed in much of the past 20 years.
Besides increasing our electricity costs, the Senate bill has some other onerous new ideas. One section creates a new “energy auditing requirement” for the sale of your home. A home energy rating and labeling system would be developed by the Mass. Department of Energy Resources and the score for your home would be based on energy consumption, costs and greenhouse gas emissions. The score for your home would have to be disclosed to the buyer before a sale could take place. I’ll bet the real estate brokers love this one!
Another section of this pathetic bill assesses a “$25 million post-closure funding fee” ANNUALLY for any nuclear power plant which is not fully decommissioned five years after it ceases producing electricity. Obviously, this is directed at the Pilgrim facility in Plymouth. Decommissioning is a highly regulated process by the federal government, yet the state seems to know how this can be done easily within five years. Or maybe it just wants to collect the money. If it starts to collect $25 million/year, guess who pays? One way or another, ratepayers will be sending this money to the state. And how do think this encourages future (carbon-free) nuclear power plants being built in Massachusetts?
Let’s now turn to the main subject of this column, heating oil. As S.2374 was being debated, over 100 amendments were offered. One, Amendment 61 (http://tinyurl.com/gwbxqzc), was co-sponsored by Senator James Eldridge (D-Acton), Senator Linda D. Forry (D-Boston) and Senator Bruce Tarr (R-Gloucester). The amendment sets up an Oil Heat Fuel Energy Efficiency Trust Fund to support oil heat energy efficiency programs. To fund this new program, a tax of 2 ½ cents/gal would be assessed on every gallon of home and commercial heating oil. Senator Eldridge is reported saying that the tax would raise $20 million annually but would save $120 million annually by making homes more energy efficient.
Yeah, right. Aren’t you glad that government is always saving us money by giving us a new tax?
The amendment passed the Senate by a voice vote. The entire energy bill, S.2372 as amended (rewritten as S.2400), passed the Senate unanimously by a vote of 39-0.
NOT ONE Republican voted against the bill.
An aide in Senator Tarr’s office on why he and the other Republicans would support such a tax told the Broadside that other advantages in Amendment 61 outweighed the disadvantages of a new tax. From this newspaper’s perspective, that seems hard to believe.
A tax on heating oil is about as regressive a tax as you can get. If you don’t live in a city or the central part of a major town where natural gas is available, you almost certainly have to use oil to heat your home. The northeast uses far more heating oil than any other part of the country. Every winter we see clips on the news about the little old lady struggling to find the money to put oil in her tank so she can stay warm during a severe cold spell. Often times it’s a trade-off between paying the rent or paying for her medications or paying for heating her home.
Where we live, heating oil is a necessity like food and shelter and clothing. In recent years we have been fortunate that because of American ingenuity and the fracking revolution, the United States is producing more oil than ever before. Coupled with high worldwide oil production, we have seen the price of heating oil fall to levels that are more affordable for the middle class homeowner who, according to the Pew Research Center (http://tinyurl.com/jhjntrv), in 2014 had a median income of 4% less than in 2000. And if you look at SmartAsset.com’s (http://tinyurl.com/h68ocfy) “The Best States for the Middle Class,” Massachusetts comes in – drum roll, please – 51st, behind Connecticut, New York, Illinois and D.C.
The poor are not getting richer. My Budget 360 says the “ranks of the poor and working poor is expanding.”
Just because heating oil is now somewhat less expensive than a few years ago, is no reason excuse for do-gooder politicians to now believe they can blatantly take some of those savings from you and that little old lady struggling to heat her house for their own pet programs.
We already have federal programs, Joe 4 Oil, and especially Mass Save®, which offers a plethora of programs and rebates to help those using fuel oil as well as other fuels for heating and hot water. For lower income households, there is the Massachusetts Association for Community Action (MASSCAP) and Low-Income Energy Affordability Network (LEAN) promoting programs to qualifying households. There are also some veterans’ programs to help veterans in need.
Aren’t these enough? Do we need a regressive heating oil tax for another government program?
As this column is being written, Senate Bill S.2400 is currently in a conference committee with House Bill H.4385, the House’s version of its energy bill. The House version does not have the home heating oil tax, so we will have to see what emerges from the six-member committee before a final energy bill goes to the House and Senate floors for a full vote. All this must take place before July 31st. Then the governor has 10 days to sign it, veto it, or let it become law without his signature.
All this just proves that old maxim: Hold on to your wallet while the Legislature is in session.♦

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