MONTPELIER -- Pay a little to save a lot. That was the theory more than a decade ago when Vermont began taxing electric bills to pay for a statewide energy efficiency program that is widely regarded as a big success.
Now, there’s a push to apply the same principle to home heating.
But the idea of taxing heating oil and other fossil fuels to pay for tightening buildings to reduce the use of those fuels is drawing opposition from business groups and wariness from many lawmakers.
A Vermont Senate Committee on Tuesday heard the details of a report from a task force assembled by the Department of Public Service estimating that to raise $30 million for expanded weatherization programs would mean a tax on oil of about 12 cents per gallon.
But "taxing Vermonters is a tough thing to do," said Rep. David Sharpe, D-Bristol, a member of the House Ways and Means Committee. Especially when heating oil, used to warm a majority of Vermont homes, already costs around $4 per gallon.
Many of the key backers of a heating efficiency program are reticent to talk about raising taxes to pay for it, saying they’d rather sell the public on its value first.
"Our first job is to try and make sure every Vermonter totally understands the benefit to them, personally and individually," said Rep. Tony Klein, a Democrat from East Montpelier and the chairman of the House Natural Resources and Energy Committee.
He said he would leave the discussion of how to pay for it to the Ways and Means Committee, which has jurisdiction over taxes.
Klein’s vice chairwoman, Rep. Margaret Cheney, D-Norwich, said she is sold on the benefits already. Cheney said she and her husband, U.S. Rep. Peter Welch, added insulation under their roof and other weatherization steps taken at their home this past fall. A follow-up test showed they can expect to save 35 percent on their annual heating bill, and the house is much more comfortable, she said.
The Legislature set a goal in 2006 that Vermont weatherize 80,000 housing units -- a quarter of its housing stock -- by 2020, but there’s broad agreement the state is not on target to meet that goal. The task force said it could do so if it spends $276 million during the next seven years
Matt Cota, executive director of the Vermont Dealers’ Association, argued against what he called a "heat tax" to fund more weatherization. Stories like Cheney’s and others like her show "efficiency is a viable business enterprise now" and does not need state subsidies aside from those that go to a longstanding weatherization program geared to low-income residents.
But supporters say it’s a much better deal for the Vermont economy overall to spend money in-state for weatherization contractors than to ship money to out-of-state oil companies. They also say long-term savings for consumers more than offset up-front costs.
Backers of an expanded heating efficiency program say it likely would be administered by Efficiency Vermont, an arm of the nonprofit Vermont Energy Investment Corp. that began contracting with the state to run electric efficiency programs in 2,000. Since then, it has reduced Vermont’s electricity costs by about $775 million, with about $228 million raised for efficiency investments through a surcharge on electricity bills, according to its deputy policy director, George Twigg.
That’s purely in electricity costs, Twigg said. When jobs and spinoff economic activity are factored in, the benefit-cost ratio is closer to 5 to 1 than 3 to 1, Twigg said.