Tax rebates for fuel efficient vehicles
by Statehouse News ServiceThe state should authorize rebates of sales and excise taxes on fuel efficient vehicles and make metering and rate adjustments to encourage consumers to adjust their electricity consumption habits, Romney administration leaders said.
The recommendations came as energy experts and elected officials pushed lawmakers to work quickly with neighboring states on a plan to conserve andvproduce more energy, consider expanding the liquefied natural gas supply, and provide more incentives for renewable energy.
Secretary of Commonwealth Development Douglas Foy, a Romney appointee, urged House leaders who convened a daylong energy summit to pursue proposals, already adopted by the Senate, that offer financial incentives and exemptions to boost sales of fuel efficient vehicles of all sizes.
In addition to rebating the sales tax on purchases of certain fuel efficient vehicles, Foy said the administration favors rebating auto excise taxes for three years and holding cities and towns harmless for lost revenues. The administration also favors breaks on efficient vehicles made
in the U.S, said Foy.
The rebates, rather than exemptions, would enable legislative leaders and the governor to mail checks and thank you letters to purchasers of fuel-efficient vehicles, Foy said at a hearing that drew industry insiders to an overheated hearing room that itself would benefit from energy
conservation, Foy pointed out.
Another top Romney administration official, Division of Energy Resources Commissioner David O'Connor, told lawmakers that the state has a higher than average supply of home heating oil heading into winter, but warned of "brutally expensive" prices. "Consumers are going to spend $650 million more than they did last year to purchase their heating oil," O'Connor said.
O'Connor urged conservation, or using less energy, and demand reduction - using energy at off-peak hours, noting that Massachusetts imports much of its energy resources. "It is foolish to bring it such a long way and then waste it when it gets here," said O'Connor.
But he cautioned that many consumers are not aware of their peak energy usage periods because it's not spelled out on their bills. Metering technology upgrades and rate adjustments are ways to control demand so that the state can reduce its "reliability risks" during peak demand periods,
O'Connor said.
When a state representatives asked whether demand control meant charging more for using air conditioning during peak periods, O'Connor replied in the affirmative, but emphasized that changes in usage trends can be made voluntarily. "This is not something that needs to be mandated," he said.
Congressman Edward Markey (D-Malden) told lawmakers that Massachusetts should become the international leader of energy efficiency and promote renewable energy policies. "We have to find ways of inventing ourselves out of this crisis because we're not going to be able to drill our way out of it," Markey said.
Former U.S. Rep. Joseph Kennedy, chair and president of Citizens Energy Corp., told state representatives they must act soon on a plan to save energy and help low and middle-income residents pay utility bills this winter. Home heating costs are likely to rise 30 to 50 percent this winter, experts say.
Kennedy said his office receives phone calls every day from consumers who are panicking about the situation. Combined with nearly a 70 percent increase in heating prices last year, residents with an annual income of between $20,000 and $50,000 will struggle the most with paying their
heating bills this year.
"I have no idea how people are going to get through this," he said. Kennedy urged House Speaker Salvatore DiMasi, who convened the forum, and other House leaders to quickly develop a fuel assistance plan, similar to one proposed by DiMasi and Senate President Robert Travaglini to provide tax credits to offset homeowners' heating bills.
"The leadership of this state is going to make Michael Brown look well organized if we don't get our act together, and we don't start anticipating the hurt and pain that people are going to witness this year if we don't start pulling it together and I mean now," Kennedy said, referring to the
former FEMA director who resigned amid criticism of his response to Hurricane Katrina. "I think, Mr. Speaker, that it is time for action. It is time to get this thing moving." Three energy-related bills are in play on Beacon Hill.
Both branches have approved legislation requiring manufacturers of household appliances to begin meeting minimum energy efficiency standards. The Senate recently approved legislation offering tax incentives to boost alternative energy sources and spur hybrid vehicle purchases. And leaders in both branches are working on a consensus $80 million proposal to meet immediate needs and address others.
The latter plan, known as the HEAT plan, authorizes energy efficiency and "green" building tax credits, establishes a public-private fuel cell technology initiative, extends a ratepayer charge that funds efficiency programs, and establishes tax deductions of up to $800 for home heating oil
and natural gas expenses.
Gov. Mitt Romney has also served notice that his administration is working on its own energy proposal to help senior citizens cope with rising prices.
Following a spike in energy costs caused by Hurricane Katrina, Romney said in August that he believes high fuel costs are a long-term problem. "It has been our view as an administration that high energy prices are not a blip, but they are a new reality," he said at the time. "Last year's high
prices in the winter were not a one-time event, but were the beginning of many years of very high oil prices. And we expect to see very high oil prices this winter and in subsequent winters."
Dr. Susan Tierney, managing principal at The Analysis Group, told House lawmakers that her "personal opinion" is New England ought to expand its LNG supply, with additional terminals in Massachusetts, nearby states, or on a Canadian province. And while the state's supply of natural gas is likely sufficient to last through this year, Massachusetts will begin needing more as early as next year, Tierney said.
Proposals have been floated to build an LNG terminal in Fall River, Gloucester, and most recently on the Boston Harbor Islands. And Markey said today that lawmakers and the governor have limited power over LNG sitings since the passage of federal legislation in August. The Boston Harbor
proposal would require a two-thirds approval by the Legislature because it involves a constitutionally protected land taking.
Markey said New England states should have a comprehensive plan for siting LNG terminals and submit it to the Federal Energy Regulatory Commission, which considers all LNG proposals. He said four LNG facilities would be "economically unsustainable" for Massachusetts. His district currently contains the state's only LNG terminal, located in Everett.
Kennedy said Massachusetts may not need to have another LNG terminal, and the nation should be more focused on upgrading and expanding its oil refineries. "That's where the problem is," he said.
Thomas M. Kiley, president and CEO of the Northeast Gas Association, expressed concern that commission proceedings on LNG siting decisions might drag on, negatively influencing the private sector plans of LNG facility proponents.
He said there are as many as 16 proposals pending in the Northeast. The association doesn't endorse one over another due to "political sensitivities," but Kiley said projects that are "as close to
the market as possible" are preferable. Dempsey said he was mindful of industry concerns and estimated that a special commission would require 60 to 90 days to complete its work.
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