Raise Taxes on Electricity?  
By John McClaughry 

The cry has again gone up for raising taxes. Not surprisingly, the cry comes from the Vermont Public Interest Group (VPIRG) and the Conservation Law Foundation (CLF).

The tax they propose to increase is the one on everyone's electric bill. In 1999 the legislature delegated to the Public Service Board the power to levy an "energy efficiency" tax to fund its "efficiency utility", known as Efficiency Vermont.

In 2003 the Republican House pushed through a law capping the PSB's tax power at $17.5 million a year. But the Democratic legislature elected in 2004 quickly repealed the cap, so today the unelected PSB can levy any tax rate it sees fit.

Last year VPIRG and other enviro groups petitioned the PSB to triple the efficiency tax to $52.5 million. The Douglas administration supported an increase to $29 million, and the Board eventually chose $30.7 million. This, coupled with Burlington Electric Department's parallel program, gives Vermont the highest per capita spending on energy efficiency programs of any state in the union.

Now VPIRG and its friends want an immediate tax increase to $52.5 million, plus a commitment to increasing the tax to an astounding $85 million by 2011.

In response, the Douglas administration offered "a resounding vote of support to continue robust spending for investments in energy efficiency" - of course! - but said that such spending needs to be "consistent with statutory requirements and commitments." This translated to support for level funding.

VPIRG bolstered its demand in a news story in which its spokesman was reported as saying that "the Board's own opinion survey found that 84% of residents support an increase in the Efficiency Vermont budget." The Board, however, knows nothing of any such survey.

The Department of Public Service surmises that VPIRG is talking about the questionnaires checked by the people attending its six "public engagement meetings" held over the past year. The legislature deliberately mandated these meetings to give the enviro activists forums to peddle their endless list of demands for shutting down Vermont Yankee, spreading wind turbines along the state's ridgelines, and in general creating their long-sought extreme green makeover.

Predictably, the activists flooded the meetings and produced an 82% Yes vote on the question "should the budget for energy efficiency be increased?" Whether average Vermonters would produce even a majority vote on the question "should the efficiency tax on your electric bill be raised?" is another question altogether.

The enviro activists seem loath to acknowledge that dramatically higher energy prices are making their conservation dream come true. A year ago heating oil sold for $2.50 a gallon. Today it's at $5.00. Do the enviros really believe that no one has noticed? Or that having noticed, people aren't taking steps to conserve fuel and electricity?

The basic truth is that price matters, and people aren't stupid. When the price of energy doubles, people reduce consumption and improve efficiency. A host of entrepreneurs, such as Kilawatt Technologies of Shelburne, stand ready to conduct energy audits, supervise conservation measures, and make their profit by sharing the resulting savings with the customer.

So why should electricity ratepayers be taxed $30 million a year - or $85 million if VPIRG and CLF get their way - by an unaccountable state board, to pay Efficiency Vermont to explain to people that it's worth an investment to save energy and money, and sell them subsidized light bulbs?

Sandra Levine of CLF says "for every dollar you invest in energy efficiency, you save two or three dollars on electricity that you would have had to buy." That's often true. And the logical next step is for "you" to take charge and act. But CLF, VPIRG and their Green friends in the legislature are determined that not "you", but the government, will take charge of solving everybody's problem - and send "you" the tax bill.

The state can usefully maintain a web site with explanatory material and a directory of qualified energy conservation contractors and cooperating lenders. State officials, legislators, the news media, labor unions, coops, chambers of commerce, utility companies, fuel dealers and environmental groups can do their part in informing the public.

Such a program ought to run around, say, half a million dollars a year. And as Vermonters look at their rising energy bills and start thinking about making them smaller, they'll find ways to adapt their behavior and solve their problems. Trust them.

Moreover, they'll more than likely solve their problems in ways that the Greens favor. And they would have $30 million more in their own pockets to defray the costs of their cost-effective energy investments.

John McClaughry is President of the Ethan Allen Institute