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"Hidden" Energy Tax Means Fewer Efficiency Services For Connecticut Oil Customers

Jan 16, 2018

Tens of millions of dollars that were to be set aside to make homes and businesses more energy efficient will instead be pumped into the state’s general fund.

It’s a funding raid that’s been criticized as a “hidden tax” on utility bills.

Here’s what the changes mean for consumers -- and greenhouse gases.

Connecticut’s recent cold spell may have you looking at your heating bill and thinking, ‘I need to lower this.’

One way? An energy audit. The state runs a program to help weatherize your house and make it more efficient. It usually provides about $1,000 in services, but customers typically only pay a fraction of that. That’s because utility ratepayers pay a small fee on their bills -- which is supposed to support these programs.

But the state legislature just threw a big wrench in that.

In its most recent budget, it slashed Connecticut’s Energy Efficiency Fund by about $130 million over the next two years.

“Honestly, this time of the year is probably the worst. Because this is when people are starting to really think about how to make their homes more efficient,” said Taren O’Connor, chair of Connecticut’s Energy Efficiency Board.

She said ratepayer money will be piped into the general fund. Because of that, she said, successful efficiency programs are coming to a “screeching halt.”

“Others, we’re really having to scramble to try and reconfigure,” said O’Connor.

First, let’s figure out what this means for gas customers.

To do that, we need to go back to those small fees on utility bills. Right now, they work like this. The state mandates every electric customer pay an efficiency charge on their bill.

And if you use natural gas, you pay another charge on that bill, too.

Now, that might not seem fair. But the state is hoping to make sure the gas customers are insulated from the worst of the efficiency cuts.

Now, what about oil customers?

“It’s a little tricky,” said O’Connor.

That’s because unlike gas customers, if you heat with oil -- there isn’t an additional conservation charge on your bill.

“That calls to question, ‘OK, how are we going to handle our oil heated homes who do want to take advantage of the programs?’" O’Connor said.

For a while, Connecticut’s solution was to use money from the Regional Greenhouse Gas Initiative. But the legislature gutted that funding, by raiding $20 million over the next two years.

Bottom line? O’Connor said oil customers will miss out big time on state-subsidized energy efficiency services.

“We’ll be able to do around 2,500 to 3,000 oil and propane jobs,” O’Connor said, noting most of those will be oil jobs. “If we hadn’t had the cut, we would have proceeded in 2018 with the ability to do about 7,500 to 8,000. So it’s a big cut we’re faced with.”

One possible solution: what if oil customers just got a fee on their bills too?

The Department of Energy and Environmental Protection likes the idea and advocated for it in its draft Comprehensive Energy Strategy. The oil industry? Not so much.

“We don’t want our customers contributing to conservation programs,” said Chris Herb, president of the Connecticut Energy Marketers Association. “Because they’ll be used for other purposes, like balancing the budget.”

Herb’s organization represents about 600 home heating oil and propane dealers in the state.

“Our position is, these funds should be generated just through the electric bill -- equally and fairly to all,” Herb said. “I’m not really excited about lowering natural gas costs, since we compete with them. But if we honestly are serious about achieving additional conservation -- the best way to do it is to just have one point of collection through the electric bill.”

Chris Phelps, with the advocacy group Environment Connecticut, said state efficiency programs need to be more “fuel blind.” That is, focus on who needs efficiency services the most -- rather than playing favorites with who heats with oil or gas.

“There’s a strong argument for saying that we really should focus on ‘bang for the buck’ -- where can we get the most savings for the people who need it the most?” said Phelps. “That becomes even more imperative, I think, as the amount of money available shrinks, at least in the near term.”

Meanwhile, heating contractors say homes using more carbon-intensive fuels like oil are already seeing fewer efficiency services due to the budget cuts. The state DEEP said this will result in an additional 13 million gallons of oil burned in Connecticut over the next two years.

And several contractors say they’ve already begun laying off employees trained to make oil homes more efficient.