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The "all fuels" efficiency program to help pay for weatherization and other heating fuel saving measures has become one of the most contentious issues in the Statehouse this year. The tax was passed along with preliminary approval of the Senate's entire energy and anti-global warming bill Tuesday was by a vote of 18-11.
The real fight, however, was whether to accept the proposed 35 percent tax on revenue gained by Entergy from the operation of the Vermont Yankee plant. That attempt passed by a 15-14 vote.
The debate is likely not over, however. Although the Senate is likely to give final approval to the measure today, it must then be reconciled with a House version of an anti-global warming bill.
The debate over the fuels efficiency program, roughly based on the state's current efficiency program to reduce the use of electricity, has largely come down to a disagreement between two groups. On one side, Gov. James Douglas and executives from manufacturing and utility companies across the state oppose the idea, worried that it could increase electricity power rates after 2012.
On the other side, Senate President Pro Tem Peter Shumlin, D-Windham, and environmental advocates have said the program will, in the long run, reduce the state's contribution to global warming, save Vermonters money on their heating bills and create jobs in industry, such as contractors who would do the weatherization work.
Entergy can afford to pay the roughly $37 million throughout the next several years because higher fossil fuel prices and changes to government programs and rules around electrical power have resulted in the company making "windfall" profits, supporters of the idea said.
They also said power contracts between Vermont utilities and Yankee are set through 2012, when its current license to operate and the tax expires.
"It does not affect Vermonters' rates," Shumlin said. The impact of the tax would fall on Entergy's shareholders, not on ratepayers in Vermont, he argued.
But opponents of the idea warned that if Yankee, which provides a third of the state's electricity, gains a new license to operate the company will try to make back those taxes from Vermonters and other ratepayers.
"In the long term, the Vermont ratepayer will suffer," said Sen. Kevin Mullin, R-Rutland.
The tax also sends a bad signal to businesses that their revenue could be taxed arbitrarily by the state.
"This is the wrong message at the wrong time," Mullin said. "Any industry at any given time could have such an onerous tax placed on them."
But the tax only risks driving away businesses such as Entergy that want to store "high level waste" in Vermont, Shumlin said.
Opponents of the tax on Entergy also said the proposal violated deals worked out in past years.
Lobbyists for business worked in the Statehouse to try and prevent the tax from being passed.
"The senators who voted for that predatory tax showed no regard for the reputation of the state, the welfare of working families or the future cost of electricity," said William Driscoll of Associated Industries of Vermont.
But environmental advocates applauded the passage of the measure, saying it was a step towards doing something about global warming and heating costs.
"Despite the fact that every corporate lobbyist in the Statehouse was twisting arms and working to kill the bill, the senators passed landmark global warming legislation today," said James Moore of the Vermont Public Interest Research Group.
The bill also includes a variety of other provisions to encourage the development of renewable energy projects in Vermont and tighten some building energy standards for commercial buildings.
One of those sections would establish a set property tax for wind power projects to improve the predictability of the tax structure for developers of such projects. The measure as passed in the Senate, would give new wind power projects in the state a three-year grace period before they were charged state property taxes. Afterwards, they would be taxed at 0.003 cents per kilowatt hour, although that rate will likely change during negotiations with the House.
"We are trying to have property taxpayers in the state of Vermont, who are paying their taxes now, significantly subsidizing the wind developer," said Sen. George Coppenrath, R-Caledonia. "I find that objectionable."
But Ann Cummings, D-Washington, said if that provision was deleted, it would "kill wind energy in this state."
An attempt to kill the provision was defeated.
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