State Rep. Harry Arora: Is a temporary gas tax cut enough?

Posted on March 25, 2022

Energy costs for CT consumers have been rising over the last year. High prices of gasoline, heating oil, natural gas, and power are creating hardship for Connecticut residents. Yesterday, we voted and passed a temporary cut in gasoline taxes of 25c per gallon from April to June. I believe this gas tax cut is an inadequate response to the crisis we face. We need a structural change in our energy policy. While I am skeptical of this short-term measure, I still prefer it over nothing and voted for it. Here are five things we need to do to contain energy prices in our state.

25c temporary gas tax cut is inadequate: CT levies roughly 50c per gallon in gas tax. The 25c tax cut will reduce gas prices by about 5% at the pump. It is a temporary cut and ends right before the 4th July driving season. In addition to relief in gas taxes, bus fares will also be waived this quarter across CT to encourage public transit. However, the most important public transit system in CT, the New Haven Line, will not see any relief. The high gas prices are not likely to come down by June 2022. We need this gas tax cut to be longer-term and part of a structural change where the tax is linked to gas prices and is automatically reduced when gas prices are as high as they are now.

Lowering natural gas prices in CT: Natural gas is increasingly the heating fuel in most CT. Over 60% of our power generation is fueled by natural gas. We get our natural gas from Texas and during extreme demand periods from Qatar or other countries. The Marcellus gas reserve in Pennsylvania is the lowest cost and most prolific gas reserve globally. HERE is a map of gas reserves in the United States. Building a pipe to get our natural gas directly from Marcellus in PA would reduce our natural gas costs by 25% and improve reliability. Our administration is not interested in exploring that idea or compelling NY to give the right of way (for interstate commerce). While getting natural gas from PA has all the economic rationale, the opposition comes from activists who want a freeze on all hydrocarbon infrastructure development .Our natural gas and power prices have risen significantly this year and will continue to rise.

Lowering power bills: CT’s electricity prices at 22c per kwHr are the highest in the country. CT imposes several mandates and programs which add to the electric bill. I have proposed a bill that studies taking out these mandates and funding them separately. If adopted, this would reduce power prices by 15% or more. Public Utility Regulatory Authority or PURA regulates our utilities. In most states, the regulatory authority is independent. In CT, PURA reports to the Department of Energy, which compromises its effectiveness. We have repeatedly asked for PURA to be made independent so that they can focus on lowering prices, but the administration is not supportive of that measure.

Removing regulatory hurdles for solar development:  We can develop solar generation if we adopt suitable policies to attract the solar industry. Unfortunately, our legislature has passed laws prohibiting solar development on any farmland, even if that land is not used for agriculture. We have also mandated union labor on large solar projects. Our programs to develop solar are very small and do not attract any serious investments. As a result, despite years of subsidies, we have less than 5% of our generation from solar energy. All my advocacy on this issue has met with partisan disdain.

Supporting an orderly transition from hydrocarbons to green energy: The current energy strategy our state has embraced is to discourage investing in any hydrocarbon infrastructure and ONLY encourage investing in renewables. This policy has led to high prices of conventional fuels while renewables still need time to develop. We need a balanced approach where we prudently invest in some hydrocarbon infrastructure as we ramp up our renewable production. If we reduce our hydrocarbon availability before renewables become available, we could see astronomical prices during the transition or a disorderly transition.