Local chamber blasts state energy fee
Gov. Andrew Cuomo’s executive budget proposal would continue charging a fee on energy bills – a fee that was scheduled to sunset this year, and critics of the pending extension say it would be unfair to consumers.
According to a news release from the Fulton-Montgomery Regional Chamber of Commerce & Industry, Section 18a of the Public Service Law authorizes the state to impose a fee on electric bills from public utilities to fund the operations of energy related agencies and authorities.
Until 2009, the assessments had been capped at one-third of 1 percent of a customer’s monthly bill. However, that year, then-Gov. David Paterson signed legislation authorizing the elimination of the operations cap and increased the fee from one-third of 1 percent to 2 percent, the news release said.
The increase was a six-fold increase for most ratepayers, chamber President Mark Kilmer said.
“That was quite a jump,” he said. “What it means now is everybody from residents, governments, schools and businesses will all pay a lot more on their energy bills.”
The fee was supposed to sunset this year, the news release said, but it would be extended under the governor’s proposed budget for another five years, which would cost all energy consumers in the state – including businesses, governments, schools, non-profits and homeowners – $236 million dollars in 2014 and $474 million a year for the next four years.
Kilmer said the chamber is worried because the surcharge puts a strain on residents and businesses while also impairing economic development and growth in the state.
“Right now, one of the biggest impediments to economic development in the state is the high energy costs,” Kilmer said. “We pay about 51 percent more than the national average for residential, and commercial is more than that and is like 65 percent more than the national average.”
The chamber sent out an email last week that provided a link to an online petition for businesses and residents to urge the governor and legislators to drop the surcharge before adopting the final budget. (The petition can be found online at fixnys.channeldemocracy.com/alert/view/378.)
“We would like to see it sunset as it was supposed to happen,” Kilmer said.
Gloversville Finance Commissioner Bruce Van Genderen said in the grand scheme of things, the 2 percent fee is relatively minor when considering how much it costs the city.
“Quite frankly, of course we are paying this, but I don’t think it is of any real big significance,” Van Genderen said. “I don’t think it has a dynamic effect on the city.”
He estimated the city pays approximately $1,000 a year toward the energy surcharge.
However, Mayor Dayton King said although this isn’t necessarily a large burden on businesses, cities and tax payers, he does think the tax “is an additional burden on the city.”
Hamilton-Fulton-Montgomery Board of Cooperative Educational Services Superintendent Patrick Michel said although he couldn’t cite an exact figure for BOCES’ annual expense for the fee, he thinks it should sunset as was planned.
“The governor doesn’t want mandates, but he has his own,” Michel said. “This is a mandate and a tax on the municipalities, which is astounding to me. It should have sunset, but with any government, if you give them a tax, it is very hard to take it away. Let’s face it, once they get the ability to tax, it is very difficult for them to stop using that avenue.”
Michel said he understands the state uses the fee revenue to support energy development initiatives, but “people in this area don’t need any more added expenses than they’ve already got.”
Michel also said many of the budgets in the surrounding districts are difficult, and some of them may be required to cut some staff to pay the governor’s energy tax.
“The budgets around here are all to the point where if we have to pay out something else to something else, we are taking it away from the classroom every time,” Michel said.
Johnstown Treasurer Michael Gifford said the city pays approximately $250,000 on gas and electric service for all of its buildings and about $5,000 of that goes toward the energy tax.
“Certainly, we would rather not spend $5,000 that we didn’t have to,” Gifford said. “Looking at the state situation, they have to fund the operation somehow, some way, so my question would be what else would have to give in the budget if this does go away?”
Fulton County Treasurer Terry Blodgett said he too thinks the county could benefit if the energy tax were removed or at least returned to its original rate of less than 1 percent.
He said last year the county’s National Grid bill was $315,000 and approximately $21,000 of that went to the state surcharge. However, he said, for the one quarter of last year that the county infirmary was still on the county’s energy bill, it made up a considerable amount of the total.
“If it’s $21,000, it is a big deal,” Blodgett said. “If the taxpayers are paying it, it’s a big deal.”
Sam Donadio, owner of Power Pallet in Amsterdam, said the energy fee costs his business approximately $2,000 a year, and wants it to sunset.
“The federal and state governments just keep pounding small businesses,” Donadio said. “How much more can we take? They are hurting us. I am probably not going to layoff any employees because of it, but it makes things more difficult.”