Only legislators can increase carbon tax

February 7, 2014

Right now there is a lawsuit asking Delaware’s Superior Court to stop the unilateral action by the Department of Natural Resources and Environmental Control from raising the carbon tax on Delaware’s businesses and citizens.


As a member of the General Assembly - any time the government wants to levy more taxes, and especially in this case, it must come before us for a vote. Unfortunately, right now, the DNREC secretary believes at his sole discretion, he can increase the caps on carbon for Delaware’s energy producers. He is wrong.


As way of background, in 2007 when I was chair of the House Environmental Committee, we took action to reduce carbon dioxide emissions by creating the Regional Greenhouse Gas Initiative, now commonly referred to as RGGI. This innovative plan was our attempt to address what many were calling global warming because of the amounts of carbon in the atmosphere. The plan called for Delaware energy producers to freeze their CO2 emission levels through 2014, and then reduce emissions further over the next four years to achieve a final goal of 10 percent lower emissions by 2018.


To help meet this goal, power plants would buy emission permits at auction from the regional state governments. The money raised by the government would be used for all sorts of weatherization programs and more energy-efficient buildings. As the number of permits decreased over time, the price would then go up, and this would continue to drive change in the power industry.


Over the years the RGGI program has devoted about 25 percent of the auction revenue to assist low income families with electric bills, and to provide grants to homeowners to make their homes more energy efficient.

Well, a lot has happened since 2007.


First, the national recession has lingered longer and was deeper than anyone expected. In Delaware we have lost 23 percent of our manufacturing jobs since 2007, and our unemployment rate remains about 6.2 percent. Other indicators show Delaware’s economy still struggling with some 2,000 to 3,000 fewer people working since last year, while food stamp and Medicare/Medicaid rolls are exploding.


Also, since the inception of RGGI in 2007, the technology for producing energy has dramatically improved. The price of natural gas continues to go down because of technology and new found reserves. So, many operators have voluntarily closed their coal fired plants. Coupled with aggressive action by the Environmental Protection Agency in new emissions standards, a lot of the smaller, less efficient plants have either moved to gas or closed. In Delaware, power plant carbon dioxide emissions have been cut nearly in half.

This makes the RGGI program obsolete. It is out of date, does little to impact CO2 and makes our electricity really expensive.


Our citizens are paying about 25 percent more for our electricity than the national average. Coupled with the surcharge assessed by Delmarva Power to their residential customers for Bloom energy, both our businesses and residents are paying too much for our energy. In the RGGI legislation, it was never our intent to create a new slush fund for DNREC to be spent as they see fit.


No one really knew what was coming, or how it would impact Delaware and this program. But lawmakers did ask for a review in 2012 of the RGGI program. Unfortunately, the review focused on ways to increase the permit auction revenue, than what is best for our citizens.


As a result, the proposed new caps on RGGI permits (supported by DNREC) starting in 2014 will make those prices soar. Worst-case-scenario, the money going into Delaware’s RGGI program will increase by $50 million a year by 2017. That means our electricity will cost $60 more each year per household and our manufacturers paying hundreds of thousands more for their energy. It makes Delaware less competitive, and people who have jobs to offer will simply look somewhere else.


It is clear: DNREC does not have the authority and should not unilaterally raise the caps on RGGI, because fees and taxes can only be done by three-fifths majority of the General Assembly. We are calling upon the DNREC secretary and the governor, that if RGGI is so important, they should - and we say must - come to us to raise more money from our businesses and citizens. To do so any other way is wrong.

Sen. Gerald Hocker
R-Ocean View

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