Reaction Mixed On Gov. Malloy’s Energy Plan; Skepticism On Natural Gas Prices

Reaction has been mixed so far to Gov. Dannel P. Malloy’s new energy plan, which was unveiled Friday.

The Connecticut Conference of Municipalities, where Malloy served as president when he was the mayor of Stamford, welcomed the plan with enthusiasm. The ideas were also praised by groups based in Massachusetts and Seal Beach, California.

In an unusual alliance by two groups that often disagree on various issues, the state AFL-CIO and the 10,000-member Connecticut Business & Industry Association both support the overall plan.

But Connecticut’s heating oil dealers expressed deep skepticism, raising red flags about the current price of natural gas and wondering if those prices will skyrocket in the future.

“Governor Malloy’s focus on driving down the cost of electricity and heat was right on target because these energy costs are a real burden for cities and towns – and their property taxpayers,” said James Finley, the CEO of CCM. “We also applaud his focus on energy efficiency because investments in efficiency are an effective way to bring down energy bills.  The policy development strategy outlined by the governor will generate tangible initiatives that  can help local governments reduce their  high energy costs associated with delivering programs and services to their residents and businesses – and that is something local officials welcome. ”

But Gene Guilford, president of the Cromwell-based Independent Connecticut Petroleum Association, says the state should not become overly reliant on natural gas when heating oil has traditionally been less expensive than gas.

“No one knows what the price of energy will be into the future,” Guilford said. “In 17 of the past 20 years, heating oil has been less expensive than natural gas. Even Yankee Gas states in their disclaimer at the end of their commercials that current prices are not a guarantee of future pricing that consumers will pay.  Since Yankee Gas cannot guarantee sustained lower prices to potential customers they are trying to persuade to switch from oil to natural gas, then why should the state pursue a policy that makes that very assumption?”

Guilford added, ”The expansion of natural gas use in Connecticut worsens the already overly-reliant position of the state with respect to natural gas. Connecticut should avoid a “one-fuel fits all” energy strategy. Both ISO-New England and the Federal Energy Regulatory Commission have warned this year about New England’s over-reliance on natural gas, and Connecticut should heed these warnings. No one four years ago believed that the economics of natural gas would be where they are today. Hence, no one today can tell you where the economics of natural gas will be four years from now. Connecticut needs to avoid the potential pitfalls of over-reliance on one fuel.”

“State government should stay out of the business of picking winners and losers in the energy markets because [a] it has a poor track record of success and [b] consumers in a free market make decisions about what they want to buy and from whom and it is not government’s role to take the place of consumers,” Guilford said. “We hear the calls for choice and fairness. Utilities know where the customers are just as we do. They don’t need government to lead them down the path of success or certainly not have a state government handing utilities customers that they can’t get on their own.”

“To the extent that the state believes it necessary and appropriate to develop a role for natural gas as a motor fuel, we strongly encourage such development of the delivery of natural gas to the driving public to be done though a collaborative effort between the natural gas utilities and the existing motor fuels infrastructure of the state,” Guilford said. “State policy should be directed toward enhancing existing motor fuels businesses with more than $6 billion invested in the state, not creating alternatives to those businesses. These existing motor fuels businesses currently remit some $1.3 billion in state taxes and fees - 6 percent of the total state budget - and employ approximately 4,600 Connecticut citizens.”

John Olsen, a longtime member of the Democratic National Committee and the longtime president of the state AFL-CIO, was pleased with Malloy’s plan.

“The approach to energy outlined by the governor is good news for working people all across our state,” Olsen said in a statement. “The governor’s strategy can help drive down electricity and heating bills, which take a real bite out of everyone’s wallets every month.  It also offers the potential for thousands of good paying new jobs – which we need more than ever.  The governor’s proposal to expand natural gas mains will put many construction workers back to work, and that is especially welcome as these are people who have been hard hit by the recession.”

In addition, the Northeast Energy Efficiency Partnerships of Lexington, Massachusetts hailed the plan.

“Energy is one of the most important public policy issues facing our states and our nation today, and Governor Malloy and Commissioner Dan Esty continue to be steadfast in their recognition and understanding that energy efficiency is vital to the economic and environmental future of Connecticut,” said Jim O’Reilly, the public policy director at the Massachusetts-based group.

Joseph Brennan, the senior vice president and longtime chief lobbyist for CBIA, said in an interview with Capitol Watch that the group’s members had a “very, very positive’’ reaction to Malloy’s announcement Friday for “cheaper, cleaner, and more reliable energy sources.’’

Brennan is aware of the skepticism of the oil dealers, noting, ”We’ve got oil dealers in our membership, gas dealers in our membership.”

He added, “I don’t think we’re putting all our eggs in one basket.’’

Brennan said that CBIA is interested in solutions for a multi-faceted problem in its totality, including hydoelectricity and greater energy efficiencies.

“We can really make this an advantage where it’s been a disadvantage,” he said. “In New England, you’re at the end of the pipeline for most things. We’re a high-cost region. It has been a cost issue for a long time.’’

For years, Connecticut manufacturers have complained about the energy costs when compared to those in the South and the West. Brennan agrees that the problems cannot be solved overnight, but the comprehensive plan is a step in the right direction.

“This isn’t going to solve all our problems, either,” he said.