Lawmakers are considering a plan to tax the state’s natural gas pipelines to fund renewable energy projects.

The new taxing scheme could raise millions for renewables as Vermont Gas Systems charts a southern pipeline expansion through Addison County on the western side of the state.

The proposal, which was introduced to the Senate Finance Committee on Wednesday, would divert pipeline tax revenue into the Clean Energy Development Fund from the state’s Education Fund, where the revenue goes under current tax policy.

Sen. Christopher Bray, D-Addison, lead sponsor of bill S.238, said the proposal is designed to help move the state off of carbon-emitting fossil fuels. "If we don’t have a healthy environment, the level of funding for schools, at some point, is going to become secondary," said Bray, who is a member of the Finance Committee.

Statewide property taxes for education are expected to jump about 7 cents. This is largely due to rising school budgets, declining enrollment and the slow growth of grand lists. Property values have grown little following the 2007 recession.

Steve Wark, communications director for Vermont Gas, said there could be unintended consequences with any new tax policy. He said it is too early to say whether the proposal would raise customers’ natural gas rates.


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"We want to make sure our customers are not unduly penalized for picking something that is more clean," he said, referencing the cleaner emissions from natural gas over other heating fuels.

The bill would set a floor for a pipeline’s taxable value at 30 percent of the total construction cost. This means the pipelines will continue to offer tax revenue even after their appraised value depreciates to zero under the proposal.

"The lowest you can go is to 30 percent so that it is always generating revenue as long as it’s operating," Bray said.

Bray said the state must funnel resources to the Clean Energy Development Fund to meet the goals set by the state’s Comprehensive Energy Plan, which call for Vermont to be 90 percent renewable energy by 2050. This bill supports that mission by providing continued funding, he said. The fund has no stable source of revenue at this point.

"A commitment without money is no commitment at all," said the bill’s lead sponsor, who is making this his top priority this session.

Sen. Ginny Lyons, D-Chittenden, who is a member of the Finance Committee and a sponsor of the bill, said the revenues from pipeline taxes could be used for a variety of renewable energy projects.

"I can see the development of any number of clean energy projects. It can be anything from woodchip burning stoves and plants to solar plants to farm net metering systems, methane digesters. I think it’s the whole broad spectrum," Lyons said.