Vermont Legislative and Regulatory Report — May 9, 2012

The Vermont legislature has adjourned. Below is a status update on legislation proposed this year concerning fuel dealers. PCF Fee Change A loophole in the law regarding the Petroleum Cleanup Fund (PCF) fee will close if the miscellaneous tax bill (H.782) is signed by Governor Shumlin. Currently, the PCF fee is applied to dyed diesel when the sale is for non-propulsion use, but is not applied when used for vehicles. According to the legislation, the 1-cent PCF fee will be applied to all “bulk retail” sales of heating oil, kerosene, or other dyed diesel fuel sold in Vermont starting on July 1. This includes sales of dyed diesel to farms and municipalities. Unlike the gross receipts tax, the 1-cent PCF fee can be itemized on a customers invoice or delivery ticket. The fee only applies to bulk sales. If the fuel comes from a stationary pump— it would be exempt from the PCF. Fuel Tank Fees Owners of single walled underground tanks in Vermont will have to pay more next year if H.769 is signed into law. The legislation raises the annual Tank Registration Fee by $25— from $100 to $125. Owners of single walled tanks will also see an increase in the Tank Assessment Fee— from $100 to $200. It could have been much higher, as the original proposal would have raised the annual fee for single walled tanks to $1000. Instead, lawmakers doubled it and asked the Petroleum Cleanup Fund Advisory Committee (of which VFDA has two seats) to study the issue this summer. There are approximately 300 single walled underground motor fuel tanks in Vermont and lawmakers fear they are a risk. The Agency of Natural Resources contends that single walled tanks (which represent less than 15% of all motor fuel tanks in the state) are more likely to leak than double walled tanks. Temperature Compensation Legislation that would have banned temperature compensation for the retail sale of heating oil, kerosene, diesel and gasoline did not pass. This doesn’t mean temperature compensation is allowed in Vermont, since the practice was already banned by the Department of Weights and Measures. What the proposed law (H.774) would have done is make it more difficult to change this policy and institute clear fines for violations. Even without the law, a dealer caught selling temperature compensated fuel could be assessed a fine of up to $500. This only applies to fuel sold at the retail level, either at the pump or bulk delivery, and does not include propane. Wholesalers will continue to be allowed to sell temperature compensated gallons. Propane Tank Tie Downs Legislation (S.211) proposed in January would have required all commercial and residential propane tanks to be secured in the event of a flood or natural disaster. After the flooding last fall, lawmakers were inundated with concerns from constituents about propane tanks floating down rivers and streams. VFDA testified against this proposal in three different committees. After listening to the concerns of VFDA and public safety officials, lawmakers agreed to delete the tie down mandate. The version that will be signed into law requires VFDA, the Dept. of Public Service, the Dept. of Public Safety, and the Vermont League of Cities and Towns to develop a consistent public safety message regarding propane and fuel oil tanks that will be used in the event of another flood.

Don’t miss the 2012 Fuel Dealer Conference, Trade Show, and Golf Tournament on May 30 and 31 at Stoweflake Resort. Visit www.vermontfuel.com for more information.

Vermont Fuel Dealers Association

Vermont Legislative and Regulatory Report — May 9, 2012
Accidental Deliveries Fuel dealers that deliver to the wrong house by mistake have had few protections under Vermont law. This is no longer true, thanks to language in H.730 advocated by VFDA. Previously, the Vermont Attorney General's Office interpreted an accidental delivery as a “gift.” Once signed into law, this measure will allow a dealer to reclaim the product within twenty days of the delivery. Collusion If Governor Shumlin signs H.778 into law, collusion between companies will become a state crime, punishable with up to ten years in prison and a $1 million fine. While collusion is already a federal crime under the Sherman anti-trust act, this legislation would make it a crime in Vermont as well. Collusion is defined as “an agreement, contract, or conspiracy to engage in price fixing, bid rigging, or market division or allocation of goods or services between or among persons.” Fracking Ban Vermont will become the first state in the nation to ban hydraulic fracturing for gas and oil. The Governor is expected to sign legislation (H.464) that would prevent the drilling method known as "fracking." While no one in Vermont is fracking now, shale deposits in the northwestern part of the state are believed to be similar to shale in Québec where natural gas is currently produced. No Renewable Mandate During the last week of the session, the Shumlin Administration and Democratic leaders backed away from a plan to require Vermont’s electric utilities to purchase more renewable energy. A broad coalition of business organizations, including VFDA, opposed the mandates because of the increased costs in electricity. Heat Tax Blocked There were two attempts this year to raise the cost of heating fuel. The first imposed a 12.5 cent per gallon “fossil heating fuel tax” to pay for a program that results in “the discontinuance of fossil fuel water heating” in every home in the state. The second attempt would have doubled the existing gross receipts tax. VFDA testified against both measures. Both failed to make it out of committee. No Disclosure Legislation (S.143) proposed in January would have required Vermonters to disclose their home’s energy performance before they sell their homes. However, the bill never made it out of committee. DMV Fees The cost of registering trucks in Vermont will increase if the Governor signs a transportation bill. The legislation increases registration fees by 6% for diesel trucks and raises the Hazmat testing fee from $10 to $15. The cost of a CDL would stay the same. Propane Tank Sale Law Blocked Legislation (H. 551) proposed in January would have further regulated propane companies operating in Vermont. The legislation would give consumers the right of first refusal to purchase a propane tank owned by their provider. Furthermore, the tank could only be sold at a depreciated value, not replacement value. The legislation would have also banned “off-route” special delivery charges and cap after-hours delivery charges at $50. VFDA Executive Director Matt Cota testified
Don’t miss the 2012 Fuel Dealer Conference, Trade Show, and Golf Tournament on May 30 and 31 at Stoweflake Resort. Visit www.vermontfuel.com for more information.

Vermont Fuel Dealers Association

Vermont Legislative and Regulatory Report — May 9, 2012
against the legislation in the House Commerce Committee on January 13. The committee did not pursue the legislation any further. Termination Fees The 2011 Vermont Energy Act allowed propane retailers to charge termination fees if it is specified in a contract signed prior to 5/25/11. However, the window to charge these fees for aboveground tanks has expired. According to the law, termination fees contained in contracts signed before 5/25/11 “remain valid and enforceable until April 1, 2012.” Termination fees for underground tanks (specified in contracts signed before 5/25/11) can be charged until April 1, 2014. Fuel Assistance Changes This will be the last year dealers file refund reports as the state moves to a payment after delivery system next winter. More changes are expected, including the elimination of the rule that allows dealers to use 17% of a fuel benefit for a back balance. There is also a proposal to limit crisis fuel assistance to only one delivery if a customer receives seasonal fuel assistance and two deliveries for those not on seasonal fuel assistance. These proposals will be discussed over the next few weeks. The Fuel Assistance Office is also expected to consider a number of other recommendations in a Fuel Assistance Sustainability Report. These include requiring oil and propane dealers to provide “more favorable pricing,” either through the existing discount off retail, a margin over rack system, or a summer fuel contract program. Oil and propane dealers will not be alone. The largest fuel assistance supplier in the state will also have to lower their prices for fuel assistance customers. Section 13 of H.730 requires the Public Service Board to ensure that Vermont Gas Systems provides a discount to their fuel assistance customers, just as heating oil and propane marketers have done since 2008. Testifying multiple times on this issue, VFDA pointed out the inequity of this policy. PSB to Decide Gaz Métro Merger Money Much of the last few weeks of the legislative session focused on the merger of the state’s two largest electrical utilities. Gaz Métro, a Québec energy conglomerate, wants to consolidate GMP and CVPS, but doesn’t want to pay back a $21 million IOU. Vermonters are required to be compensated for rescuing CVPS from the brink of bankruptcy a decade ago. Gaz Métro has offered $21 million in efficiency and renewable energy projects that deliver “societal benefits” rather than money, but only if they can bill the cost of those projects into their rates. In other words, the Québec energy giant wants to pay back Vermonters by increasing our electric bill. The Senate overwhelmingly approved legislation that would have required payment in full. However, the House rejected the measure. Governor Shumlin, a steadfast supporter of Gaz Métro’s business plan, was opposed as well. What happens to the $21 million will now be decided by Vermont’s Public Service Board. If the PSB approves the $702 million transaction as currently structured, Gaz Métro will control nearly 80% of all electricity and 100% of the natural gas sold in Vermont. More importantly, the Québec conglomerate will have greater control over Vermont’s transmission lines and will be able to use Vermont’s spine as a corridor to send natural gas and electricity between Québec and more populated areas to our south. The ownership structure of Gaz Métro as outlined in a legislative report includes the Province of Quebec and Enbridge, Canada’s largest natural gas distributor.
Vermont Fuel Dealers Association

Don’t miss the 2012 Fuel Dealer Conference, Trade Show, and Golf Tournament on May 30 and 31 at Stoweflake Resort. Visit www.vermontfuel.com for more information.

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