As Gov. Dannel Malloy pushes to alter Connecticut’s energy infrastructure, some industry players in the state are speaking out against the administration’s plans.
At five public hearings earlier this month, heating oil providers protested the state’s proposed Comprehensive Energy Strategy (CES). The CES would introduce a multitude of energy goals, ranging from industrial energy needs to consumer energy efficiency. The provision of the plan generating the most controversy is intended to increase the number of households using natural gas for heating by approximately 300,000. Owners and employees of heating oil firms said at both the hearings and in interviews with the News that the plan threatens their businesses. State officials responded by saying that the plan does not seek to harm the heating oil industry, but rather increase consumer choice.
“In the long run the energy plan could have a detrimental impact on my company,” said Ralph Carlo, co-owner of New Haven-based Tracey Energy Services, which provides heating oil.
State Rep. Clark Chapin, who has served as ranking Republican member of the Connecticut House Energy Committee, said he had heard from a dozen heating oil dealers who were “very upset.” Chapin said he plans to invite the 12 dealers to a meeting to discuss the plan.
“I think when they say that the government shouldn’t be picking winners and losers as far as which commodity people use, I would tend to agree with that,” Chapin said.
The CES, which was introduced on Oct. 5, identifies the challenges in meeting Connecticut’s energy needs with the goal of providing “cleaner, cheaper and more reliable energy to consumers and businesses,” according to Malloy spokesman Andrew Doba. The plan provides recommendations that, according to the state’s Department of Energy and Environmental Protection (DEEP), “give Connecticut residents and businesses the power to choose from a wide array of energy options.”
The CES proposes to increase the number of natural gas-heated homes through subsidies and infrastructure development. Natural gas, which the plan calls “a bridge to a truly sustainable energy future,” is currently significantly less expensive than heating oil and leaves a smaller carbon footprint when combusted.
The proposal does not sit well with the heating oil industry, which includes 600 firms — upwards of 90 percent of which are family-owned — throughout the state and employs 13,000 people, Carlo said. Heating oil firm owners claim that the CES will not only eliminate the jobs of many in the industry but also that it places too much power in the hands of major utilities that provide natural gas.
“It should be the homeowner’s choice if they want to convert. They don’t need incentives from the state or incentives from utilities,” Carlo said. “You’re subsidizing one industry at the demise of another.”
Southern Connecticut Gas, Connecticut Natural Gas and Yankee Gas are the main Connecticut natural gas providers. UIL Holdings, a conglomerate with a market capitalization of $2 billion, currently owns both Southern Connecticut Gas and Connecticut Natural Gas.
Carlo said that although heating oil dealers can “band together” through the Independent Connecticut Petroleum Association (ICPA), they do not have the resources to compete against firms such as Northeast Utilities when it comes to lobbying the state.
Neither UIL Holdings nor Northeast Utilities could not be reached for comment.
Malloy’s administration and the DEEP responded to the heating oil industry’s accusations by emphasizing that the plan is intended to augment consumer choice.
“No one is required to sign on to natural gas,” Doba said.
DEEP spokesman Dennis Schain responded further by noting that Connecticut is currently on the “low end” of natural gas use. According to Schain, only 31 percent of households in Connecticut use natural gas, compared to 67 percent in New Jersey and 58 percent nationwide.
Schain added that the plan would significantly lower heating costs for Connecticut residents because of the lower cost of natural gas. Responding to heating oil owners’ claims that oil has traditionally been less expensive than natural gas and that current market prices are an anomaly, Schain suggested that there has been a paradigm shift in commodity prices.
“The past is not an accurate guide to the future when it comes to the prices of oil and gas,” Schain said. “The spread between the two is going to remain substantial.”
Malloy claims the average heating bill for a consumer using natural gas is $1,600, compared to $3,400 for one using heating oil.
The heating oil industry is not the only group unhappy with the plan. Advocates for greater adoption of renewable energy sources, such as Fight the Hike, also spoke out at the forums, claiming that the plan made too little mention of energy alternatives such as wind and solar power.
Fight the Hike and several other renewable energy advocates, including the Clean Energy Finance and Investment Authority, could not be reached for comment Thursday.
In response, Schain noted that the plan does encourage having alternatives “tested in the marketplace,” but that renewables are currently too expensive to be the CES’ sole focus.
“We all love solar and wind, but do you really want to pay four times more for it?” Schain said.
Heating oil in New Haven currently costs an average of $3.75 per gallon.