A tax, or any other name, would raise ire

Is it or isn't it a new tax? Confronting a key roadblock to his ambitious package of energy proposals, Gov. Rendell visited a Chester County Wawa store yesterday to publicly dismiss the question as irrelevant and lambaste Republican lawmakers for focusing on it.

Holding a $1.09 cup of coffee as a prop, Rendell said Republican lawmakers were threatening to kill a proposal he said would save the average Pennsylvania household more than $70 a year in energy costs "for the equivalent of half a cup of coffee per month."

At issue is Rendell's plan to impose a "systems benefit charge" on electricity, which would add a surcharge of one-twentieth of a cent per kilowatt-hour to electric bills. The proceeds would create an $850 million Energy Independence Fund to invest in conservation, energy efficiency, and development of alternative power sources - efforts that Rendell predicts would save Pennsylvanians $1 billion a year for the next 10 years.

Rendell said dwelling on whether the surcharge should be called a fee or a tax was elevating spin over substance.

"I don't care if they call it a tax," Rendell said after the Wawa rally. "When Republicans were in power and raised the landfill tipping fee, it was a fee. When I got into power, it was a tax."

Republicans countered that Rendell was delaying passage of a 2008 budget over an issue that, at the very least, could wait until fall.

"We don't like his energy charge - his tax," said House Minority Leader Sam Smith (R., Jefferson). "We think you can do things to help Pennsylvania be more energy-independent without creating the same kind of huge program that he is looking to do."

Although Rendell has said publicly that he would not bend on several issues entangling the budget this year, the governor has made a series of concessions over the last two weeks, dropping plans for a sales tax increase and for leasing the Pennsylvania Turnpike. But yesterday, Rendell said he would not yield on his energy plan.

The Rendell administration says the $1 billion in savings would come largely through general conservation and through special techniques, such as the installation of computerized "smart meters," that can cut electricity costs during peak-demand periods. On the hottest summer afternoons, utilities pay prices that can spike at 10 times or more the ordinary cost of power - expenses they must either bear or pass on to customers.

"Once electric rate caps come off statewide in less than three years, our families and businesses are going to see double- or triple-digit spikes in the price of electricity," Rendell said in a statement. He said he was refusing to agree to a 2008 budget unless his energy package is enacted "so we can avoid this impending economic train wreck."

By administration estimates, the $0.0005 charge would add an average cost of $5.40 a year for residential customers, $36 a year for commercial users, and $888 for industrial customers. For the state's largest businesses, the fee would be capped at $10,000 a year. In return, he said, commercial customers would save an average of $425 a year, and industrial customers an average of $10,500.

Rendell said the proposed Energy Independence Fund was crucial for the state's economic health, and was modest compared with similar plans in other states. He said that 15 states and Washington impose similar charges, and that Pennsylvania's surcharge would be lower than all but two.

Smith, the House minority leader, accused Rendell of using averages to misrepresent the actual cost of the program to many residents.

"I would venture a guess that any household of three or four with a few extra appliances or maybe air-conditioning will pay more," he said. "It's a big tax on Pennsylvanians, and he is using an average number to downplay a bigger tax than it is."

At least one Republican, Rep. Kate Harper of Montgomery County, said she would support the bill with an amendment capping the surcharge at $500 a year for businesses with fewer than 10 employees. "I'm concerned about the mom-and-pop pizza parlors with their big ovens," she said.

With the traditional June 30 budget deadline passed, some state employees could be furloughed as early as Monday. Legislative talks were continuing yesterday. But leaders said a budget was unlikely to be passed until after July 4, and perhaps even as late as next week.