Rebate or tax credit? Clean air proposal targets compressed natural gas vehicles
OGDEN — Scott Jenkins has a fleet of trucks for his wholesale plumbing supply business on the road making deliveries throughout northern Utah and neighboring states.
Over time, Jenkins has converted about one-fifth of the vehicles to compressed natural gas to save costs on fuel, and he hopes to have the entire fleet transformed someday.
"It has worked wonderfully for me," Jenkins said. "I don't know why more people don't do it."
Jenkins, who also happens to be a member of the Utah State Senate, has thrown his wholehearted support behind a colleague's proposal to simplify the incentives behind CNG conversions by switching the system from a tax credit to rebate.
"It is cumbersome and it is difficult, and you have to put out the full amount of costs to get credit on your taxes," said Rep. Steve Handy, R-Layton. "We wanted to do what is being done in other states with a rebate."
Handy detailed the measure — which he hopes to run in the 2015 legislative session — earlier this week before members of the Natural Resources, Agriculture and Environment Committee.
Under his proposal, a CNG conversion would work like this: The motorist takes the car to the mechanic, has the work done and gets the state's incentive of $2,500 immediately taken off the bill, rather than waiting to claim the expense on taxes. The mechanic then gets reimbursed from the state.
"Anything that helps the consumer and prevents them from paying those higher costs is beneficial," said Robin Erickson, director of Utah Clean Cities. "You get a significant financial savings from using compressed natural gas, which is produced right here in Utah. It is a good fuel, works well and cleans the air. We are on board with the proposal."
Handy said the CNG conversion program for individual consumers has not caught on like it should. The costs of about $15,000 per vehicle have dropped to about $8,000, but confusion persists around the tax credit and potential fuel savings.
"There's been about 363 vehicles retrofitted, an average of about 59 a year. That is not really very many," Handy told committee members. "And I think the reason for that is that it is cumbersome when you are dealing with a tax credit."
Jenkins said he believes more people ought to be doing it on their own but are deterred by that initial cost. He said CNG vehicles are ideal for a business on a route-delivery system because of how quickly the savings add up.
"It has gotten to the point where it is very economical to do it, and I don't even need the rebate," he said, adding that it takes him about a year to 18 months to pay for the costs on a converted vehicle. "And then after that, it is saving me money."
To prove his point, Jenkins said one of his trucks made a delivery to Sun Valley for just $17 in fuel, but coming back on diesel, the cost was $77.
"Seventeen over 77? I will take that any day," he said. "It has made it a lot cheaper for me. I am a happy guy."
Finding a place to fuel up is typically not a problem in Utah, which has more CNG stations per capita than any state in the nation.
Erickson said there are 42 stations across Utah that are public, with 48 that are private for company or state fleets.
Handy also wants to propose adding a $3 surcharge to registrations for all vehicles in the state. With 2 million vehicles, that would add up to $6 million to pay for large fleet conversions to CNG and other clean air initiatives.
"Survey after survey after survey shows that people care about clean air," he said. "Are people willing to pay for it? More than half our emissions come from the tailpipe. We would be directing it right at the problem."
That type of funding boost, Erickson added, could be leveraged to get even more money to help address Utah's notorious inversions.
Utah Clean Cities, as an example, has been able to take a three-year, $14.9 million grant and use that to get another $42 million in in-kind funding.
"It does not matter where I go, people tell me I live in the most beautiful state, and we do," Erickson said. "But we are getting recognized nationally for our bad air, and we need to do more."
Copyright 2012, Deseret News Publishing Company