Comments on 2018 Revisions to Virginia’s Energy Plan

Virginia Petroleum Convenience and Grocery Association is a statewide trade association founded in 1948 that represents more than 240 Virginia domiciled businesses in the petroleum marketing and convenience store industries.   Our Association is governed by a 15 member board of Directors – each of whom is a Virginia resident and a principal of their business.   We appreciate The Northam administration’s efforts to reach out to all sectors of the energy industry during this year’s revisions.

Oil Heat

VPCGA represents 78 firms who sell home heating oil,  which is used by approximately 150,000 homes and businesses for space heating  Recently VPCGA, has worked with the National Oil Heat Research alliance on to develop the “Upgrade and Save Program” which in its first year leveraged $218,400 to achieve the following results in 549 homes.

• 111 Boilers Replaced- Average efficiency Increase 21.25%  Reduced oil consumption by 138 gallons per home or 15,331 gallons statewide annually
• 124 Furnaces Replaced- Average Efficiency Increase of 20.40% Reduced consumption per home 132.60 gallons or $391.04 annually
• Total annual customer savings per year statewide $93,614.97.   Savings over anticipate lifetime of upgrade (25 years) $2,430,346
• One year reduced Co2 Emissions reduction 729,675 co2/year.   Savings over anticipated lifetime (25 years of upgraded equipment) = 18.25 million pounds Co2)

The 2018-2019 version of this program has recently launched and we are hopeful to build upon last year’s success.

Convenience Stores

Virginia has 4,519 convenience stores which employ over 73,000 Virginians.  These locations have total sales over 16 billion annually - almost 4 billion from merchandise, 2 billion from food, and 9.25 billion in gasoline and diesel.   Additionally the convenience store channel sells approximately 7 out of 10 lottery tickets – with the profits going to Virginia Public Schools.

Diversified Industry

Many diversified petroleum marketers are also involved in the sale of off road products to fuel a wide variety of applications including road building, farm equipment, the military, and fuel for watermen and marinas.  Most of these businesses are also involved in the sale of lubricants which are used in hundreds of hundreds of manufacturing, trucking, and railroad applications.

Virginia Petroleum Storage Tank Fund

For more than 25 years Virginia has maintained one of the most effective petroleum storage tank funds in the nation, funded by a 6/10ths of a cent per gallon fee assessed on all gallons of petroleum sold in Virginia.   These funds (approximately $25 million per year) are segregated on motor fuels taxes paid to the Department of Motor Vehicles and then remitted to the Department of Environmental Quality, evaluates sites, and where necessary conducts timely cleanup of spills associated with petroleum products in the Commonwealth.    Continuation of the Petroleum Storage tank fund is priority for the industry and Virginia’s environment.

Emergency Response

During last year’s response to Hurricane’s Irma and Maria, VPCGA members deployed in excess of 220 petroleum transports and short trucks to help assist relief efforts in Texas, Florida, and Puerto Rico.  They provided to fuel for generators in the most critical sectors of health care, public safety and first responders, and then transitioned into assisting with fueling gasoline station generators, shelters, and off-road equipment to return the areas to a state of normalcy.   We have worked closely with the Governor’s office and Department of Emergency Management, and General Assembly to assure that necessary waivers are available in times of emergency.  A protocol is now in place to assure communication between industry and government during times of weather emergencies and product shortages.

Motor Fuel Taxes and Alternative Fuels

From July 1, 2017 to June 30, 2018, the statewide gasoline tax produced $654 million for the state of Virginia, while the statewide diesel tax produced $217 million.  The local fuels tax for Northern Virginia produced another $55.6 million, while the Hampton Roads tax raised $32.7 million.  Contrast this with collections from the $64.00 annual fee on electric vehicles which raised only $450,437 for transportation - equating to a total of 7,038 electric vehicles compared to total statewide vehicle registrations of 8,470,020.   A gasoline powered vehicle driven 20,000 miles which achieves 20 miles per gallon pays $162 in motor fuel taxes annually  ($238 for the 51 percent of vehicles registered in Northern Virginia and Hampton Roads).  Even a gasoline vehicle in Northern Virginia achieving 30 miles per gallon driven only 10,000 miles per year pays $77.99 in gasoline taxes versus an electric vehicle which pays just $64.   Other alternative fuel vehicles pay motor fuel taxes on per gallon equivalent basis and electric vehicles should start paying their fair share to maintain Virginia’s highway system. 

As the number of EVs grows, petroleum marketers will likely have to battle for a share of the electric vehicle charging market with utility companies that see EV charging as a new business opportunity without cost. When utility companies install charging stations, they may be able to include that cost as part of their capital investment. When these costs are approved by governmental regulatory agencies, they may by passed on to all ratepayers as part of their monthly electric bills.

We share the concern of many relative to the the potential of utilities using their rate base to pay for EV infrastructure expansion. VPCGA believes this may allow utilities an unfair competitive advantage Virginia based small businesses simply cannot compete with.  Our membership must economically justify and self-fund at risk investments in new equipment like EV charging stations.

Thank you for consideration of our comments.