SB 106-16: Energy Cost Reduction Act of 2021 (Failed)

[Senator Spark]

This bill is proposed in an effort to defray electricity costs incurred by our grid and encourage the use of sustainable technologies. Currently, Atlasia lacks the necessary infrastructure to provide for electric vehicle charging. This bill is intended to revitalize our infrastructure by lowering the cost of electricity for consumers and to connect those in rural areas to power.

[Senator Spark]

Motion to table.

I object to this obstructionism.

[Senator Spark]

No

[Senator Spark]

In addition to what Senator WD said, why exactly would we want to tax electric vehicles? If anything, doesn't it make more sense to tax non-electric vehicles and gas and subsidize electric vehicles to make them more affordable?

The idea is to give an incentive for the building of infrastructure while simultaneously reducing the cost. So yes, subsidizing electric vehicles would be necessary as well. There should be no new taxes involved.

[Senator Spark]

In addition to what Senator WD said, why exactly would we want to tax electric vehicles? If anything, doesn't it make more sense to tax non-electric vehicles and gas and subsidize electric vehicles to make them more affordable?

The idea is to give an incentive for the building of infrastructure while simultaneously reducing the cost. So yes, subsidizing electric vehicles would be necessary as well. There should be no new taxes involved.

Then why does your bill do exactly that with taxes on "electric vehicles and tolls"?

Also, Federal highway tolls are generally prohibited under current law. I will not support changing that and I will never support tolls.

We can strike the "tax" on electric vehicles, and as for tolls, how else would we fund such an initiative?

[Senator Spark]

AN ACT
To reduce energy costs for the average Atlasian

BE IT RESOLVED BY THE CONGRESS OF THE REPUBLIC OF ATLASIA
Quote
Energy Cost Reduction Act of 2021
Section 1. Purpose

1. This bill is to provide for a less costly energy grid because many areas of Atlasia precluded from benefiting from earlier efforts made by the federal government to invest in rural electrification throughout regions.

a) This bill will provide for interconnection of regional electrical grids are not interconnected to those in other states or territories, and many communities in the state have isolated microgrids.

b) This bill will fix the isolation of many electric systems throughout the regions. This means that consumers in communities served by those systems cannot benefit from a reduction in energy bills by utilizing lower-cost power from other areas of the state;

c) This bill is intended to lower the average retail price of electricity where in rural communities this is the highest. The average cost of electricity per capita is $3,891.

d) The bill, through the energy authority, will reduce high energy costs for heating, electricity, and transportation that have a multiplying effect, which increases the cost of all goods and services in rural communities.

e) Many residents in communities with the highest power costs are unable to shoulder the financial burden of developing large-scale power infrastructure without significant government investment;

d) The bill will establish for lower carbon emissions through the development of economically feasible renewable energy projects and investment in an electric vehicle charging network.

Section 2. Implementation, Costs & Appropriations

a. BE IT RESOLVED that the Congress of the Republic requests a creation of a regional Energy Authority, in coordination with utilities throughout the regions and with statewide power and electrical organizations.

b. This energy authority will develop a comprehensive 10-year infrastructure plan to reduce power costs by 25% in areas of the regions that endure extremely high electric and heating costs.

c. Be it FURTHER RESOLVED that Congress requests that the regional Energy Authority deliver a plan for the reduction of power costs in the region to the Senate by May 31, 2022, and notify the legislature that the plan is available.

d. The Congress hereby establishes a energy sustainability fund, this fund will be appropriated by  taxation on electric vehicles and tolls from federal highways to the amount of $50,000,000. Congress shall raise the gasoline tax at a rate of 0.01% to raise revenue for this initiative. This is projected to raise an additional $5,000,000,000 in revenue.

To incentivize production, with the average cost of production for electric vehicles being $19,000, the federal government shall subsidize electric vehicles at a rate of 1.7%, or $323 per unit, for the total cost of production. The total cost of the subsidies shall be $4,845,000,000.

Section 3. Grant criteria

a. A "grant" shall be defined as a sum of money awarded for an energy related project in any of Atlasia's regions.

b. These grants shall be categorical in nature by funding upgrades to Atlasia's regional energy grids, for projects to reduce carbon emissions, increase electrical grid inter-connectivity.

b. Grants can only be made available for energy-related projects that will have substantial impact or effect upon the electrical grid in each region.

c. Eligible entities: Grants can be allotted for subsidies or incentives to regional energy companies, nonprofits, or independent contractors

Section 4. Funding

a. The Congress of the Republic of Atlasia will appropriate $25,000,000 in grants to each region for the establishment of a regional energy authority; these grants shall be up for renewal every 5 years.

b. Hereafter, the Congress shall appropriate monies to the amount of an additional $20,000,000 to establish electrical vehicle charging stations across Atlasia's regions.

To the Senate PPT, offering an amendment to compromise since President Scott won't support tolls.

[Senator Spark]

I had to explain this like thirty different times on Discord, but the laws of economics say that when you tax something, consumers buy less of it, because even if the tax is indirect, it is still built into the price. This is a very basic law of economics. With the subsidy, the most we can expect is to break even.

What the president means to say is that he doesn't support subsidizing electric vehicles.

[Senator Spark]

To clarify for my Senate colleagues, this is simple arithmetic. The conversation about electric vehicles as the president said on Discord, is not "pointless". We have a future to create. Instead of being concerned about the principles of economics, we need to be grounded in the practical considerations of the matter at hand.

To fund this initiative, $25,000,000 will be appropriate to establish the regional authorities, with another $20,000,000 going to establish electric vehicles charging stations across Atlasia.

If annual sales, which since 2006 are projected to increase threefold by now, are 15,000,000 electric vehicles, we break even. 15,000,000 cars x 0.03 = $45,000,000, which is enough to fund. But it all comes down to these sales. If the government takes up a convincing promotion campaign for subsidizing electric vehicles and explains to consumer that they will be saving roughly $1,300 annually on fueling costs, that should be enough for them to exceed sales projections and make the switch even faster.

[Senator Spark]

Since the math is difficult when accounting for funding of the other initiatives in addition to the subsidy, as demonstrated below:  

A Subsidy of $1539 per unit (8.1% subsidy)
Average cost to produce an electric car - $19,000
Total cost: $23,085,000,000

Fee of 3% (0.03) = $1,530 on each unit
total revenue: $22,950,000,000 - $45,000,000 = $22,905,000

-$180,000,000 difference

Instead of the 3% fee on electric vehicle sales to fund this initiative, it looks like our options are either the need to tax the production of fuel-powered cars or investigating a small increase in the gas tax to account for the difference. I'd rather not pose an unfunded mandate to the regions and fully fund this bill. I updated the bill accordingly and defer to the president on that.

[Senator Spark]

I have told Spark I am willing to raise the gas tax. Otherwise, I don't see in what universe it makes sense to directly tax the people for the benefits that you're giving them (and may not even be constitutional) and only screwing over the environmentally conscious consumer instead of shifting the cost burden of renewables toward fossil fuels, which is the only viable economic strategy if you want more renewables. The bill as it stands just doesn't make sense.

Understandable. I have updated the bill.

I will incorporate a 0.01% increase in the gas tax to the bill here. This raises an additional $5 billion in revenue.

[Senator Spark]

I don't understand - who exactly is the electric vehicle subsidy going to? I have troubled understanding if the text means a subsidy to producers or one to consumers.

It is being provided to producers of electric cars.

[Senator Spark]

Having some trouble following the back-and-forth here to the detail needed, so for now I’ll just have Spark confirm that the text in his post is the amendment he wishes to offer. Assuming that, 24 hours to object to the amendment as it currently stands.

The president and I did have a lengthy discussion, but we compromised. The amendment's text stands as is and is offered.

[Senator Spark]

Motioning for a final vote

Seconded.

[Senator Spark]

Aye

[Senator Spark]

Mr. PPT, I hope to reintroduce a reworked version of this bill in the new session as I deem it important for the citizens of our Republic.