Daily on Energy: Are Michigan drivers interested in a road-charge fee?

As EVs are projected to dominate the roads over traditional gas-fueled vehicles, states are looking for ways to compensate for the lost revenues from gas taxes. One prominent, yet controversial suggestion: a road-charge fee, or a charge that levies a tax on drivers based on distance traveled.

Following the approval of an $82 billion budget by Democratic Gov. Gretchen Whitmer last week, the state plans to spend at least $2.6 million to survey 20,000 Michiganders on their understandings of what a road-charge fee is, and their feelings about the tax – along with other options. The survey will aim to inform policymakers and officials about what voters believe is a “fair” way to pay for transportation, and how a road-charge fee could possibly change driver behavior.

“I know our funding levels, where they’re coming from right now isn’t sustainable,” said Jean Ruestman, an administrator of passenger transportation at the Michigan Department of Transportation.

The survey will also assess how these fees could change travel behavior, potentially mitigating congestion and environmental damage. Ruestman described enhancing the state’s newest transportation platform – dubbed Michigan’s “mobility wallet” – to survey if educating consumers about their carbon footprint could change their travel habits. The mobility wallet – which is still in the stage of a pilot program – aims to provide information to the consumer about the different modes of transportation near them and costs associated with each choice.

“Will road-use charges actually increase the use of public transit?” said Ruestman. “Will I need to make sure I have more money to put more transit out there to continue meeting the needs of people?”

The Michigan DOT will also partner with Via Transportation Inc. – a transportation and software company – to understand participants’ willingness to share location data with a third party for the purposes of easy road-charge fee calculation.

Drivers will also be surveyed on how they feel about having further tolls to make up for reduced funding, or would they prefer having the option of self-reporting miles driven.

Why it’s important: Funds from gas taxes are expected to heavily decline with the onset of electric vehicle usage, which could possibly cost the state $390 to $470 million by 2030 if the rise of EVs adheres to projections and they represent 15-25% of new vehicle sales, according to a report conducted by the Anderson Economic Group for the County Road Association of Michigan. According to the same study, Michigan missed out on an estimated $50 million from 2019 to 2021 because of electric vehicle adoption.

Currently, the state is already employing increased registration fees for hybrid and electric vehicles. But the registration fees alone are not able to make up for the expected gap left from gas taxes.

Why VMT fees are controversial: The road-charge fees are a lightning rod for controversy, igniting conversations about economic equity and privacy. Many are concerned that the fee will become an additional fee and not a replacement for the fuel tax. Furthermore, residents are concerned the technology that’s tracking the mileage of drivers could also be a privacy violation, tracking residents wherever they go.

At least a dozen states have commissioned studies on a VMT program, though just several have progressed beyond the research phase. Those states include Oregon, Utah, and Virginia.

Welcome to Daily on Energy, written by Washington Examiner Energy and Environment Writers Breanne Deppisch (@breanne_dep) and Nancy Vu (@NancyVu99). Email [email protected] or [email protected] for tips, suggestions, calendar items, and anything else. If a friend sent this to you and you’d like to sign up, click here. If signing up doesn’t work, shoot us an email, and we’ll add you to our list.

AT LEAST 36 KILLED IN FAST-SPREADING HAWAIIAN WILDFIRE: At least 36 people have died and thousands scrambled to evacuate as a wind-whipped wildfire tore through the island of Maui, fueled by far-off hurricane winds and the island’s steep terrain that made the fire’s path especially erratic and difficult to predict.

“The fire can be a mile or more from your house, but in a minute or two, it can be at your house,” Maui Fire Assistant Chief Jeff Giesea said in a statement. Thousands still remain without power or cell reception, the island’s utility provider said, further complicating rescue efforts.

The Coast Guard and Navy have been deployed to aid in evacuations, including rescuing groups of adults and children who jumped into the Pacific Ocean as they raced to escape the flames and smoke.

Marines are providing Black Hawk helicopters to fight the flames, the U.S. Indo-Pacific Command said, including models that have been used in Iraq and Afghanistan, and another model capable of carrying torpedoes and air-to-ground missiles traditionally used in anti-submarine warfare.

“This is truly an all hands on deck situation,” Sen. Mazie Hirono said this morning at a press conference.

TREASURY SETS FINAL RULES FOR LOW-INCOME CLEAN ENERGY TAX CREDITS: The Treasury Department and IRS issued final rules today for a new program that would add up to 20 additional percentage points to the size of the IRA’s tax credits for solar and wind projects in certain low-income areas.

The Low-Income Communities Bonus Credit Program is funded by the Inflation Reduction Act and is part of the administration’s push to lower clean energy costs for residents living in areas of chronic poverty, tribal lands, or those living in areas that have been especially hard-hit by the effects of climate change.

Treasury Department officials told reporters this morning that the application process will begin as early as this fall, and could serve millions of people in the next decade alone. Read more on the program and application guidelines here.

BLACKSTONE RAISES $7.1B FOR CLEAN ENERGY PUSH: Blackstone said today it has raised $7.1 billion for its Green Private Credit Fund aimed at financing clean energy technologies and companies,surpassing its original target of $6 billion and reflecting the firm’s goal to increase lending for renewable projects, including solar companies, EV parts manufacturers, and other carbon emissions-reducing technologies.

“The capital needs for the energy transition are immense,” Robert Horn, who oversees Blackstone’s energy lending arm, told Bloomberg. “This is an opportunity to use our capital and resources to try to transform big areas of the economy and make attractive returns for our investors.”

The news comes after major Blackstone funds swore off funding oil and gas exploration and production last year, and as it has moved to expand its presence in the green energy space, despite growing anti-ESG backlash and attacks against “woke” capitalism from Republicans.

IDAHO MAN CHARGED FOR SHOOTING RIFLE AT HYDROELECTRIC POWER STATIONS: An Idaho man was charged this week with two counts of destruction at an energy facility after he shot at two hydroelectric power stations at two dams in the state, resulting in temporary outages and causing more than $100,000 in damages to the facilities, which store and distribute power to Washington, Idaho, and Oregon.

After shooting at both stations with a rifle, 58-year-old Randy Scott Vail jumped on a white motorcycle and evaded police, resulting in a 71-mile high-speed chase that saw him going four times as fast as the speed limit.

He was eventually arrested and found to be in possession of two rifles, bolt cutters, and multiple tire-repair cans “full of what smelled like gasoline,” according to a probable cause affidavit submitted on behalf of the officers. If charged, he could face up to 20 years in federal prison. Read more here.

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