Energy co-chairs try to revive tiered electric generation tax
The co-chairs of the legislature’s Energy Committee Wednesday introduced a scaled-back version of their plan to tax electricity producers on the basis of how the power is generated, but their new proposal drew little enthusiasm from legislative leaders and the Malloy Administration.
Gov. Dannel P. Malloy and Democratic leaders already have agreed on a budget that includes an across-the-board flat tax on energy generated through nuclear, natural, coal and oil. It is expected to bring in $72 million a year in new revenue.
“We thought that it was fair and would likely stand [legal and legislative] challenge and an appropriate way to tax the industry. Obviously there are those that disagree; that is why they are proposing alternatives,” said Ben Barnes, Malloy’s budget director. He said the administration is committed to passing the agreed upon budget.
Rep. Vickie O. Nardello and Sen. John Fonfara, co-chairs of the Energy Committee, have been pushing for more than a month for a bill to create a tiered tax structure based on the source of energy production. They say that because nuclear plants produce power more cheaply than other generators but charge comparable prices, nuclear production should bear the brunt of the generation tax.
Their revised proposal released Wednesday would raise between $67 million to $134 million from a nuclear generation tax, while the other energy sources would be taxed no more than $10.4 million a year.
“We believe a flat tax.. will cause electric rates to rise,” said Nardello.
At one point the room in which she was explaining the proposal went dark. Nardello said she’s not taking that as a sign of her proposals prospects.
“I think that there will be the opportunity to change this if there’s a consensus built around it,” said Nardello. “We are hopeful that [leaders and administration officials] will understand why we feel so strongly about this.”
But Senate and House majority leaders were reluctant Wednesday to commit to making such a major change to the tax package without the support from the Malloy Administration.
“We are in agreement with the governor’s office with the budget we have right now any substantial chances like this would require more discussions with his office,” said House Majority Leader Brendan Sharkey, D-Hamden. “That particular conversation about changing the energy tax has not happened… What is out of the committee is the status quo right now and what we are hoping to pass.”
“Obviously we came to a meeting of the minds with the governor last week so I don’t know if the possibility of revising that part of it,” said Senate Majority Leader Martin M. Looney, D-New Haven, said during an interview. “When you come to an agreement, obviously all parties need to come to an agreement to any changes.”
Lt. Gov. Nancy Wyman also was non-committal to whether the Energy Committee leaders’ proposed changes have a chance of making it into the budget.
“I have not seen that at all,” she said, adding she is confident legislators will be moving forward with the agreed upon budget soon.
Dominion, which owns the Millstone Power Station, has threatened to close the nuclear plant if a tax targeting the nuclear industry pass, and said it would result in increased bills for their customers. Dominion is the largest generator in the state, with 63,505 customers, or 14 percent of the market.
“An energy tax policy that is more uniform, where any increase is shared by all generators, is the right policy,” said Daniel A. Weekley, a spokesman for Dominion said. “It’s disappointing that a few legislators continue to pursue these attempts without really focusing on core energy issues in the state such as why Connecticut consumers pay 20 percent more for electricity than other New England states.”
The state’s largest business group also are critical of the tax.
“Why are we talking about taxing energy when we are all in agreement it’s too expensive to begin with? Our members are extremely concerned about the cost of energy,” said Eric Brown, with the Connecticut Business and Industry Association.
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