New Generation Tax Still Relies More On Nuclear
(Updated 2:13 p.m.) The co-chairs of the Energy and Technology Committee have scrapped one of their proposals to increase the generation tax by $335 million and replaced it with a proposal to decrease the tax to $72 million.
Their first proposal, which would have taxed the Millstone Nuclear Power Plant more than any of the other generation sources, was not supported by Gov. Dannel P. Malloy. The governor proposed a generation tax which was evenly distributed among generators in the state and in a compromise with Democratic lawmakers would raise about $72 million.
The co-chairs of the Energy and Technology Committee’s new proposal is not a flat tax, but taxes nuclear generation at a higher level than other sources of generation even though it raises the same amount of revenue as the current budget proposal.
“This is a very fair proposal,” Rep. Vickie Nardello, co-chairwoman of the Energy and Technology Committee, said Wednesday morning at a press conference. She said there’s still time to include it in the budget, which could be called for a vote as early as this week.
“Is there any opportunity to change this if there is a consensus built around this? Yes,” Nardello said. “We are hopeful they will understand why we feel so strongly about this.”
But it doesn’t look like the governor is willing to change his proposal.
“The Governor thanks Rep. Nardello and Sen. Fonfara for their ideas, but he remains committed to the proposal agreed upon with leadership last week,” Colleen Flanagan, Malloy’s spokeswoman said Wednesday.
The Energy and Technology Committee proposal includes three options: one that would raise about $72 million in revenue, another that would raise $100 million, and a third that would raise $150 million. At the first rate, nuclear generation would be taxed $0.0040 per kWh and raise $67 million. The rest of the tax would be distributed to coal, oil, and natural gas generators at varying lower amounts.
Nardello and her co-chairman, Sen. John Fonfara, D-Hartford, believe the way the governor’s proposal is worded the tax could be passed along to ratepayers, but said their proposal would prohibit it.
“Even our minimal proposal raises the dollars the budget requires,” Fonfara said.
He said the initial proposal was based on the premise that they could return money to ratepayers if the market were working properly, but it’s an artificial market that doesn’t respond to traditional supply and demand economics.
“The number was too significant for people. That’s fine,” Fonfara said. “But the bottom line for us is that it’s the mechanism that’s so important.”
Dominion, which owns Millstone, worked hard to defeat the committee’s initial proposal that effectively taxed them $330 million of the $335 million the bill sought to raise in revenue. They have said they would have to consider closing the plant if the tax was passed.
Dan Weekley, vice president of government affairs for Dominion, said this proposal is no better than the first one.
“This is nothing more than a regurgitation of Senate Bill 1176, which these two legislators tried to get through the legislature and onto the backs of Connecticut consumers earlier this month,” Weekley 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.”
Rep. Betsy Ritter, D-Waterford, who fought to get rid of the hefty tax on Millstone, said Wednesday that she doesn’t support the new reduced proposal either. She said it’s still punitive.
“It still turns around and punishes the company that’s not going to pass the tax onto the consumer,” Ritter said. “It’s an extremely bad public policy statement.”
Paula Panzarella, of Fight the Hike, said there’s no reason for Dominion to complain about the tax because it has received excess profits over the years.
“We feel it’s only fair in these times that corporations that had made excess profits be taxed at a rate that will still give them a fair rate of return,” she said.
But there are still those, like the New England Power Generators Association (NEPGA), who oppose even the concept of the new tax.
The association released a statement today saying it “opposes any legislative plan to place a new tax on any electricity-generating company in Connecticut. This new tax — which would be the only tax of its kind in the nation — unfairly singles out generating companies and will ultimately be passed along to ratepayers. We respect the efforts of the two co-chairs of the Legislature’s Energy and Technology Committee to attempt to eliminate ratepayer impact, but we feel the newest proposal will continue to turn Connecticut ratepayers’ electric bills into tax bills.”