The Supreme Court hasn’t ruled yet, but Sen. Joseph Markley walked out of the court Wednesday content that a lawyer for the state agreed he had exhausted his administration remedies in his lawsuit against the Department of Public Utility Control.
The trial court ruled that Markley hadn’t exhausted his administrative remedies with the DPUC before filing the lawsuit challenging the extension of the competitive transmission assessment on Connecticut Light and Power and United Illuminating customers.
Markley, who initially filed the lawsuit himself, had two lawyers, Peter Bowman and Doug Dubitsky, argue the case Wednesday before a six-member panel of the Supreme Court.
“I was glad they asked a lot of hard questions,” Markley said of the justices. However, Markley said he was also glad he wasn’t the one who was answering them. “It’s above my weight class,“ he joked.
The justices asked several questions about the case partially because there wasn’t any decision to rely on from the trial court. The trial court dismissed the case and refused to rule on the merits because it didn’t believe the case was properly before it.
The underlying complaint claims the DPUC has no taxing authority and the tax was applied in an inequitable manner because Connecticut Light and Power and United Illuminating customers are the only ones continuing to pay a portion of the tax. Dubitsky argued that the DPUC was treating the two electric companies differently than the municipal generators in Wallingford, Norwich, Bozrah, Groton, Norwalk and Lebanon.
But Assistant Attorney General Mark Kohler, who represented the DPUC, told the justices that the stranded costs were never paid by the municipal companies, which is why there were exempted from the recovery of the 1998 deregulation fee structure.
“This is about the proceeds of the bonds, not the revenues it raises,” Kohler told the justices.
The stranded costs, also known as the competitive transmission assessment, was a fee CL&P and UI were allowed to levy on their customers for 12 years to help pay them back the cost to them for getting out of the generation business. That fee or tax, as it’s referred to, was set to expire last year when the state had to figure out how to come up with some revenue to pay back the close to $1 billion it planned on borrowing to balance the budget, so it decided to extend a portion of that fee for another eight years.
Kohler said as a matter of law the municipal companies exist under a completely different regulatory structure and should not be treated the same as the other larger utility companies. He said they were not included in the legislation that passed extending the stranded costs to CL&P and UI.
There seemed to be some confusion about whether municipal companies were ever asked to pay a portion of the stranded costs as part of the states deregulation efforts and whether they should be treated the same as the two big utility companies for taxing purposes.
Bowman argued the statute passed last year by the General Assembly charging to DPUC to start collecting this tax was not clear about the rates when it asked it to raise and collect $40 million to help pay back the Economy Recovery Revenue Bonds the state needs to help balance its budget.
“There seems to be a lot of skepticism on both sides,” Markley said of the inquisitive nature of the justices.
Bowman said the trail briefing schedule was done on an expedited basis, but the justices have a long time to render a decision and even when they do they could send it back down to the trail court for a fuller hearing on the merits of the case.