Lawmakers from southeastern Connecticut held a press conference Thursday to call upon their colleagues and Gov. Dannel P. Malloy to make sure they keep their promise to sunset the tax on wholesale electricity generators at the end of the fiscal year.
Implemented in the 2011 budget cycle, the tax is generating about $70 million a year, and the company paying the bulk of that — about $42 million — is Dominion, which owns the Millstone Nuclear Power Plant in Waterford.
“Should policymakers decide to continue this tax — that’s certainly what we hope will not happen — its continued costs will be borne by ratepayers to the tune of $100 million in wholesale electricity prices,” Sen. Andrea Stillman, D-Waterford, said.
She said she doesn’t know if the extension of the electric generation tax is in the governor’s budget, which will be released next Wednesday.
“I would love to see the governor and the legislature live up to its promise and allow the tax to sunset,” Stillman said.
Stillman said she would consider it “a new tax,” if Malloy decided to extend it beyond July 1, 2013.
Rep. Betsy Ritter, D-Waterford, said she feels pretty confident that if the tax continues it will be passed along to ratepayers.
Already it’s had an impact on taxpayers in Waterford, who will be asked to make up for the loss in tax revenue from Dominion. As the town’s top taxpayer, the tax takes a toll on value of the nuclear plant and the difference needs to be made up by all the other residential and commercial taxpayers, Ritter explained.
Neither Stillman or Ritter, could say definitively if the tax will be passed along to electric ratepayers. They said that’s a decision for each of the electric generators to make.
“Anytime you introduce a tax on a product, that tax is ultimately borne by the consumers,” Ken Holt, spokesman for the Dominion Millstone Power Station, said. “Going forward if the tax is extended that tax is going to passed on to consumers.”
Since the tax was supposed to be temporary, Dominion decided not to pass it along to consumers, Holt said.
“At this point a promise hasn’t been broken yet,” Kevin Hennessy, director of government affairs for Dominion, said. “And we expect that it won’t be.”
According to the Edison Electric Institute, Connecticut is still paying some of the highest electricity rates in the county. An average monthly residential bill in Connecticut is about $200.59, while residents in the rest of the New England states pay an average of about $158.12 per month.
But if the tax continues it’s likely those rates could go up. That’s in spite of a recent 12 percent reduction in rates.
Last year, the two lawmakers who chaired the Energy and Technology Committee didn’t believe the Malloy administration had been completely fair in how they levied the tax on generators.
Sen. John Fonfara, D-Hartford, and former Rep. Vickie Nardello, who lost her re-election bid, thought Malloy didn’t put enough consideration into how electricity is sold on a regional basis or the difference between gas generators and nuclear generators.
Back in October, Fonfara said he knew Malloy didn’t intend to increase rates, but that he thought that a rate increase could be the consequence of the Connecticut-only tax.
Sen. Bob Duff, one of the new energy committee co-chairs, said that while he may have an opinion on the generation tax, it won’t be something his committee decides. He said it will be something for the legislature’s Finance Committee to tackle.
Dan Dolan, president of the New England Power Generators Association, has said the only reason Connecticut hasn’t seen an increase in electric rates yet is because of the historically low price of natural gas. Aside from nuclear, most of the state’s wholesale electricity generators are fueled by natural gas.
“Even though rates came down, they came down despite that tax,” Dolan has said.
Malloy has declined to address specific taxes or spending proposals that will or won’t be included in the budget to be unveiled Feb. 6.
Last Friday, Malloy was asked if he thought continuing any taxes beyond their sunset date counts as a tax increase.
“I would not consider continuing existing taxes as raising taxes,” Malloy said.
Asked if that’s what he was considering as he prepares his budget, he said he was “not eliminating that possibility.”
Malloy spokesman Andrew Doba reiterated that message.
“That said, let’s be clear — extending a tax that is set to expire is not a tax increase,” Doba said. “The fact is that generation rates have fallen 12 percent in the last two years. That means Connecticut residents are paying less for energy than they were two years ago. That means Connecticut businesses are paying less, so they can reinvest that money and create jobs.”
Oz Griebel, CEO of the MetroHartford Alliance, and Tony Sheridan, president of the Eastern Connecticut Chamber of Commerce, joined lawmakers in calling for the tax to expire at the press conference. They said the business community needs a predictable tax structure.