MA, RI to Connecticut: Stop With the Taxes

Dominion hates it. The local legislators don’t like it. And the attorney generals of Massachusetts and Rhode Island — both Democrats — are not too happy with it either.

“We are sympathetic to Connecticut’s budget challenges as our individual states are also looking for creative means to address our challenges,” Massachusetts Attorney General Martha Coakley and Rhode Island Attorney General Peter Kilmartin wrote in a joint letter to the state legislature. “But Connecticut’s generator tax is inappropriately raising the rates of our states’ families and businesses in order to benefit Connecticut’s coffers.”

In 2011, Connecticut passed a $2.50 per megawatt production tax on all electricity generated in the state, with the exception of solar and wind energy. That banked the state about $76 million annually, with Waterford’s Millstone Power Station – the largest electricity producer in New England – responsible for $42 million of the total.

Connecticut electricity generators sell their power to ISO New England, which sells it back to all the states in New England. Coakley and Kilmartin cited a 2011 study that found that the generator tax caused New England ratepayers to pay $58 million more to purchase electricity.

That tax sunsets at the end of June, but in his budget proposal, Gov. Dannel Malloy proposed extending that tax for at least the next two years. Kevin Hennessy, Dominion’s director of federal, state and local affairs for New England, contends that the governor promised to have that tax sunset in July, and broke his promise.

Hennessy said for the last two years, with the understanding it would sunset, Millstone has not passed that tax onto ratepayers. However, if it remains in the budget, it will be passed onto ratepayers, he said.

“Electricity is really very, very expensive for people in this region,” Hennessy said. “And frankly, a commitment was made by the Connecticut government.”

Local Support for Appeal

Waterford’s two state legislatures, State Sen. Andrea Stillman and State Rep. Betsy Ritter, have both come out against the tax, along with Chamber of Commerce of Eastern Connecticut President Tony Sheridan. Ritter said it will mean higher electricity rates for Connecticut ratepayers, who already pay the highest electricity rates in the continental United States.

In a previous interview, Malloy Spokesman Andrew Doba pointed out that electricity rates are down 12 percent in the past two years in Connecticut. However, rates are down everywhere because the supply of natural gas has greatly increased, therefore dropping the price, and Connecticut still has the highest rates in the continental United States, Ritter said.

“One of the things that a business is going to look at is the cost of electricity,” Ritter said. “To have that knowingly happening, it does send the wrong message to businesses potentially moving into this state or businesses who are already here.”

Coakley and Kilmartin agree. They said this tax will hurt the New England economy and be counter-productive to what they are trying to do.

“Our offices work every day to oppose unnecessary and inappropriate electricity rate increases to protect the ratepayers of our states,” they wrote. “As our commercial and industrial ratepayers attempt to compete with other businesses across the country and the world, high electricity costs hurt their ability to keep jobs and bring new jobs to the region.

Patch left a voicemail and sent an email to Doba on Friday morning to hear Malloy’s side of the story, but neither was returned. If we here anything from the governor’s office, we will update this story.