Government Affairs REPORT

Conservation already happening:
New energy ratepayer fund is costly,
unnecessary

(Feb. 24, 2006) With Connecticut consumers facing steep energy prices last year, the legislature’s Energy and Technology Committee shelved a proposal to create a new state conservation fund partly because of its additional costs to ratepayers.

This year, with consumers in the state facing even higher energy prices — 50% higher for natural gas and 23% higher for oil — the committee is again considering the proposal that, in effect, would create a new energy tax.

CBIA testified before the legislature’s Energy and Technology Committee this week to oppose HB-5261 because it will bring higher energy costs to Connecticut consumers. The bill would create an energy-conservation program for natural gas and oil — and calls for 17 different people to be involved in the creation and administration of just the oil conservation programs.

CBIA has been, and continues to be, a strong supporter of the state’s electricity conservation and load management programs. In fact, the business community is the largest contributor to the fund, accounting for approximately 60% of the total revenue collected.

But last year, the business community received only 35% back in the form of program dollars. And residential electric ratepayers fared no better — for their 33% contribution they received only 19% back in the form of actual conservation programs.

The discrepancy is due to the fact that 37% of ratepayer-collected monies for conservation last year was transferred to Connecticut’s General Fund to help plug the state’s budget deficit. More than $220 million has been diverted from ratepayer funds for state budget purposes — meaning that many of the ratepayer-collected “conservation” funds are amounting to an additional state tax.

Conservation is happening
Energy conservation is a fact of life in many Connecticut companies — last year the Department of Public Utility Control found that ratepayers are achieving significant natural gas conservation on their own and that ratepayer-initiated conservation saves the cost of creating formal, centralized programs.

A recent CBIA survey found that 73% of Fairfield County businesses have upgraded their heating and cooling systems in an effort to conserve energy. Statewide, many businesses have either curtailed their hours of operation or modified the production schedules to save on energy.

Basically, conservation is occurring on its own in Connecticut.

High costs
Because Connecticut is at the end of the country’s energy pipeline, our energy prices are nearly the highest in the United States. High overall business costs are affecting Connecticut’s performance in job creation. They also make it difficult for state companies to price their products and services competitively in the global marketplace.

Increasing energy costs further will not help accomplish the important goal of growing our economy. In short, businesses cannot afford to pay even more for energy. This tax should be rejected because it simply adds to the burdens of doing business in Connecticut and negatively affects the ability of businesses to grow the jobs our state desperately needs.

HB-5261 will be the subject of a public hearing before the Environment Committee on Monday, Feb. 27.

For more information, contact CBIA’s Rob Earley at 860-244-1900 or earleyr@cbia.com.