Energy proposals mask harm to state's economy

 
(March 14, 2008) Giving energy consumers a rebate might sound like a good idea at face value, but if the source of the rebates is something that’s damaging to the state’s economy, then it’s poor public policy.

The Energy Committee this week approved HB-5783, which promises to give certain Connecticut power customers a rebate. It calls for the state to determine the service costs, including a reasonable rate of return, for nuclear and coal power plants in Connecticut. The plants would then be offered a five- to 15-year contract for power generation by the local electric distribution company. 

But if the power plant decides not to do that, it would have to pay the state an “annual market incentive recovery charge” that would be rebated to electric customers. In plain language, the state would enforce a windfall profits tax.

Connecticut would become the only state in the nation to tax private energy company profits — sending an anti-business message to businesses and investors.

Connecticut’s electricity costs are already among the highest in the country and this proposal, over time, would likely increase costs further because power-generating companies would be more inclined to locate elsewhere since no other state caps their profits.

At best, Connecticut and the U.S. are in uncertain economic times that call for ways to promote growth. Proposing policies that discourage businesses – and increase costs — will make it much harder for the state to withstand the economic downturn.
 
More government bureaucracy
Another proposal creates a new government bureaucracy that would act as a quasi-public energy company. Under HB-5819, a “Connecticut Energy Authority” would be set up to purchase power, sell energy to distributors and build and operate power plants.

But these roles are much better accomplished by the electric distribution companies that are under state regulation. Adding another costly layer of bureaucracy and government management is not what Connecticut consumers want or need — which is affordable and reliable power. 

CBIA believes that lawmakers can help accomplish those goals by supporting efforts to develop Connecticut’s energy marketplace.

For more information, contact CBIA’s Kevin Hennessy at 860-244-1979 or Kevin.hennessy@cbia.com. n

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