Lawmakers’ energy progress could be
offset by tax proposal

(April 28, 2006) Anticipated record-breaking demand for electricity this summer in New England is likely to strain available energy supply, say the region’s power managers. Amid that troubling forecast, state lawmakers are working on a wide-ranging energy plan that, among other things, will encourage the building of new power-generating plants in Connecticut.

“While demand for electricity continues to grow across New England, construction of new generating resources has stagnated,” said ISO New England. “Without new investment in power infrastructure and greater energy efficiency and conservation, New England could soon be consuming more electricity than it can produce or buy from its neighbors.”

Positive steps - CBIA is encouraged that, while the specific language of the new energy proposal is still being developed, it is likely to call for better energy infrastructure planning, along with ways to stimulate the construction of more energy-generating plants in the state. And that’s critical to providing Connecticut’s economy with a stable, affordable and ample supply of energy.

Policy-makers in recent years have taken steps to provide energy consumers in the state with that kind of energy system, but, as ISO New England indicated, more needs to be done. The new legislative proposal could be another step in the right direction. But legislators apparently are also discussing a measure that would actually discourage the kind of private investment needed to provide the state with new power-generating plants.

Tax could make situation worse - The proposal, originally introduced this session by the attorney general, would cap the profits and place a new tax on power companies in Connecticut.

Oddly, that might actually increase the overall cost of electricity in Connecticut. That’s because power generators would be far less likely to locate in Connecticut, since no other state caps their profits. What’s more, generators, including in-state companies, would be discouraged from selling in Connecticut, which would then:

• increase consumers’ LICAP federal energy charges
• eliminate a potential source of less expensive energy

Should such a measure be proposed, CBIA urges legislators to reject it, because the proposal would only make matters worse. Instead, CBIA encourages lawmakers to continue developing legislation that will address the electric generation shortage and provide the state with sound, long-term solutions.

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