Bill Targets Major Cuts in Electricity Costs

Connecticut lawmakers are reviewing newly introduced legislation that promises to bring much-needed relief for residents and businesses struggling with the state’s high electricity costs.

SB 1560, which was introduced in the Finance, Revenue, and Bonding Committee this week, restructures both the ways the state purchases energy and how customers pay for and use electricity.

The 80-page bill shifts public benefits charges from ratepayers to state bonding, along with the cost of repairing storm-damaged distribution networks.

The proposal creates a new Connecticut Electricity Procurement Authority designed to manage energy markets, redefines nuclear power as renewable, and better incentivizes off-peak electricity use.

It also eliminates the sales tax on electricity for commercial customers, along with the demand charge, which can account for 50%-60% of customer bills.

A Hartford Courant report cites a utility analyst who estimated that the proposal, which has bipartisan support, could save customers as much as $1 billion annually.

State at a ‘Severe Disadvantage’

SB 1560 was introduced by Finance Committee co-chair Sen. John Fonfara (D-Hartford), who spoke at an April 16 press conference that included Senate President Martin Looney (D-New Haven), Senate Majority Leader Bob Duff (D-Norwalk), and House Minority Leader Vincent Candelora (R-North Branford).

“There are certain fundamental truths that we must acknowledge and act on if we want to reverse the path we are on,” Fonfara said.

“If we choose to do nothing, electricity costs will continue to increase.”

“If we choose to do nothing, electricity costs will continue to increase.”

Sen. John Fonfara

The bill is the most comprehensive measure addressing Connecticut’s high electricity to emerge this legislative session, with the Energy and Technology Committee not acting on an earlier Republican proposal.

CBIA’s Chris Davis told an April 16 Finance Committee public that soaring energy costs put Connecticut “at a severe disadvantage as our employers seek to compete on the regional, national, and global stage.”

“Like residents across the state, electricity costs for Connecticut’s employers continue to rise at a staggering rate, impeding economic growth and job creation,” he said.

‘Existential Threat’

Davis referenced earlier comments by Department of Economic and Community Development Commissioner Daniel O’Keefe, who called high energy costs “an existential threat to our continuing economic progression.” 

The CBIA/Marcum 2024 Survey of Connecticut Businesses found that the issue is a top priority for employers, with many already taking steps to mitigate costs through third-party suppliers (23%), power purchase agreements (13%), and solar energy solutions (11%).

“Lowering electricity costs will improve the ability of Connecticut businesses to compete, enabling them to invest in new technologies, expand their product offerings, and enhance customer experiences while empowering employers to create jobs and expand operations in our state,” Davis said.

Howard Goldfarb, president of Hamden-based manufacturer Leed Himmel, told committee members the company is competing with companies in other states that “pay about 25% of what we pay in Connecticut.”

“The demand and the public benefit charge almost double our electric cost here in Connecticut—these costs are not sustainable and need to be removed,” he said.

George Frantzis, owner of Quassy Amusement Park in Middlebury, testified that the bill “will provide immediate and tangible benefits to businesses across the state.”

“I urge the committee to support creating a more favorable economic climate for Connecticut businesses,” he said.

Immediate Relief

Davis highlighted several key provisions of SB 1560 that CBIA supports. These provisions are designed to lower energy costs immediately:

1. Elimination of sales tax on electricity: The bill removes the sales tax on electricity used at commercial and industrial facilities, providing immediate financial relief by lowering energy bills by 6.35% for non-exempt employers. Currently, only manufacturers are exempt from this tax. 
2. Removal of demand charge: By eliminating the demand charge, businesses will no longer be penalized for peak usage during their daily operations, encouraging growth and expansion.
3. Restructuring of public benefits charge: The bill suggests moving many public benefit charges to the proposed Green Bond Fund, which will lower overall electricity costs. CBIA recommends placing programs not related to long-term infrastructure investments or power purchase agreements into the General Fund to ensure they fall under the spending cap and compete for prioritization like other state-funded programs.

Davis urged the committee to support these sections of SB 1560, stressing that these measures are crucial for creating a more favorable economic climate for Connecticut employers.

---

For more information, contact CBIA’s Pete Myers (860.244.1921).