If you live or do business in Connecticut, you know that electricity rates in the state are among the highest in the continental U.S.

But that's not stopping the legislature's Environment Committee from considering legislation that will increase that burden.

Electricity costs
Source: Wallet Hub 2018’s Most & Least Energy-Expensive States.

HB 6646 adds a one mill per kilowatt hour tax on Connecticut electric bills to create a new fund for what's described as environmental infrastructure investments.

The bill creates a quasi-public agency, the Connecticut Earth Bank, to "promote investment in environmental infrastructure in accordance with a comprehensive plan developed by it to foster the growth, development and commercialization of environmental infrastructures."

Carbon Tax

Meanwhile, SB 1064 creates a new carbon tax on all fossil fuels sold in Connecticut beginning Jan. 1, 2021.

Under the bill, the state Department of Revenue Services will collect the tax—$15 per metric ton of carbon dioxide—from all electricity distributors and suppliers operating in the state.

Those suppliers and distributors will pass those costs to their customers based on electricity usage.

The tax will increase by a minimum $5 annually or as determined by a proposed 39-member Carbon Pollution Council appointed by the governor and legislative leaders.

CBIA's Eric Brown noted that while both proposals are intended to help the environment, they just add to the tax burden of Connecticut residents and businesses and make the state less affordable.

"The Environment Committee has no qualms about entertaining bills that will continue to squeeze electricity customers for more money and make Connecticut less competitive with respect to energy costs," he said.

"We recommend the Environment Committee take at least a two-year break from proposing more energy taxes on Connecticut citizens and businesses."

Another Fund to Raid?

A major concern, besides the economic consequences of these bills, is that lawmakers previously raided the Connecticut Green Bank—a quasi-public agency that arranges and provides loans, and guarantees financing for renewable energy and energy efficient projects in Connecticut—as well as the Conservation and Load Management Fund.

The Green Bank and the CLM programs are funded by a tax on electric ratepayers.

However, lawmakers removed millions of dollars from the fund in 2017 to balance the state budget.

The fear is that the Connecticut Earth Bank will become another fund for lawmakers to raid.

United Illuminating, one of two major utilities serving Connecticut, sees HB 6646 as nothing more than another tax on customers, according to company representative Al Carbone.

"The bill would impose a tax on electric distribution customers to fund environmental improvement activities in Connecticut," Carbone told the Environment Committee March 18.

"Unlike the funding for the Green Bank, which has a focus on advancing clean energy deployment and receives funding from electric ratepayers, the infrastructure bank appears to have no direct relationship to energy production or utilization in Connecticut."

'Regressive'

John Chunis, a Rocky Hill resident, told committee members that this proposal will hurt business.

"As the price of electricity increases, companies will consider leaving the state or not moving in, which further hurts our struggling economy," he said.

He also worried the tax will hit lower-income people the hardest.

"This is highly regressive," Chunis said.

"Low-income citizens, families, and retirees are struggling to make ends meet on a daily basis, and if this bill passes, they will have to pay even more for their electricity."


For more information, contact CBIA's Eric Brown (860.244.1926) | @CBIAericb