Electricity customers in New England could see rates jump if Connecticut successfully extends a $76 million a year tax on electricity generation.
The Connecticut State Senate is set to consider the budget this month. Consumer Energy Alliance has launched a net roots campaign urging people to write to legislators to stop the tax.
Advocates warn extending the tax could hinder economic growth, especially among small businesses. “Small businesses operate on very thin margins and the exorbitant cost of electricity in Connecticut is a major impediment to growth and job creation,” said Andy Markowski, Connecticut state director of the National Federation of Independent Business. “The tax on electricity generation is passed on directly to utility customers. That hurts small businesses and consumers.”
According to the U.S Chamber of Commerce Institute for 21st Century Energy the highest average rate in the continental United States belongs to Connecticut, where electricity costs nearly 16 cents per kilowatt hour – 60% higher than the national average of just under 10 cents.
Impact of the tax will not be limited to just Connecticut. Other New England states will see prices increase because they are served by the same electricity market. Already, the attorneys general from Rhode Island and Massachusetts have voiced their opposition to the tax, arguing that as much as 75% of the tax would be passed to consumers outside of Connecticut. New Hampshire residents are starting to protest as well. The New Hampshire Journal noted that in a recent poll conducted by Opinion Dynamics three out of four residents in the region, including those in New Hampshire, opposed the tax.
The tax will not only burden consumers, but also the generating companies, which contribute significantly to local economies. A 2011 study conducted by the consulting firm Chmura Economics & Analytics for Dominion Power, which operates the Millstone power station located in Waterford, found the plant produces $1.2 billion in annual economic benefits for the state, supporting 4,200 jobs in Connecticut.
The tax, which is unique to Connecticut, was agreed to in 2011, but only if temporary and utilities did not pass the cost on to customers. The tax is a $2.50 per megawatt hour charge levied on electric power plants that generate and upload electricity to the regional power grid. The Connecticut Senate is now evaluating whether to include Governor Malloy’s proposal in its 2014-2015 budget. If you’re a New England resident who may be affected by the tax increase, write to the Connecticut legislature today and voice your opposition.