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Hartford — Residential and business consumers might see an increase in rates if the state's energy-generation tax doesn't expire, a Dominion official warned Thursday.
"The real loser at the end of the day ... is not the power companies, it is ultimately consumers, residential and business consumers, they are going to bear these costs," said Kevin Hennessy, director of government affairs for New England for Dominion.
On Thursday, state Sen. Andrea Stillman, D-Waterford, Rep. Betsy Ritter, D-Waterford, and a dozen other legislators said they wanted the state to keep its promise and let the two-year energy-generation tax expire. Some said they disagreed with Gov. Dannel P. Malloy when he said extending the tax would not be a tax increase.
"I consider it a new tax because it is meant to expire, and in my estimation means we would have to reauthorize it," Stillman said.
In 2011, the governor asked energy-generation companies, such as nuclear, coal, oil or natural gas companies, to share in the state's responsibility to close the $3.5 billion budget deficit. The tax was supposed to bring in $72 million annually for two years by taxing nearly all electricity producers at the same rate.
"I know for a fact that Dominion did not pass this tax along," Stillman said. "They did participate in the shared sacrifice that the governor asked for to the tune of $42 million a year."
The largest portion of the new tax was paid for by Dominion because of its operations at Millstone Power Station, Ritter said.
Dominion chose to pay the tax instead of raise rates because the tax was set to expire, she said. But even requiring the company and others like it to pay the tax still has a negative effect on the local community.
For example, because the company now has a higher tax liability, the company's property tax assessment is lower, Ritter said. The company's value on the town's grand list goes down and the property tax burden falls back on residential property owners, she said.
Besides residential property taxes increasing, the energy-generation tax also prevents job stability, she said.
Nelson Griebel, chief executive officer of MetroHartford Alliance, agreed and said the state needs to generate private sector confidence to increase capital investment and retain and grow jobs.
"Critical to that confidence is the ability of we, as a state, to control our spending, honor the constitutional spending cap and to ensure that we have a predictable tax structure," Griebel said.
The sunset of this utility generation tax is critical, he said. It sends a strong signal to the private sector that this state means what it says, Griebel said.
No other state has a tax similar to this one, Stillman said.
Connecticut already pays the highest rates in the continental United States, Hennessy said.
"It was crystal clear today that if this tax gets extended, that that's a broken promise," he said.