Gov. Dannel P. Malloy's new plan to tax all electricity generators at the same rate would avert a shutdown of Millstone Power Station, the reactor owner said Thursday, because the proposed $40 million tax would be more manageable than a competing tax that targets nuclear power.

Under Malloy's plan, Millstone owner Dominion would pay the $40 million in a temporary, two-year tax designed to generate

$72 million in revenue from all the state's electricity generators, Dominion spokesman Ken Holt said. The Energy & Technology Committee had proposed a $332 million tax on Millstone, which the plant owner said would force it to close down its two operating reactors in Waterford.

State Sen. John Fonfara, D-Hartford, who co-chairs the Energy & Technology Committee, acknowledged Thursday there is no longer support for that tax.

But Fonfara said he still plans to challenge Malloy's proposal next week, because he thinks its cost, unlike the committee's plan, will be passed on to consumers. "We don't believe (Malloy) wants to have electric rates go higher, but that will be the result of his current proposal," Fonfara said.

Fair and balanced

Holt said Dominion understands the need for the $40 million tax, "and we appreciate the challenge Gov. Malloy has in developing a balanced budget for the state under such difficult circumstances."

Holt said the tax proposal limits the potential negative effect on consumers and businesses, will address the state's short-term financial needs and is applied to electricity generators in a much more balanced and fair manner.

Dominion would "absorb the costs" of the new tax, and doesn't plan any rate increases or cutbacks at Millstone because of it, as it did under the energy committee's plan, Holt said. The nuclear complex and its two operating reactors directly employ 1,080 people and about 350 independent contractors.

On Wednesday, Malloy and Democratic lawmakers said they had reached a deal on a two-year $40 billion budget plan, although negotiations with state workers for about $1 billion a year in possible concessions have not yet ended.

Malloy's energy tax plan would apply to all forms of electricity generation except renewables, such as wind and solar power.

The proposal, which Malloy budget chief Ben Barnes said is based on talks with legislative leadership and the chairmen of the budget and finance committees, would tax electricity at .0025 cents a kilowatt hour in the next two fiscal years beginning July 1, up from his original proposal of .002 cents per kWh.

Dominion had said Malloy's original proposal would have cost it roughly $30 million.

In contrast, the proposal led by Fonfara and state Rep. Vickie Nardello, D-Cheshire, co-chairmen of the energy committee, would have charged Dominion 2 cents a kilowatt hour and lesser rates on oil and coal sources.

Lawmakers, including state Rep. Betsy Ritter, D-Waterford, expressed confidence that the targeted tax on nuclear is "off the table."

"I am getting from the legislature as a whole that that would not be well received," Ritter said. "It was a punishing message to send to other groups, to anybody else who happens to make money in the state."

Passing on costs?

Fonfara said Thursday he still thinks his energy committee's $340 million tax proposal on nuclear, oil and coal was a good one, since Dominion would still have earned several hundred million dollars after paying the tax, and some of the tax would have been given back to ratepayers by the state.

Fonfara said Malloy's method will raise rates on consumers because natural gas generators are most likely to pass on their costs to consumers.

Kleen Energy power plant developer William Corvo Consultants Inc. of Middletown also argues that Malloy's proposed tax will eventually be passed on to ratepayers. It puts a "disproportionate" burden on natural gas plants like theirs, and would be paid primarily by five of the 40 companies generating electricity in Connecticut, he said.

"There needs to be an intelligent and mathematical analysis done on the impact of this tax, because you may be putting some of your natural gas plants out of business," said William Corvo in a telephone interview.

In opposing the larger $332 million Millstone tax, Waterford First Selectman Dan Steward informed lawmakers by letter that the town is already experiencing trouble with bond ratings because of its potential implications. Steward also noted that ultimately, ratepayers will end up paying for any tax increase.

"My expectation is that users will get charged for the tax somehow, but it would be a much lesser charge" under the Malloy plan, Steward said. "Going forward, when (Dominion does) renegotiate their contracts, we'll get charged for it one way or the other."

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