Energy – particularly those forms of energy that cause green energy proponents to wrinkle their noses in dismay – is quickly becoming in Connecticut the new tobacco, a reviled product susceptible to punitive taxation. The object of punitive taxation is to drive up the price of the undesirable product so as to make it less competitive with other more desirable products, even if the more desirable product is in its larval stage.
The Democratic dominated General Assembly may pass just such a tax on nuclear energy for three reasons: 1) Green utopians and their facilitators in the General Assembly don’t like nuclear energy; 2) they much prefer energy produced by wind turbines, except when the turbines grate on the aesthetic sensibilities of their constituents; 3) they believe all things powered by oil, gas and coal -- cars especially -- are environmentally destructive; and 4) true utopians, they hope to construct out of whole cloth a better society by using the tax code to drive from a quasi private enterprise energy universe products they do not favor, while using the tax code and burdensome regulations to encourage the development of products they do favor.
The two co-chairmen of the General Assembly’s Energy and Technology Committee, Rep. Vickie Nardello of Prospect and Sen. John Fonfara of Hartford, are dangling before energy starved Connecticut a bill that would impose taxes on energy generators that use oil and coal, but their bill imposes especially onerous taxes on nuclear power. Energy producers that rely on natural gas and wind power would be spared the tax drubbing.
The Nardelo/Fonfara bill would be especially deadly for the Millstone plant near New London, the sole operational nuclear power plant in Connecticut. Having passed the Energy and Technology Committee, the bill is expected to raise $340 million in taxes, $330 million of which would come from the nuclear plant owned since 2001 by Dominion. The plant's two reactors, Dominion officials say, are capable of meeting 50 percent of Connecticut’s energy needs.
As might have been expected, Dominion is strongly resisting what it considers a crippling imposition.
Businesses do not pay taxes. Properly understood, they are tax collectors. All business taxes are passed along to product or service purchasers in the form of price increases. Highly regulated energy providers in Connecticut are private/public entities, since cost increases are imposed only with the approval of the Department of Public Utility Control (DPUC).
When a company cannot recover non-productive costs through a pricing structure and when the cost increase is unavoidable, which is inevitably the case both with tax increases and state regulations, the one remaining option available to a company that wishes to maintain a competitive advantage with respect to other companies producing a similar product is removal to a more friendly tax and regulatory environment. And this is precisely what Dominion, facing a bill that looks suspiciously like a bill of attainder against nuclear power generators, has proposed to do.
"If this bill passes, the Millstone power station will not be economically viable to operate and it will be shut down," Dominion spokesman Ken Holt said.
Dominion’s response should surprise neither Ms. Nardello nor Mr. Fonfara – because their bill is designed to make nuclear power generation in the state impossible by imposing strangling regulations and high taxes on those power generators they deplore.
Mr. Holt’s response is an indication that the ambitions of Ms. Nardello and Mr. Fonfara have been achieved. The co-chairs of the General Assembly’s Energy and Technology Committee should be popping champagne corks and congratulating each other at having nudged out of Connecticut a company that, with some encouragement from non-utopian realists in the legislature, could provide the state with half its energy needs.
“Ah!” opponents of nuclear energy say -- “Japan!”
“But,” proponents of energy self sufficiency for Connecticut say, “Nuclear plants will not be built on fault lines in the state, and the last recorded tsunami that hit the New London area was an April Fool’s joke. Ms. Nardello’s well publicized opposition to wind power turbines in her own political bailiwick – she opposes them -- is not an April Fool’s joke.
The inequitable and anti-competitive Nardello/Fonfara bill, designed to haul tax money into a depleted treasury and at the same time stake out a future in which nuclear energy will play little or no part, is itself not in compliance with the mission statement of Connecticut’s Department of Public Utility Control, an agency that “keeps watch over competitive utility services to promote equity among the competitors while customers reap the price and quality benefits of competition and are protected from unfair business practices.”
Indeed, the Nardello/Fonfara bill shamefacedly promotes inequity by giving preferred energy suppliers an unfair business advantage through an inequitable tax code at precisely the point when Connecticut businesses, always in competition with out of state businesses, are reaping the disadvantages of the high cost of energy the state legislature has attempted to address through a partially successful deregulation effort.
The economic benefits of deregulation cannot be achieved by a governmental command apparatus that chooses economic winners and losers by means of a business unfriendly regulatory and tax structure which, in addition to all else, makes planning for the future on the part of energy generators a win or lose guessing game.
Showing posts with label DPUC. Show all posts
Showing posts with label DPUC. Show all posts
Sunday, April 3, 2011
Friday, December 31, 2010
The Markley Suit And Fake Taxes
The legal ball that state Senator-elect Joe Markley tossed into the Superior Court has been batted by Judge Henry Cohen back to the Department of Public Utilities Control (DPUC).
Mr. Markley, striking a blow for Connecticut citizens and good government, filed a suit in October against the DPUC for having permitted a fee to appear on energy bills that anyone with half a brain would recognize as a disguised tax.
In 2000, the state legislature initiated energy deregulation in Connecticut. Having made inquiries of the state’s two largest energy distributors concerning the cost of deregulation, legislators were told the bill would run about $1.7 billion. Rather than raise the money for deregulation though a forthright tax, it was decided to pay for deregulation through bonding. The bonds used to pay the cost were securitized by the imposition of a fee on electric bills amounting to about $15 per month. The Competitive Transition Assessment (CTA), which has been appearing on electric bills for a few years, was set to expire in 2011 for one company and 2013 for another.
Through a combination of impudence and imprudence, Connecticut in the meanwhile had accumulated a budget deficit of some $3.5 billion in each of the next two years and beyond. The governor and the legislature, lacking the courage to raise taxes before an upcoming election, as usual stuffed the 2011 budget hole with temporary and dubious fixes, one of which is a brand new tax to be applied as a fee on energy bills. This one -- a so called “fee” with lipstick on it designed to look like Marylyn Monroe, though it is an obvious tax pig – the legislature, with a bow to George Orwell, called the Economic Transition Charge (ETC). Having received no political push back the first time when the legislature secreted a tax in the form of a “fee” in energy bills, a repeat was in order.
Who says you can’t fool all the people all the time?
When Mr. Markey noticed the imposture, he filed a suit contesting the imposition on two grounds: The DPUC, he argued, lacked the authority to implement the tax; and the tax was also inequitable because ratepayers in several districts would not be required to pay it. Judge Cohen recently decided that Mr. Markley had not exhausted all the administrative remedies available to him before filing suit and, while making no decision on the merits of the case, ruled that Mr. Marley should exhaust himself by first seeking a remedy from the DPUC, which is on the order of seeking a missing chicken from the full bellied, satiated and smiling fox in the henhouse. In oral argument, Mr. Markley characterized this route as “a matter of theatre,” showing that there is room in legal pleadings for searing poetry.
To people unused to artful legal subtleties, it may seem obvious that the legislature, suffering from a lack of courage, delegated the DPUC to implement a tax used to securitize bonds the proceeds from which would be dumped into the state’s depleted general fund. Assessments collected from citizens and transferred to the general fund to pay off debts incurred by legislatures are taxes, though these collections have cleverly been styled as “fees” to dupe citizen the legislature has tapped out with taxes.
Perhaps in Utopia one might expect from judges clear, courageous and constitutional rulings. But Connecticut is very far from Utopia. The usual outcome in cases involving taxes is to allow the taxing authority as much liberty as needed to fill state coffers; the whole governmental apparatus, judges being a principle part of the Republic’s tri-partite structure, feeds at the same public trough. Empty bellies and possible joblessness within the public sector are powerful inducements, sometimes more persuasive than measures that truly advance the public good.
According to a luminous story in the Ridgefield Press written by Carrie Schmelkin and Macklin Reid, Mr. Markley, not at all intimidated, has said he intends to press on with his suit. State Senator Toni Boucher and state Rep John Frey, both representing Ridgefield, have placed themselves on the side of the angels and overtaxed citizens. They are certain to be joined by other conscientious legislators courageous enough to confront chicanery and call it by its right name.
The case made by Mr. Markley against this odious hidden tax -- paid by everyone, by the way, including the 80 year old mothers of editorial writers who have not yet muckraked this obvious imposture -- should not be permitted to whither on the judicial vine, even if the courts should decide in favor of legislative duplicity. Preeminently, this subterfuge is a political matter and should be resolved at the voting booth by those people in Connecticut -- Republican, Democratic and Independents -- who refuse to allow themselves to be fooled all the time.
At the very least, these controversial and inappropriate “fees” should figure prominently in upcoming campaigns for legislative seats opened when Governor-elect Malloy reached into the legislature to fill important positions in an administration that he has promised countless times would be forthright, transparent and honest.
Mr. Markley, striking a blow for Connecticut citizens and good government, filed a suit in October against the DPUC for having permitted a fee to appear on energy bills that anyone with half a brain would recognize as a disguised tax.
In 2000, the state legislature initiated energy deregulation in Connecticut. Having made inquiries of the state’s two largest energy distributors concerning the cost of deregulation, legislators were told the bill would run about $1.7 billion. Rather than raise the money for deregulation though a forthright tax, it was decided to pay for deregulation through bonding. The bonds used to pay the cost were securitized by the imposition of a fee on electric bills amounting to about $15 per month. The Competitive Transition Assessment (CTA), which has been appearing on electric bills for a few years, was set to expire in 2011 for one company and 2013 for another.
Through a combination of impudence and imprudence, Connecticut in the meanwhile had accumulated a budget deficit of some $3.5 billion in each of the next two years and beyond. The governor and the legislature, lacking the courage to raise taxes before an upcoming election, as usual stuffed the 2011 budget hole with temporary and dubious fixes, one of which is a brand new tax to be applied as a fee on energy bills. This one -- a so called “fee” with lipstick on it designed to look like Marylyn Monroe, though it is an obvious tax pig – the legislature, with a bow to George Orwell, called the Economic Transition Charge (ETC). Having received no political push back the first time when the legislature secreted a tax in the form of a “fee” in energy bills, a repeat was in order.
Who says you can’t fool all the people all the time?
When Mr. Markey noticed the imposture, he filed a suit contesting the imposition on two grounds: The DPUC, he argued, lacked the authority to implement the tax; and the tax was also inequitable because ratepayers in several districts would not be required to pay it. Judge Cohen recently decided that Mr. Markley had not exhausted all the administrative remedies available to him before filing suit and, while making no decision on the merits of the case, ruled that Mr. Marley should exhaust himself by first seeking a remedy from the DPUC, which is on the order of seeking a missing chicken from the full bellied, satiated and smiling fox in the henhouse. In oral argument, Mr. Markley characterized this route as “a matter of theatre,” showing that there is room in legal pleadings for searing poetry.
To people unused to artful legal subtleties, it may seem obvious that the legislature, suffering from a lack of courage, delegated the DPUC to implement a tax used to securitize bonds the proceeds from which would be dumped into the state’s depleted general fund. Assessments collected from citizens and transferred to the general fund to pay off debts incurred by legislatures are taxes, though these collections have cleverly been styled as “fees” to dupe citizen the legislature has tapped out with taxes.
Perhaps in Utopia one might expect from judges clear, courageous and constitutional rulings. But Connecticut is very far from Utopia. The usual outcome in cases involving taxes is to allow the taxing authority as much liberty as needed to fill state coffers; the whole governmental apparatus, judges being a principle part of the Republic’s tri-partite structure, feeds at the same public trough. Empty bellies and possible joblessness within the public sector are powerful inducements, sometimes more persuasive than measures that truly advance the public good.
According to a luminous story in the Ridgefield Press written by Carrie Schmelkin and Macklin Reid, Mr. Markley, not at all intimidated, has said he intends to press on with his suit. State Senator Toni Boucher and state Rep John Frey, both representing Ridgefield, have placed themselves on the side of the angels and overtaxed citizens. They are certain to be joined by other conscientious legislators courageous enough to confront chicanery and call it by its right name.
The case made by Mr. Markley against this odious hidden tax -- paid by everyone, by the way, including the 80 year old mothers of editorial writers who have not yet muckraked this obvious imposture -- should not be permitted to whither on the judicial vine, even if the courts should decide in favor of legislative duplicity. Preeminently, this subterfuge is a political matter and should be resolved at the voting booth by those people in Connecticut -- Republican, Democratic and Independents -- who refuse to allow themselves to be fooled all the time.
At the very least, these controversial and inappropriate “fees” should figure prominently in upcoming campaigns for legislative seats opened when Governor-elect Malloy reached into the legislature to fill important positions in an administration that he has promised countless times would be forthright, transparent and honest.
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