For Immediate Release - June 04, 2013

Connecticut Legislature Agrees to Reduce, Eliminate Tax on Electric Generation

BOSTON – After strongly advocating that a generation tax on electricity in Connecticut unfairly burdened Massachusetts and all New England ratepayers with increased costs, AG Coakley issued the following statement commending the Connecticut Legislature’s decision to severely cut the tax by letting it expire in the first quarter of FY2014:

“We are encouraged that the Connecticut Legislature passed a budget that severely reduces and eventually eliminates the current production tax on the generation of electricity, the only broad-based tax of this kind in the country.  This tax not only raises electricity rates in Connecticut, it unfairly raises the rates of all ratepayers throughout New England and New York and puts the region at a competitive disadvantage.”

BACKGROUND:

In 2011, Connecticut imposed a tax of one quarter of one cent per net kilowatt hour of electricity produced by generators within Connecticut and uploaded to the regional bulk power grid.  Concerned this new tax could raise rates for all New England states that draw power from the grid, AG Coakley raised serious concerns about this tax and asked ISO-New England to study the potential impact.  That study showed that New England ratepayers were likely to pay approximately $58 million more to purchase electricity because of the tax, and that approximately 75% of the higher energy costs resulting from the tax were likely to be borne by ratepayers outside of Connecticut.

In February 2013, AG Coakley sent a letter along with AG Peter Kilmartin of Rhode Island that insisted the generator tax inappropriately raises the rates of all New England families and businesses in order to benefit Connecticut’s coffers.  AG Coakley urged the Legislature to not reauthorize the tax.

On Monday evening the Connecticut Senate passed a budget which severely reduced that tax on ratepayers across New England by allowing the tax to sunset completely in the first quarter of FY2014.  The budget now awaits the Governor’s signature.

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