Connecticut electricity tax could raise rates for Granite State consumers

Connecticut’s extension of a tax hike on electrical generators, proposed by Democratic Governor Dan Malloy, could impose higher costs on all of New England – including New Hampshire.

Malloy initially sold the electricity tax – found nowhere else in America – as a temporary revenue generator, set to expire on June 30th of this year. But now the Governor is pushing to make permanent a tax that has unarguably raised costs in his state and carries similar implications for the region as a whole. Not to mention that Connecticut’s electric rates were already the highest in the nation before the tax.

Data from ISO New England shows that electricity prices were already on the rise in New England, increasing by an estimated $0.44/MWh for a total of $58 million in 2010 alone – prior to Connecticut’s generator tax. The ISO report states that CT’s tax extension risks hiking rates by another $58 million across New England.

Why do tax rates in Connecticut impact Granite State consumers? Because Connecticut’s electricity is included in a regional grid, encompassing 350 plants that also serve other New England states. This structure means that there are across-the-board consequences when individual states raise taxes on generators. When generators have to payer higher taxes, they pass those costs along to all consumers in their service area.

In addition to higher electric bills for consumers, the increased costs of operating could lead to a reduction in quality, posing a risk to both consumers and the environment.

Polling conducted by Opinion Dynamics and on behalf of the New England Energy Alliance shows that three out of four residents in the region, including NH, oppose the electricity tax.

The structure of New England’s regional grid was designed to boost competitiveness and benefit consumers, but Gov. Malloy’s arbitrary tax hike in an effort to fund his unsustainable spending levels will produce just the opposite effect. Consumers – including those here in New Hampshire who are unable to vote Malloy out of office – will be left to foot the bill.

Author: Shawn Millerick

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  • Anonymous

    This tax is without conscience. We don’t need new taxes or extensions of what was passed with a clear sunset. That’s what consumers and producers were told. To go back on the promise is not only bait and switch, it’s bad public policy. This budget has a spending problem, not a revenue problem. It’s time to start making the kind of cuts and strategic decisions real leaders make. If the legislators embrace yet another round of tax hikes, they ought to be hung by their thumbs in the town squares of their respective towns so we can throw rotten tomatoes at them. Remember the “temporary” sales tax on our homes? That our political weakness and frankly, irresponsible behavior can affect citizens in other states is just shameful.