Connecticut Responds to High Energy Costs With…More Taxes?

Mar 20, 2013

The U.S Chamber of Commerce Institute for 21st Century Energy recently completed its annual review of each state’s average electricity retail prices (full results available here). The highest average rate in the continental United States belongs to Connecticut, where electricity costs nearly 16 cents per kilowatt hour, or nearly 60% higher than the national average of just under 10 cents.

Our review clearly shows that rates throughout the Northeast are high, and that’s a topic we’ll address in a future post. But amazingly, Connecticut appears to be poised to raise rates even higher.

In 2011, lawmakers in Connecticut enacted a $2.50 per megawatt tax on all electricity generation except electricity generated by wind and solar energy. At the time, Governor Dan Malloy promised that the tax would only be in place for two years. Because the tax was only temporary, the Millstone Power Station in Waterford, the largest nuclear power plant in New England, agreed not to pass the $43 million a year cost onto consumers.

But now, the governor has released a new budget proposal that keeps the tax in place, breaking his promise and angering local officials. Millstone can no longer afford to keep absorbing the costs of the tax. Instead, they’ll be passed onto consumers—the same consumers that are already paying the highest rates in the lower 48 states.  

It is a clear example of how taxes on the energy industry end up hurting consumers. Hopefully Congress is paying attention.

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