Sunday, April 03, 2011

Running On Empty

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.
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