Ratepayers throughout all six New England states will have to pay $58 million to cover the cost of Connecticut’s tax on electricity generators, according to a report by regional electric grid administrator ISO New England.
As part of Gov. Dannel Malloy’s budget package, Connecticut implemented a $2.50 per megawatt hour tax on all power plants operating in the state.
The state estimates the tax will raise $60 milllion a year for the Connecticut General Fund.
Since all the electricity in New England is pooled under one entity and sold to ratepayers at the same wholesale prices, officials in the region’s other states – particularly Massachusetts Attorney General Martha Coakley – raised concerns the Connecticut power plants would pass the cost of this state tax onto the entire region.
Assuming the Connecticut power plants do pass the cost of this tax onto ratepayers — as many have already said they will — ISO New England estimated in a report released Monday that electricity prices will rise by 44 cents per megawatt hour throughout the region. That’s a 1 percent increase, based on 2010 pricing.
The total cost to ratepayers will then be $58 million, according to the ISO report.
The report says this estimate is based only on 2010 prices and could be higher or lower for other years.
Connecticut is developing a contentious relationship with ISO New England, and officials in the state said ISO’s pricing model leads to high electricity costs in Connecticut, which trail only Hawaii as the highest in the nation.
The same day ISO New England issued its report on the Connecticut electricity tax, the Connecticut Senate passed a comprehensive energy bill that called for an investigation into ISO New England’s pricing model and its impact on Connecticut prices.
Even without Connecticut power plants passing the state’s electricity tax onto consumers, electricity prices looked to rise. The Federal Energy Regulatory noted in its 2011 Energy Market and Reliability Assessment that natural gas prices are rising, which would have a significant impact on New England, whose electricity pricing is tied directly to the cost of natural gas.
