One Fist Of Iron, The Other Of Steel

Dominion Is Fighting Two Major Tax Increases; Not Just One

Most people would be outraged over a 100 percent tax increase. But when you are looking at a 1,000 percent tax increase, it might not seem so bad.

Lately, there has been heavy coverage of a , which would place a $330 million tax on Millstone Power Station. But before that bill even came out, a $32 million tax was already proposed on Millstone Power Station, by Gov. Dannel Malloy.

Millstone Power Station currently pays $32 million in state and town taxes. A $32 million increase would double that tax rate in one year, a far cry from increasing taxes tenfold like SB 1176 does, but still a substantial amount, Dominion spokesman Ken Holt said.

“We have expressed our concerns,” Holt said. “Any tax that is put on Dominion will go on to the consumers.”

Dominion makes hundreds of millions of dollars in profit off of Millstone Power Station, according to state estimates. Still, the tax would be passed onto the consumers because of a “legal responsibility to the shareholders,” Holt said.

“Any tax on any business will be passed on,” he said. “It is just how it is.”

Malloy’s proposal was made in January as part of his efforts to balance the budget. The energy committee in the state legislature, with no input from Malloy, approved SB 1176 in March.

Malloy’s proposal taxes all energy generators at the same rate, including Millstone. SB 1176 stands to make $335 million from Dominion, and less than $10 million from all other energy generators combined.

Both proposals need to be passed by the state legislature to become law.

State And Local Support?

State Rep. Elizabeth “Betsy” Ritter and First Selectman Dan Steward have both been very vocal in their criticism of SB 1176. However, neither showed much emotion in opposition to Malloy’s proposal.

“I am not a big fan of any new tax,” Steward said. “But it is part of Malloy’s 'spread the pain' philosophy.”

Steward said the tax would increase the cost of electricity. But it would not have any of the effect that SB 1176 would have, he said.

Ritter was equally ambivalent about Malloy’s tax. At least the tax is equitable, she said.

“The governor’s proposal … has many new taxes,” she said. “It is part of trying to balance the budget.”

Ritter would not say if she was in favor of or opposed to the bill, because it was not yet made available to the legislators. It could be given to the finance committee as soon as Monday, and then it will become more clear, she said.

State Sen. Andrea Stillman, who represents Waterford and is on the finance committee, did not return a voicemail from Patch.

Production Tax?

One thing SB 1176 and Malloy’s proposal have in common is that they are both production taxes, Holt said. No other state in the nation has a production tax, he said.

In other states, taxes are based on what electricity is bought at, not simply a flat fee on all energy generated at the plant, Holt said.

If both bills pass as is, Dominion would pay an additional $367 million in state taxes; 11 times what it currently pays in state and town taxes.

However, the reality is if both bills pass, Millstone will pay almost nothing in taxes, because Dominion will shut down the plan, Holt said. At that point the plant would be too expensive to operate, he said.

The $32 million tax alone would not force Millstone to close down, Holt said.

Eileen April 14, 2011 at 12:45 PM
if the state is so worried about the excess profits that dominion makes, why dont they purchase it from dominion. Other states, such as new york have a power authority that runs electric generators, all profits are reinvested to provide lower electric costs for business and consumers and provide funds to seek alternate energy.
Casey April 14, 2011 at 12:56 PM
Paul - I don't understand why Andrea Stillman and Betsy Ritter don't have more to say about the topics that have been discussed in The Patch in recent weeks including the unwarranted tax on Millstone. All of the topics in recent weeks that involve public employees connect directly with what is happening in Hartford and the state budget. The Patch would be a great place for them to help us all understand these issues better and to let us know what they are thinking. I am also surprised that Betsy seems neutral on taxing Millstone $32 million dollars when we already have electricity rates that are outrageous .
Paul Petrone (Editor) April 14, 2011 at 01:18 PM
Harry, In fairness to them, much of Malloy's proposals haven't been sent to them yet. I believe the finance committee will receive them next week (which Andrea Stillman is on), and then the full legislature will see them after (so then Betsy Ritter will see them). I will ask them questions about the budget and track their progress. And for some more background, last year the state bonded $3 billion in operational costs (something towns can't even do) to keep taxes artificially low. To help pay off the bond, they began collecting the Competitive Transition Assessment charge (CTA, check your electric bill) for themselves. This charge used to go to CL & P to help them offset the costs of having to sell all its electrical generators, such as Millstone. This charge should have gone away this year (and just to get an idea, on my personal $53.82 electric bill, the CTA charge was $2.12). However, the state realized it was a nice way to make revenue that people were already used to paying, so they decided to keep it for themselves. This has been challenged in court. So, to make up that difference if the court rules that illegal, SB 1176 was created to pay off the bond of these borrowed operational costs. I know that is not really what you were asking, but along the lines of the bigger picture.
Gary Johnson April 14, 2011 at 06:45 PM
Following the Production tax philosophy, the Legislators should themselves be taxed on every Bill they produce in committee. Let's say only 2 cents a page (including photocopies) that couldn't be passed onto the taxpayers. That would either significantly cut down on the useless piles of paper they produce or it would shut them down. If they claim they can't afford it, they would need to show us their gross income numbers, so we could decide as taxpayers what they can afford. It may not make as much sense to them then. I would like to hear their arguments as to why this isn't a good idea.
BJ April 14, 2011 at 08:03 PM
Thanks for the fresh idea Gary. Our “representatives” are so delusional… they think they are doing the “people’s business” while putting themselves first and crushing us under the weight of taxes and regulations.
Casey April 14, 2011 at 10:52 PM
Paul - thank you for your response. I guess my issue is this: The Competitive Transition Assessment charge that was supposed to go away but the government decided to keep it because they hoped we wouldn't notice and we were used to paying it. Betsy Ritter doesn't seem to excited at the prospect of taxing Dominion 'only' $32 Million. Things like this are just another little slice in the death by 1000 cuts. Our legislators have been there for many of the decisions that got us to where we are - I am afraid they don't get it. I hope I am wrong.
BJ April 14, 2011 at 11:49 PM
Harry: If you have the facts, how can you be wrong? Paul: THANK YOU FOR YOUR SERVICE HERE ON PATCH!!!! If you are “biased” I can not see it. You seem to have a burning need to relentlessly dissect the issues; and to inform us of what you find. Thanks again for all your hard work!
Tony Dasta April 16, 2011 at 02:09 AM
So if these taxes do go through and Dominion decides to close its doors, what happens to the Waterford property taxes?
Paul Petrone (Editor) April 16, 2011 at 02:18 AM
I have discussed this in separate articles, but they would drastically go down. The town assessor does not want to go on record for saying how much (for obvious reasons, he doesn't want them to use it against him); but it certainly will be a lot. One of the three things assessments are based, and the most important for businesses like Millstone, is income. If they show no income for the year (instead of however much they make currently), the assessment will drop like a rock. Needless to say, considering Millstone is 30 percent of the grand list, this would have major, major affects on the tax rate and town services.
R Lee Balderdash April 16, 2011 at 01:43 PM
Tony , assuming that the property taxation system is a fair and equitable one, and that Millstone is paying for the services received from the Town of Waterford through the property tax; if Millstone closes it's doors, services required will drop off dramatically and there will be no need for residential property taxpayers to make up the difference. Millstone closing will have no impact whatsoever on Waterford property taxes in general. That's just what i like to tell myself anyway.
John Sheehan April 16, 2011 at 02:11 PM
Sorry, RL Balderdash, but Millstone closing will have a great impact on Waterford property taxes. The taxes that Millstone pays the Town far out weighs the cost of services provided by the Town to Millstone Station. There will have to be a drastic cut in services or residential property taxes will increase significantly. Unfortunately, it is not possible to determine the exact value of the impact until it occurs. So, I will stick with "great".
R Lee Balderdash April 16, 2011 at 03:14 PM
I don't think property taxes will go up more than 6%/year because they did a study(no doubt payed for by taxpayers) that found that if taxes were raised 7%/year taxpayers would be angry. Of course i don't believe property taxes are fair at all- it's an 'eat the rich' based system. Just because someone owns a million dollar home(and i don't), doesn't mean they use more town services. In my opinion, property taxes have no place in this country or any other country that supports the right to own property. The property tax is unconstitutional because it is not an excise of any economic activity- it is a confiscation of part of the principal value of property, year after year, from the principal value of property. Confiscation without due process is unconstitutional.
BJ April 16, 2011 at 04:54 PM
I agree, but how are property taxes different from income taxes (as they stand today in America)? Politicians use taxes to buy votes, it is wealth redistribution disguised as “everyone paying their fair share” for “needed services” (the “rich” pay while everyone else reaps the benefits). It is always about votes, and votes are about power, and power is always for the elite.
CU Seaside April 23, 2011 at 09:25 PM
I thought that the elite were, for the most part, rich.


More »
Got a question? Something on your mind? Talk to your community, directly.
Note Article
Just a short thought to get the word out quickly about anything in your neighborhood.
Share something with your neighbors.What's on your mind?What's on your mind?Make an announcement, speak your mind, or sell somethingPost something