Legislative Office Building, Room 5200

Hartford, CT 06106 (860) 240-0200

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OFA Fiscal Note

State Impact:

Agency Affected


FY 12 $

FY 13 $

Department of Revenue Services

GF - Net Revenue Gain

334. 3 million

338. 4 million

Department of Revenue Services

GF - Cost



Note: GF=General Fund

Municipal Impact:



FY 12 $

FY 13 $

Various Municipalities

See Below

See Below

See Below


The bill establishes a tax on nuclear, oil-fueled, and coal-fired electric generation, and makes changes to the method by which securitization bonds used to fund the FY 11 budget are paid off. This results in a net revenue gain of $334. 3 million in FY 12 and $338. 4 million FY 13, and a cost of $75,000 in FY 12.

Output Tax Revenue Estimate

The electric generation tax results in a gross revenue gain of $342. 6 million annually from the two cents per kilowatt-hour (kwh) tax on nuclear generation ($335. 0 million), the 0. 5 cents per kwh tax on coal-fired generation ($7. 4 million), and the 0. 05 cents per kwh tax on oil-fueled generation ($201,500). 1 This is partially offset by an estimated $4. 2 million revenue loss from the Corporation Business Tax resulting from a reduction in the net income of Connecticut electric generation facilities.

The bill also results in a one-time cost to the Department of Revenue Services (DRS) of $75,000 associated with implementing a new tax type in the Taxpayer Service Center and Integrated Tax Administration System.

Output Tax Revenue Stream Utilization

Proceeds from the new tax on electric power generators would initially be used to retire the Economic Rate Reduction Bonds (ERRBs) authorized by PA 10-179 to balance the FY 11 General Fund budget. 2 It is anticipated that revenue from the new tax could retire the ERRBs debt, including the principal, interest and issuance costs, by the close of FY 14. Beginning in FY 15 and continuing thereafter, approximately $340 million in revenue would be generated each year and used for ratepayer relief and the funding of clean and renewable energy projects, in accordance with the bill.

Property Tax Impact

The output tax is expected to reduce the net income of electric generation companies affected by the bill. To the extent this occurs, the valuations of the generation facilities may be decreased. This would result in a reduction to certain municipalities' grand lists.

Ratepayer Impact

Any impact of the tax on ratepayers, including the state and municipalities as ratepayers, would likely occur after FY 13 as that is the expiration of the current sales contracts of the electric generating plants.

The Out Years

The annualized ongoing revenue impact identified above would continue into the future.

Beginning in FY 14, the bill would result in a cost to the state and municipalities if the tax is passed onto ratepayers.


United States Energy Information Administration

1 The revenue gain from coal-fired generation pertains only to the months of January, February, June, July, and August.

2 In order to balance the FY 11 budget, $646. 6 million was borrowed against future revenue from charges on the electric bills of CL&P and UI customers.