A lawsuit was filed in federal court Tuesday May 15, 2018 charging Connecticut lawmakers acted illegally when they raided $155 million in clean energy/efficiency fund surcharges to be collected on electric bills and used it to plug an unrelated state budget hole last fall.
The announcement was made in front of the United States District Court on Main Street in downtown Hartford.
The funds are widely considered key to driving Connecticut’s significant success in adopting solar and energy efficiency use.
“If this raid is not stopped, lawmakers will have confiscated nearly $400 million from people who’ve paid a United Illuminating or Eversource electric bill over the past 10-plus years,” said Mike Trahan, executive director of Solar Connecticut (SolarConn), the state’s business group for solar businesses operating in Connecticut. “That money is supposed to be returned back to ratepayers in the form of low cost clean energy and energy efficiency products and services.”
The suit was filed on behalf of a dozen plaintiffs including clean energy businesses, energy efficiency contractors, ratepayer organizations, and environmental powerhouse Connecticut Fund for the Environment.
According to the complaint, using ratepayer bill surcharges for reasons other than its intended purpose is a breach of the contracts clause of the United States Constitution, and also functions as an illegal tax on tax-exempt organizations—such as nonprofits that are ratepayers. The complaint further requests that the court declare the 2017 state budget funding sweep unconstitutional and thus null and void, and issue an injunction forbidding the State from sweeping the funds.
The raid is slated to cost the Connecticut Green Bank $28 million in funds received from the Combined Public Benefits (CPB) charge on UI and Eversource electric bills over the next two years. The Green Bank puts much of its CPB funds to work with private-sector investors to create low-cost, long-term sustainable financing to accelerate the growth of solar in Connecticut all to the benefit of consumers who purchase solar and contractors that do the work.
The 2017 raid is also slated sweep $127 million collected over two years from the Conservation and Load Management (C&LM) Charge on electric bills. This charge supports energy efficiency programs.
“Conventional wisdom is that the General Assembly can change priorities and reallocate tax revenue with the stroke of the legislative pen,” said Attorney Stephen J. Humes, a partner at Holland & Knight in New York City and one of the lawyers leading the litigation. “But this time is different and lawmakers went too far. We all should be worried when the State uses its extraordinary powers and literally takes and diverts funds held in private bank accounts of utilities to subsidize the General Fund coffers.”
The decision to pursue legal action was launched by the SolarConn board of directors last October after state lawmakers approved the raid. SolarConn and its energy efficiency contractor allies pushed the lawsuit forward this week after state lawmakers failed to restore the funds during the state Legislative session that wrapped up May 9.
Holland & Knight and Hartford-based Feiner Wolfson filed the complaint for the plaintiffs in the U.S. District Court. Plaintiffs are Leticia Colon de Mejias; The Connecticut Fund for the Environment, Inc.; Fight the Hike; Energy Efficiencies Solutions, LLC; Best Home Performance of CT, LLC; Connecticut Citizen Action Group; New England Smart Energy Group, LLC; CT Weatherproof Insulation, LLC; Steven C. Osuch; Jonathan Casiano; and Bright Solutions.
Gov. Dannel Malloy, Treasurer Denise Nappier and Comptroller Kevin Lembo and are named as defendants in the lawsuit. Both Malloy and Lembo quickly released statements after the lawsuit was announced urging the state to uphold its commitments to clean energy investment.
“Last year the State of Connecticut decided to take $155 million in funds paid by residents on their electric bills for specific energy efficiency and clean energy services for ratepayers, and used it to plug an unrelated budget hole,” said Roger Reynolds, chief legal director at Connecticut Fund for the Environment. “We believe the state’s action is illegal and unconstitutional and are demanding these funds be protected and used for their intended contractual purpose: energy efficiency and clean energy projects that reduce home energy bills, generate economic activity, and reduce air pollution.”
News item from Solar Connecticut