When Connecticut families and businesses open this month’s utility bills they will be subject to the highest electricity rates in the continental United States. 

Residential customers of United Illuminating will experience a 24% rate increase in January to be followed by a 25% boost in July, while Connecticut Light & Power customers, already burdened with a 22.4% increase in 2006, will see that their rates rise another 7.7% in 2007.  Businesses will be subject to the most severe rate hikes –50% - 75% with no phase-in.  It’s outrageous.

To help mitigate these obscene rate hikes, Senate Republicans have introduced legislation to save ratepayers $100 million by suspending the Public Service Company (PSC) Tax on gas and electric bills through June 30, 2007.

The PSC Tax is a gross earnings tax on the cost of electric transmission and distribution.  It is applied at a rate of 6.8% on residential electric bills and 8.5% on commercial accounts.  The tax is also applied to natural gas bills at a rate of 4% for residential customers and 5% for businesses.

The proposed tax break is affordable because it occurs entirely in FY07, a year in which Connecticut is projecting a $540 million budget surplus.  If passed, it will provide immediate, needed relief to Connecticut families and businesses while the General Assembly works toward a sensible long-term solution to reform our state’s broken energy policy. 

Some Democrats have expressed opposition to our proposal on the grounds that “it’s not a long-term solution.”  But it was never meant to be a “long-term solution.”  It is meant to save people money and to help people cope with the outrageous rate increases that have been imposed on them virtually without warning. 

We recognize there are no quick fixes or easy answers to Connecticut’s energy crisis.  The General Assembly still has a lot of work to do in that regard.  In fact, many of the variables contributing to the high cost of energy are beyond the legislature’s control.  The increased cost of crude oil, limited refining capacity in the U.S., the destruction of oil refineries due to Hurricane Katrina, a failed federal energy policy, and Connecticut’s geographic location are all part of the problem.

The failure of deregulation has also contributed to this crisis and also must be addressed.  Deregulation was supposed to create a more open marketplace for electric generation.  We were told eight to ten new generation plants would be built to create competition and reduce the cost of energy. 

Instead, due to the zealous and counterproductive protests of extremists and a “not in my backyard” mentality in our own state and local governments, the plants were never built and the promise of deregulation was left unfulfilled. 

The complexity and gravity of this issue demands that the legislature act with a sense of urgency.  The Democratic majority’s failure to enact a comprehensive plan to deal with rising energy rates was a low-point of the 2006 legislative session – a failure that cannot be repeated in 2007.

While I am pleased the Democrats have finally joined the discussion about energy reform, nothing in their plan will help ratepayers cope with the dramatic rate increases they will face when January utility bills arrive.

That’s why we must act now to provide some immediate relief to Connecticut ratepayers, while we debate a long-term energy solution in public hearings and legislative committee meetings over the next several weeks.

Because there are so many variables related to the high cost of energy that are beyond the legislature’s control, we must never miss an opportunity to positively affect the variables within our control.

I urge you to contact your state Senator and Representative and ask them to support the Senate Republican proposal to immediately suspend the PSC tax on your gas and electric bills.