May
21, 2003
Governor
of Connecticut
State
House
Hartford,
Connecticut 06106
Dear
Governor Rowland:
I
am writing to you to strongly oppose the taking of the $84 million or $72
million from the Conservation Fund and the $25 million from the Clean Energy
Fund.
I
am writing to you as a Connecticut resident, a ratepayer and a business concern
performing services under the Energy Conservation Fund.
As
a ratepayer, I gladly pay into the conservation fund. I know that the current structure overseeing the expenditure of
those dollars is heavily scrutinized. I know that the use of those dollars will
reduce the depletion of our resources, eliminate billions of pounds of carbon
emissions from being produced, eliminate billions of gallons of water from
being used and make us less dependant on foreign resources. I pay into the fund with a clear
understanding of how the dollars will be utilized. I also know that if the programs that have operated from this
fund over the years did not exist, Connecticut would have had to find and
additional 700 MegaWatts of energy generation which was deferred by the
programs implemented through the fund.
I
question the legality of taking a conservation fee paid by ratepayers and
placing it into the general fund – it is then, actually a tax. I have heard the
statement “what the legislature “giveth” the legislature can “taketh” away –
and it infuriates me that that thinking is prevalent throughout the current
legislative body.
As
a business concern, I am aware that the C&LM Fund was established to enable
the state to capture, in an organized and deliberate process, the economic and
environmental benefits of energy conservation and load management. It was built on the experience of
Connecticut and other states in designing effective approaches to this
goal. The Energy Conservation
Management Board, the electric utilities and the DPUC have worked diligently to
implement programs which are cost-effective, provide benefits to all classes of
ratepayers including the state and the towns, and make lasting improvements in
the productivity of Connecticut. These
benefits would be lost if the funds were simply allocated to particular
recipients without the planning, coordination and safeguards that make the program
successful.
Dollars and Sense
Yale
University Graduate students confirmed the validity of a report that stated by
diverting just the $84 million Conservation Load Management dollars into the
general fund, the tax base would be eroded by $45 million (which is a very
conservative number). So at the end of the day when all is said and done you
take $84 million but actually end up with $39 million. That is not a sound fiscal decision.
Further,
we estimate that by labeling this as a tax, as you have clearly done in your FY
2003-05 Biennial Budget Introduction Supplement (March 4, 2003), there are
thousands of businesses who currently pay into the fund who are tax exempt from
a tax on their energy usage. All of these
entities would no longer be required to pay this new tax – perhaps they are
even due a refund for the dollars that they have been contributing. We estimate that this will reduce the
dollars flowing into the fund by 35% or roughly $30 million dollars (again
conservative).
Add
the $30 million immediate tax base loss with the $45 Million erosion and you
end up with 9 million dollars by grabbing $84.
Grabbing these funds is bad in the short term, worse in the long term,
and overall a bad fiscal strategy.
On
the reverse side, the programs ran by the fund are trackable, measurable and
are documented to have over a 400% return on investment – the $87.1 million
invested last year yielded $372.5 million in customer energy cost savings over
the lifetime of the technologies. So
for every $1.00 you take – Connecticut looses $4.00. Not a good economic strategy either!
1,000 Jobs Lost
The
fund creates 10- 15 jobs per million dollars spent. In the mid-west the number is as high as 20 jobs per million
dollars.
These
jobs have already been created. A very large number of them will be eliminated
(perhaps all 1,000 plus jobs).
Companies working for the utilities under these programs are selected
through a competitive bidding process.
They are small and medium sized businesses that hire employees specifically
to meet the needs of the contracts awarded.
Without the contracts, these positions cannot be absorbed and will be
eliminated along with the tax base referenced above.
My
company will lay off 5 people, New England Energy Management has already laid
off 12, Competitive Resources will lay off 12, Efficient Lighting will lay off
10 people, Air, Inc. will lay off 5, and on and on. New England Energy Management and Efficient Lighting will go
completely out of business.
Firms
outside of Connecticut, who are employing Connecticut citizens to open offices
and implement business strategies tailored around the availability of the fund
will shut down these satellite locations.
In
addition to this, every one of those firms if they are not out of business, who
have had to make deep staffing cuts to survive will look artificially bad with
regard to unemployment insurance taxes.
They will be saddled with an increase of up to 2% of their payroll
dollars for unemployment insurance tax penalties. This will equate to millions of dollars that will not be
available for spending which, in turn, also reduces sales tax revenue.
Industry is Left Holding the
Bag
Over
the past 22 or so years or so we (Connecticut companies) have been building and
cultivating an entire industry. This is
one of the most mature, experienced and knowledgeable energy infrastructures in
the country. This will be effectively
eliminated.
In
addition, over the years the Connecticut companies (utilities and private
industry) have asked manufacturers, distributors, buying groups, and retailers
to partner with us on the implementation of these programs. We are just starting to make headway into
changing the behaviors, attitudes, and perceptions of these markets.
We
have been successful in getting the manufacturers to produce the more efficient
technologies because we have been able to demonstrate that the programs are
here to assist them in their effort of selling the more expensive
products. We have been successful in
getting the middle of the distribution channel (distributors and buying groups)
to stock and promote these products to the consumer – again through the
availability of the program dollars.
And
finally, we have been able to get the message to the consumer that energy
efficiency works – 40% now recognize the ENERGY STAR label. While this is good, only 30% can define what
it means, so there is still much work to be done.
It
may seem ridiculous that it has taken this long – however, when you consider
the microwave, television, and VCR all took over 30 years to be fully adopted
in the marketplace with the last couple of years having the most impact, you
see that we are/were right on target.
Divert
the dollars and industry is left with an inventory of more expensive equipment
that it cannot sell so easily. We have
been representing the State of Connecticut in good faith in persuading industry
to partner with us – these programs have directed that effort – so essentially
the State of Connecticut has directed that effort.
If
you take the dollars, do you think industry is going to come back to the table
and simply just trust us again – I know first hand that they will not. I hear their position everyday.
Who
is industry? It is Bernie’s Appliances,
Connecticut Lighting Centers, Harp Mechanical, Air, Incorporated, Kaman,
Applied Industrial, Lowe’s, Home Depot, Best Buy, Sears, Osram Sylvania, GE,
Westinghouse, Harmony Lighting, MaxLite Lighting, Environmental Systems,
Nationwide Connecticut (representing all the independent appliance retailers),
the Connecticut Plumbing Heating, Cooling Contractors (and their 80 Plus member
association), the electrical distributors and wholesalers, the energy service
companies, the lighting installation and maintenance companies, and that is
just to name a few.
It
is more cost effective to partner with industry to save energy then it is to
generate energy – not to mention the environmental benefits.
Environmental Benefits
The
Conservation Fund in 1 year saves 245.8 Million kWh, this is equivalent to:
|
·
71,282 Acres of Trees Planted |
·
34,412 Cars Off the Road |
|
·
115,526 Tons of Coal Not Burned |
·
31,300 Homes with Electric Energy Per Year |
|
·
18,582,480 Gallons of Oil Not Burned |
·
35,000,000 Gallons of Water Not Used |
The
Fund in one year eliminates 174,542 Tons carbon dioxide (CO2) 727 Tons of
sulfur dioxide (SOX) and 223 Tons of nitrogen oxides (NOX) from being released
into the atmosphere.
Just
from the ENERGY STAR clothes washers purchased due to the program – there are
105,000,000 gallons of water saved every year for the next ten years – equaling
1 Billion 50 Million gallons of water.
Connecticut Received
National Recognition
CL&P
and UI just received national recognition for running the best programs in the
country. 30 programs were selected and
Connecticut was recognized for 7 out of the 30. These awards were determined and handed out by the America
Council for and Energy Efficient Economy (ACEEE).
The Lights WILL Go
Out
There
is not any doubt about it. Take the
dollars and we will be the next California in South West Connecticut. We have a shot in curtailing a tremendous
problem with the funds and the programs that can be focused in SWCT. Without them there is no chance. Will there be a ground swell wanting to say
“I told him so!” I would think so.
North
American Electric Reliability Council (NERC), warns of the threat of blackouts
in Connecticut. ISO-New England
(ISO-NE) state that they forecast that capacity deficiencies could occur in
Southwest Connecticut up to six times this coming summer. Will there be any
deaths or injuries – very possibly. How
expensive are these problems – what will they cost Connecticut?
Not All Municipalities’
Ratepayers Pay Into the Fund
Only
ratepayers from the Investor Owned Utilities (IOU) pay into the funds. There are six Municipal Utility Companies
that are not required to collect the conservation fee from their
customers. This is highly inequitable.
I request that if you do not listen to good economics and reason, that those
towns be taxed for their share of the $12 million diverted from last year.
I
also request that if you take the funds that they are taxed for their share
going forward.
Coalition of Businesses
We
have formulated a coalition of businesses.
Within our first week of organization we were able to get 49 concerned
business owners and executives assembled.
This number has since grown to over 150 and we are signing up companies
every hour. The companies referenced
earlier are all part of the coalition and we have implemented a strategy to
enlist the entire energy industry on a national platform.
A Nationally Acclaimed
Energy Infrastructure Decimated
Secretary
Ryan seems to think that these programs are only a couple of years old and that
by diverting the dollars for a couple of years nothing will be hurt. That could not be farther from reality. As I have tried to demonstrate, these
companies will lay off close to 1,000 employees – who are the most experienced
energy professionals in the country.
These programs have been running for over 22 years and diverting the
dollars will completely decimate them along with the infrastructure that they
have created. It will take years for a
minimum infrastructure to be recreated again and it will not be anywhere near
where it is today.
I
strongly urge you to take action and
restore the fund to its original level and purpose, and to stop the
raiding of this fund. Further, I urge
you to get in front of this parade and lead it to creating legislation that
says these dollars cannot be diverted.
Sincerely
David
J. Leishman