$12.5 million generating tax on Vermont Yankee approved by Senate finance committee
by Alan Panebaker vtdigger.org On Wednesday, the Senate Committee on Finance approved a miscellaneous tax bill that includes a proposal offered by the Shumlin administration that would reshape the tax Vermont Yankee nuclear power plant pays on the electricity it generates.
The tax would charge $0.0025 per kilowatt hour produced by Vermont Yankee. The tax would raise about $12.5 million annually.
Louisiana-based Entergy, the plant’s owner, pays $5 million currently in the generating tax. The company also pays about $6 million annually into the state Clean Energy Development Fund, which helps pay for renewable energy projects. The funding for the CEDF is required by two agreements with the state. Those agreements expired this year.
Entergy is seeking a new operating license from the Vermont Public Service Board. The Department of Public Service has asked that the board require Entergy to continue making those payments, but Entergy says it will put the money in escrow until it gets assurance that it can continue operating and that the state does not impose a tax to replace those monies.
Under the administration’s proposal, the tax would generate $9.5 million fiscal year 2013. The law would not go into effect until July, so the state would not receive the full $12.5 million it would in 2014. In 2013, $2.9 million would go to the general fund and $2.1 million to the education fund. Three million dollars would go to the CEDF, and $1.5 million to Vermont Technical College and the Community College of Vermont. Another $3 million would be up for grabs in 2014, and could potentially go to the clean energy fund.
The Vermont Energy Partnership, a coalition of businesses that supports Vermont Yankee’s continued operation, says the tax is a punitive measure aimed at an adversary in federal court.
“The Administration continues its efforts to shut Vermont Yankee down, only this time it is by taxing VY out of business,” a release from the partnership said. “To target one company with a 140 percent increase is punitive and the Vermont Senate should reject it.”
Both the Vermont Attorney General’s office and legislative council told the finance committee the tax could have some risk of a legal challenge by Entergy.
Earlier this year, a federal judge ruled in favor of Entergy in a lawsuit it filed against the state. The judge deemed two Vermont laws requiring legislative approval for the plant’s continued operation unconstitutional.
Sen. Ann Cummings, chair of the Senate Committee on Finance, said the bill that came out of her committee would ensure that the company is not taxed twice. Entergy would pay roughly what it does now under the proposal except it would be in the form of a tax rather than a tax and agreements with the state.
“We don’t feel it’s punitive,” she said. “We feel like it’s their fair share.”
Gov. Peter Shumlin said in his weekly press conference Wednesday that he thinks the proposal is sound tax policy and not an intervention into the Public Service Board process.
“It is the job of the Legislature and it is the constitutional obligation of the Legislature to set tax policy for all taxpayers in the state of Vermont, and what the finance committee did was continue as they have in the past to make a tax judgment about what they thought an appropriate tax would be for a generating facility that they thought was going to be shut down on schedule in March 2012 and obviously that’s not going to happen so what they’ve done is their constitutional duty,” Shumlin said.