Suit alleges state ‘raided’ energy funds

Alleging that state government is “raiding” Connecticut’s clean energy and energy-efficiency program funds, several businesses and ratepayer organizations joined the Connecticut Fund for the Environment in a federal lawsuit to block the state’s actions.

“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. 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,” said Roger Reynolds, chief legal director at Connecticut Fund for the Environment.

Holland & Knight and Feiner Wolfson filed the complaint for the plaintiffs Tuesday, May 15, 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 LLC.

Defendants are Gov. Dannel P. Malloy, state Treasurer Denise Nappier and Comptroller Kevin Lembo.

“It is never too late to do the right thing; therefore, we are calling on the state of Connecticut to return the diverted ratepayer funds for the specific purposes of serving the ratepayer and meeting the state’s written climate, energy and economic goals. The time is now!” said Leticia Colon de Mejias.

The suit alleges that last year the legislature directed the Malloy administration to divert $175 million from the Conservation & Load Management, Regional Greenhouse Gas Initiative and Clean Energy funds to the General Fund to fill a budget gap over two years. Much of the funding is raised from a small charge on state electric bills, paid by ratepayers to their utility in return for specific services to be provided.

The legislature voted last week to restore $10 million of the Conservation & Load Management Fund in fiscal year 2019, leaving a gap of $165 million in unlawfully seized ratepayer funds.

The plaintiffs argue that using the funding for 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.

“We are requesting that the court declare the funding sweep unconstitutional and thus null and void, and issue an injunction forbidding the state from sweeping the funds,” according to a press release from the Connecticut Fund for the Environment.

“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. “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.”

“If this raid is not stopped, it will add to the hundreds of millions that state lawmakers have quietly taken from people who pay a UI or Eversource electric bill over the past 10-plus years,” said Mike Trahan, executive director of Solar Connecticut. “That money was supposed to be returned back to ratepayers in the form of low-cost clean energy and energy-efficiency products and services. Instead, state lawmakers took those hundreds of millions of dollars and used it to balance state budgets when they couldn’t balance the budget with their own funds.”

Stephanie Weiner, CEO and founder of New England Smart Energy Group LLC, said, “We are now seeing the real-life fallout of this misguided, irresponsible decision by the state to divert funds that wasn’t theirs to take; we are not only losing valuable, skilled technicians but we are losing entire companies. If these funds are not restored in the very near future we will see a once thriving and growing Connecticut industry, that actually helped all the residents of Connecticut save money on their energy bills, disappear forever.”

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