July 23, 2018
Legislative Theft of Efficiency Funds Moves Forward as Legal Briefs Filed
Electric ratepayers, efficiency employers, environmental organizations, file for restoration of efficiency, clean energy funds
Hartford, Conn. – The next step in a lawsuit to restore Connecticut’s ratepayer energy funds took place on Friday, July 20, as attorneys for both sides filed briefs in federal court. Energy efficiency businesses, clean energy businesses, environmental nonprofits, and utility ratepayer organizations filed a federal lawsuit on May 15 to repeal the legislative sweep of Connecticut’s energy efficiency and clean energy plan funds, and to prevent future diversions of ratepayer funds.
Attorneys from the firms of Holland & Knight in New York City and Hartford-based Feiner Wolfson, representing the Plaintiffs, filed papers Friday enabling U.S. District Judge Janet C. Hall in New Haven to render a speedy decision on the merits. State attorneys for the Defendants have filed their own summary judgment motion papers as well.
In attempting to justify the illegal sweeps, the Defendant’s brief points to a $30 million sweep that took place in 2003 and a $12 million sweep that happened in 2005, arguing that because they raided the fund before, they have the right to do it again.
“A few prior acts of petty theft do not justify grand larceny,” said Attorney Stephen J. Humes, partner at Holland & Knight. “Given the magnitude and brazen nature of the sweeps, recognized and acknowledged by legislators, it should come as no surprise that this time Defendants got caught with their hand in the till. As the state capitol floor debates made clear, the legislature knew it was stretching the bounds of its authority.”
Last year, Connecticut’s legislature directed the Defendants—the governor, the treasurer, and the comptroller of the State of Connecticut—to divert $175 million from the Conservation & Load Management Charge, Renewable Energy Investment Charge, and Regional Greenhouse Gas Initiative (RGGI) funds to the State’s General Tax Fund to fill a budget gap over two years. Much of that funding is collected from a small charge on Eversource and UI electric bills, paid by ratepayers and then returned back to the ratepayers as discounts on energy efficiency products, services, low interest financing, and solar panels. The legislature voted in May to restore $10 million of the Conservation & Load Management fund in fiscal year 2019, leaving a gap of $165 million from the state’s demand reduction plan crippling efficiency programs, jobs, services, and financing for ratepayers who need help with efficiency or installing renewable resources. ($137 million in unlawfully seized ratepayer funds and $28 million in RGGI funds)
Plaintiffs are Leticia Colon de Mejias of Windsor; The Connecticut Fund for the Environment, Inc.; New Haven-based 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 of East Windsor; Jonathan Casiano of Windsor; and Bright Solutions, LLC.
The lawsuit argues that using ratepayer funding for other than its intended purpose violates the Contracts Clause of the United States Constitution and functions as an illegal tax on tax-exempt organizations. The Plaintiffs’ motion filed Friday requests that the court declare the funding sweeps null and void, and issue an injunction requiring the swept funds be replaced immediately and forbidding the State from sweeping the funds in the future.
The first transfer of $73.5 million of ratepayer dollars and $14 million of RGGI funds into the state’s General Fund took place on June 25, 2018. An additional transfer of $63.5 million of ratepayer dollars and $14 million of RGGI funds are scheduled to be made in June 2019.
“The State of Connecticut took $137 million in funds paid by residents on their electric bills for specific energy efficiency and clean energy services, and used that money to plug an unrelated budget hole instead. That was illegal and unconstitutional. We’re demanding the funds be returned and used for their intended purpose: projects that reduce home heating and electric bills, generate economic activity and jobs, and slash air pollution,” said Roger Reynolds, chief legal director at Connecticut Fund for the Environment, a plaintiff in the case. “We are gratified the court accepted our request and put this on a remarkably expedited schedule, as time is of the essence if we are to prevent severe damage.”
Plaintiffs argue that the raided funds have created more than 34,000 local energy efficiency jobs, increased state GSP, and added millions to the green energy economy. They further state the energy efficiency program consistently reduces energy demand year after year, lowering air pollution, water pollution, and strengthening the energy grid to protect vulnerable populations.
“As a residential and business ratepayer, and as an environmental activist, employer, and concerned mother, I stand strongly against the politics behind this illegal state action to tax our electric and gas bills, tax nonprofits, and misdirect ratepayer money into general state coffers,” said Leticia Colon de Mejias, chair of Efficiency For All (EFA). “This theft has undermined our state energy demand reduction plan and has already resulted in thousands of Connecticut layoffs and several business closures—leaders must be held accountable. I have personally been forced to lay off several employees due to this irresponsible action by our state leaders. If the legislators were my children I would be telling them, ‘Just because you snuck two cookies and we didn’t notice, does not mean that we won’t punish you when we find the cookie jar two-thirds empty.’”
“Top state lawmakers have said that forcing Eversource and UI customers to pay more than their fair share to balance lawmakers’ state budget is perfectly defensible, and that people who pay Eversource or UI electric bills should get used to paying what one legislative leader says is a new electric bill tax,” said Mike Trahan, executive director of Solar Connecticut, the state’s solar energy business group. “It’s remarkable that we’ve had to drag state legislators into federal court where a judge will decide if lawmakers scammed consumers out of $165 million.”
“We are now seeing the real life fall-out 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,” said Stephanie Weiner, CEO and founder of New England Smart Energy Group, LLC. “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.”
“It breaks my heart, when we receive a call from a client whose house is drafty and leaky and who needs new windows and/or insulation. And the efficiency charge money they have been contributing on a monthly basis towards the plan is no longer there for them,” saidVivian Perez, co-owner of HE-Energy Solutions, LLC.
“As a result of the sweeps, Plaintiffs no longer get what they paid for,” said Attorney Humes “While the Plaintiffs will continue to pay surcharges into the funds, they will no longer receive the benefits of their payments, nor will they be able to access energy efficiency services or clean energy investments like before. The State has violated the public trust. In light of the ongoing harm caused by the transfer of these funds, we’re pleased the federal court has set an aggressive schedule to resolve the matter in a timely way.” ###
Quotes from Senate leaders defending the sweeps:
“I believe it’s defensible, what we’ve done,” the Senate’s top Democratic leader, Martin M. Looney of New Haven, said of the legislature’s move to sweep up those energy conservation monies. – Hartford Courant, May 16, 2018.
In a letter from Senate Republican President Leonard A. Fasano to the Connecticut Green Bank’s President and CEO, Bryan Garcia, Senator Fasano wrote, “Although some may argue that the money you receive is ‘ratepayer dollars,’ I would argue those funds are taxpayer dollars.” – March 16, 2018.
To speak with contractors who are experiencing direct harm or staff who were let go please contact Leticia Colon de Mejias at 860-690-5522.
business/article/Briefs-filed- in-lawsuit-challenging- legislative-13098634.php, CT Post
- Briefs filed in lawsuit challenging legislative raid on Connecticut energy efficiency funds, New Haven Register
politics/hc-news-energy-fund- sweep-lawsuit-20180723-story. html, Hartford Courant
com/opinions/connecticut-is- drowning-in-debt-should-its- neighbors-have-to-pay/2018/07/ 23/eff14b6a-83be-11e8-8589- 5bb6b89e3772_story.html?utm_ term=.9b4b795788ab, Washington Post
court-challenge-continues- last-minute-efficiency-fund- cuts, WNPR