A group of environmentalists, consumer advocates and energy businesses have filed a federal lawsuit to stop Connecticut's state legislature from raiding clean energy and energy efficiency program funds. The Connecticut Fund for the Environment Inc., Energy Efficiencies Solutions LLC, Connecticut Citizen Action Group and others filed the complaint against Connecticut state officials in U.S. District Court on May 15.
The lawsuit is in response to a October 2017 budget deal that diverted $175 million of funding meant for the Conservation & Load Management, the Regional Greenhouse Gas Initiative, the state's energy financing vehicle (known as the Green Bank), the Energy Efficiency Fund, and other clean-energy programs in order to fill a two-year budget gap. Much of that money is raised from small charges on electric bills paid by ratepayers to their utilities in return for specific services.
The majority of the so-called "sweeps" came in the form of a $127 million cut to the state Energy Efficiency Fund. On May 10 the state legislature restored $10 million to the Conservation & Load Management fund in fiscal year 2019, leaving a gap of $165 million in what plaintiffs decried as "unlawfully seized" ratepayer funds.
Gov. Dannel Malloy said in a press release that the lawsuit came as a surprise to no one. Although Malloy is named alongside the state treasurer and comptroller as a defendant in the lawsuit, the Democratic governor said he opposes the "energy sweeps" pushed by Republican lawmakers, which Malloy says will increase energy costs for consumers and businesses while causing "untold harm" to the state's "green energy economy."
The plaintiffs in the lawsuit want the court to declare the transfers unconstitutional and issue an injunction forbidding the state from sweeping the funds again in the future. The plaintiffs contend that the use of the funds for other than the intended purpose is a breach of the contracts clause of the U.S. Constitution and is an illegal tax on tax-exempt organizations, such as nonprofits that are ratepayers.
"Conventional wisdom is that the General Assembly can change priorities and reallocate tax revenue with the stroke of the legislative pen," said Attorney Stephen Humes, a partner at Holland & Knight law firm, which filed the litigation. "But this time is different and lawmakers went too far."