A U.S.district court judge has ruled that up to $145 million of Connecticut's energy efficiency funds can be used by state lawmakers to shore up a budget shortfall.
In May, several environmental groups, consumer advocates and energy businesses sued Connecticut officials after a budget deal diverted $145 million in funding for programs such as 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. Most of the funds are raised from small charges on electricity bills paid by ratepayers in return for specific services from their electric distribution companies.
Courthouse News Services reported that $77.5 million of transfers of the 2018 funds have already occurred, with the remaining $67.5 million scheduled to be transferred in 2019. Most of the so-called "sweeps" came in the form of a cut to the state energy efficiency fund, which plaintiffs decried as "unlawfully seized" ratepayer funds. The plaintiffs asserted that this "tax" also violated the Equal Protection Clause of the Fourteenth Amendment of the U.S. Constitution by only applying to electric distribution company customers and not municipal utility customers.
But Judge Janet Hall of the federal district court in Connecticut concluded that customers were never promised that the funds would not be transferred to the general fund. Further, she noted that the language of the fundraising tariffs is purely descriptive in nature and does not create any "implied" contractual obligation between the plaintiffs and electric distribution companies.
"The taxpayer standing doctrine prevents the plaintiffs from challenging the state's decision to allocate revenue between the energy funds and the general fund," explained Hall. "This doctrine holds that absent a narrow set of circumstances, taxpayers do not have standing to challenge how state or federal governments spend tax revenue."
In a statement, attorney Stephen Humes, a partner at Holland & Knight law firm and co-counsel on the case, said his plaintiff clients are considering whether to appeal the court ruling.
"This case shows how incredibly difficult it is to stop the state from converting millions of dollars dedicated for specific purposes — in this case, energy efficiency, renewables, and investments in clean energy — and converting the money into general fund purposes on a legislative whim even when the state treasury had already collected an unanticipated surplus of $1.7 billion dollars," said Humes. "While voters can hold their legislators accountable in 11 days, the sad reality is that more than 3,000 jobs have been lost and a number of energy efficiency projects across the state have been halted as a result."
