Federal Lawsuit Filed To Block State From Using Energy Conservation Funds To Solve Budget Deficit

A federal lawsuit filed Tuesday would block the legislature from taking tens of millions of dollars from ratepayer-funded energy conservation programs to help solve the state’s massive budget deficit, a move energy and environmental groups argue is unconstitutional.

The court action is to stop the state from using $175 million that energy ratepayers contributed to three separate energy conservation programs through their utility bills. The bipartisan budget passed by the General Assembly last October calls for taking that money to help solve a multibillion state deficit crisis.

“This was a violation of the state’s promise,” Leticia Colon de Mejias, of the energy activist group Efficiency for All, said of using those ratepayer funds for deficit reduction instead of paying for energy conservation programs. She and other advocates said taking those funds would hurt energy conservation programs, cost hundreds of energy jobs, and cause more pollution.

Curt Johnson, president and CEO of the Connecticut Fund for the Environment, said at a news conference on the steps of the federal courthouse in Hartford Tuesday that the promise to use that money constituted a legal contract. He said diverting the funds “is an unconstitutional violation of the contracts clause of the U.S. Constitution.”

The clean energy funds in question are still being collected through utility bills and the state doesn’t intend to actually take possession of that money until June, according to lawyers for the energy activists. Stephen Hume, an attorney helping to file the legal action, said the plaintiffs also intend to ask for a court injunction to block the state taking that money until the lawsuit is decided.

“This should come as a surprise to no one,” Gov. Dannel P. Malloy said in a statement about the lawsuit. “I have long maintained that these shortsighted sweeps would increase energy costs for consumers and businesses and cause untold harm to our green energy economy.”

Malloy said that the “energy sweeps pushed by legislative Republicans represented a massive step backwards and I continue to strongly oppose them.”

But those energy fund raids were included in a two-year, $41.3 billion state budget compromise that was passed last October with both Democratic and Republican support and was signed into law by Malloy.

“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.

Looney said those energy fund sweeps were proposed by legislative Republicans and ultimately accepted by General Assembly Democrats “as what we needed to do” to get a compromised budget approved after nine months of stalemate.

“It remains to be seen,” Looney said when asked about the lawsuit’s legal grounds to challenge the legislature’s actions. He pointed out that the General Assembly has in the past taken money out of various dedicated funds in order to help solve deficits.

The two-year budget plan approved in October took $127 million from the state Energy Efficiency Fund, $28 million from Connecticut’s Green Bank, and $20 million from this state’s share of the Regional Greenhouse Gas Initiative.

A new budget package approved by the legislature earlier this month restores $10 million of the money taken out of the conservation funds. But Colon de Mejias called that action “a slap in the face” given the fact that recent state tax windfalls is expected to increase the state’s budget rainy day fund to $1.5 billion.

Environmentalists say taking those funds severely hampers Connecticut’s efforts to improve energy conservation, efficiency and to subsidize solar power for homeowners and businesses. They argue that the result is that this state will use more fossil-fuel generated energy, causing more pollution and contributing to global warming.

Hume said the taking of those clean energy funds amounts to an effort to retroactively and improperly impose a new state tax on energy consumers. He said utilities are routinely punished by state regulators if they misuse ratepayer funds.

“We believe the state must follow the law as well,” Hume said.

Several speakers at the news conference cited statistics that those energy conservation and efficiency funds produce more than $1 billion in economic activity in Connecticut by subsidizing solar power and energy efficiency projects for homeowners and businesses.

Steve Osuch, owner of Energy ESC in Manchester, said he has already had to lay off two of his four technicians who would normally be working on energy efficiency projects because of the state’s decision to take those conservation funds.

“This is highway robbery — there’s no better way to put it,” Osuch said.

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