Court tells no-tax governor he can't impose a tax on electric-company customers

The Supreme Judicial Court today struck down a Baker-administration plan to tax electric users to pay for new natural-gas pipelines to feed Massachusetts power plants.

In its ruling, the state's highest court said the proposed tax would violate a 1998 revision of state laws regulating utilities, which sought to shift the costs of new construction away from consumers and onto the companies that would benefit from them.

Last year, Baker's Department of Energy Resources and the Department of Public Utilities proposed a way to reduce volatility in Massachusetts electric rates, especially in the winter: Expand the the capacity of the state's natural-gas pipeline system, through a tax that would be added to electric bills.

The court said that by shifting all of the costs onto consumers, the state would be moving back towards a regulated system, when the intent of the 1998 law was to recognize and expand competition in the electricity market in the state.

Both the DOER and the department noted that gas-fired generating businesses are unwilling to assume the risks associated with long-term gas pipeline capacity contracts because there "is no means by which they can" assure recovery of those contract costs. Shifting that risk onto the electric ratepayers of the Commonwealth, however, is entirely contrary to the risk-allocation design of the restructuring act. ...

The department's interpretation of the statute as permitting electric distribution companies to shift the entire risk of the investment to the ratepayers is unreasonable, as it is precisely this type of shift that the Legislature sought to preclude through the restructuring act.

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Comments

Read his lips, no new taxes

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Read his lips, no new taxes or fees. Well, except for those on electricity and Uber/lyft. Those companies gave a lot of money to him so hes willing to make some exceptions.

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And ...

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Let's not forget the increase in T fares. Imagine if he'd tried a 10% increase in turnpike tolls - or, God forbid, tolls on people driving north/south in the Boston area, instead of just those going east/west.

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Well

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They returned the Tobin to tolls each way. They returned the Callahan to being a toll tunnel (yes, reducing the Sumner, but still). I don't recall a hue and cry over that.

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Surely you see a difference

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Surely you see a difference in the T raising fares every 2 years(while cutting service) and the Tobin toll, which was not raised at all.

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...

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a. it was free to leave the city prior, so some people may have raised a fuss
b. the point was tolls have changed. I'm not arguing that the T fee raises make sense in any sense of the word. That was too far of a conclusion for you to leap to. And nice try.

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Two things:

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Two things:
1- the Tobin was previously tolled both ways, as were the Sumner/Callahan.
2- the two-way toll rates are going to be half of what the current one-way rates are. This means that someone making a round trip pays the exact same rate, and should benefit drivers by more evenly distributing traffic flow (i.e. people are going to be less likely to take the Tobin outbound but 93 inbound, and fewer people are likely to take 16-99 through Everett to avoid the toll.

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Correct

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the Tobin was previously tolled both ways, as were the Sumner/Callahan.

I KNOW:

They returned the Tobin to tolls each way

Again, my point was about people raising a fuss.

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Hell Yeah!

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Tax electric customers for natural gas pipeline construction? That's insane!! I'm still happy the plan got struck down.

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Not quite

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And my apologies if it's not clear in the post: But the tax would go to increased supply for plants that generate electricity by burning natural gas - not for the gas people use to heat their homes. So that might be illegal and immoral or whatever, but not quite insane.

UPDATE: I've updated my original post to make this, hopefully, clearer. Further updates as events warrant.

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Why doesn't he ask the AG to

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Why doesn't he ask the AG to hold a press conference announcing the new tax by reinterpreting some existing legislation. Seems to work for other things without the pesky voting and hearing process.

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No need

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A judge ruled on it.

You might want to check out those other amendments sometime?

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Here's another liberal policy

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Here's another liberal policy by a governor who ran as a fake Republican. Vote him out, please!

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It's comical reading these comments

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All because of a stupid letter after his name on a ballot.

While he replaced Deval who spent $1b on a non function website, raised sales taxes, oversaw two MBTA fair increases and thought his office needed a $11m makeover.

Funny how short peoples memories are.

The guys increased funding for a slew of liberal causes, but he's and horrible man because he ran as a Republican.

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Presumably "liberal" means

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Presumably "liberal" means "something you don't like"? Giving profits to big companies while putting the risks on the rate-payer or other consumers isn't a liberal policy, and it's absolutely how the contemporary Republican party does things.

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OK, we'll vote him out, but...

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...but not for the reasons you think. Republicans tend to run as anti-taxes, anti-big government, etc. THAT'S why it's noteworthy that a Republican wants to raise taxes. The hypocrisy.

Though the GOP tends to count on fooling most of their voters most of the time - current national politics being the most obvious example - so Charlie might be just fine. Because: low-information voters - they're not just for the GOP, they're everywhere.

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I'm confused here

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With this ruling, the gas suppliers will now just pass on the price of pipeline construction (read, electricity generators who have moved from coal to gas) who will, in turn, pass the costs on to electricity users, no?

In the end, we're paying for this one way or another.

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I'm no expert

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But I believe rate hikes have to go through the AG's office, and are capped at some limit. So she can just say, "No, you pay for it."

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Gotchya

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But I'm still going to play devil's advocate.

Say the system gets constrained so that there is not enough gas to produce electricity. We could go back to coal, but I would imagine the environmental safeguards would lead to big capital costs, to say the least. We could try to reactivate Pilgrim, which would undoubtedly cost a lot of money. We could look at ways to increase gas supplies. Or we could let the free market run its course with proposed rises in electrical rates to avoid California like brownouts. Either way, the user will pay in the end.

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Counter-angel

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If prices go high enough, offshore wind becomes marketable. I would hope and prefer that that would be the solution.

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Different sets of "we"

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With the tax, "we" would get to pay for the pipeline regardless of whether "we" are consumers of its end product.

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Nope

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It would be a tax applied to a rate-payer's bill, not a tax imposed on the citizenry-at-large. The end product in this case is not the natural gas, but the electricity generated from it.

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I'm having flashbacks to when

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I'm having flashbacks to when I was a kid and vaguely aware of the major fight in NH (where I grew up) over a Construction Work in Progress (CWIP) charge on electric bills to pay for Seabrook. My memory is that the argument was that the way it was supposed to work was that the utility (PSNH in those pre-consolidation days) should borrow for the construction, then pay that off from the proceeds of the electricity sold after Seabrook was on line.

Just googled it - I was in high school and should have been more aware of what was going on! But we were up in the north country & all our news came from Portland, and my family didn't really talk politics.

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