(HOST) The proposal to tax Vermont Yankee on windfall profits has stirred up lots of comment from supporters and critics alike. Among the latter is commentator John McClaughry.
(MCCLAUGHRY) As the legislature winds down its session, its leadership has been engaged in a desperate attempt to find something new to tax.
Earlier, legislators tried, but failed, to increase the property transfer tax to raise money for farmers.
Then there was a proposed new tax on heating oil, propane, and natural gas. That scheme crashed when people who heat their homes and businesses found out about it. Then the House tried a one hundred fifty dollar surtax on the purchase of minivans, SUVs and pickup trucks, coupled with a subsidy for the purchase of upscale hybrids for people who can afford thirty-five thousand dollar cars, plus little teeny-weeny cars for everybody else. The House voted down that combination in mid-April.
Recall that in November 2003, in return for Public Service Department support for its application to the Nuclear Regulatory Commission for a reactor power uprate, Entergy, the owner of Vermont Yankee, agreed to pay the state seven point eight million dollars to clean up algae in Lake Champlain, one hundred eighty miles away, plus two point one million dollars to pay for more low income home heating assistance. The Public Service Board later decided that funding algae cleanup was inappropriate, but diverted the money to other energy-related projects.
Two years after making that deal, Entergy sought regulatory permission to store spent fuel rods in concrete casks, instead of a cooling pool. To get the state’s acquiescence, Entergy agreed to pay the state’s new Clean Energy Development Fund as much as twenty-eight million dollars over the next seven years. The state will use the money to subsidize people who install renewable energy systems.
Last month the Senate leadership proposed to tax the spent fuel rods that Vermont Yankee already agreed to pay twenty-eight million dollars for permission to store. This dishonorable stunt would have shattered the 2005 agreement that Entergy, acting in good faith, thought it had sealed with its twenty-eight million dollars.
On April 26th that scheme collapsed, to be replaced with an even more far fetched new tax: a thirty-five percent tax on any “unanticipated revenues” that only one particular business – Vermont Yankee – might earn from selling its product. Last Tuesday the Senate, by a fifteen fourteen vote, passed an amendment to impose this novel new tax on Vermont Yankee.
Both the 2003 and 2005 deals between the state and Entergy are examples of government extortion. For enough money, the state agreed not to strangle Entergy’s plans to produce more cheap, dependable power and improve the management of its waste. This is, to be blunt, an upscale protection racket.
That’s bad enough. But now a Senate majority has broken that deal, and, if their amendment is approved by the House and Governor, will hammer Entergy again. Even by racketeering standards, this is a sorry piece of work.
John McClaughry is president of the Ethan Allan Institute, a Vermont policy, research and education organization. Later this week, we’ll hear other perspectives on this controversial plan.