Senate supports Vermont Yankee tax

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(Host) A divided Vermont Senate has supported a tax on the Vermont Yankee nuclear plant to fund new energy conservation programs.

Opponents said the tax would send a bad message to companies trying to do business in the state.

But those who favored the tax said the revenues were needed to reduce energy bills and make Vermont a leader in the fight against global warming.

VPR’s John Dillon reports:

(Dillon) The tax is aimed at the profits of the Entergy Corporation, the company that owns Vermont’s only nuclear plant. The tax is supposed to raise about $37 million over five years. The money would be used to fund an expansion of energy conservation programs.

Washington Democrat Ann Cummings says Entergy has reaped a financial windfall by selling power into the deregulated electricity market. Cummings, who chairs the Senate Finance Committee, said Entergy has done better than anticipated, because the worldwide price of oil has driven up electricity costs.

(Cummings) “Vermont Yankee is selling at that inflated price that increased price without any of the increased cost. That is a windfall profit that they had nothing to do with. It had nothing to do with business planning. It probably has more to do with the war in Iraq and the weather than any other reason.”

(Dillon) The lobbying was fierce against the tax. Yankee executives, along with an official from the union representing plant employees, worked the halls and buttonholed lawmakers. They were joined in opposition by officials from the state’s utilities and major businesses.

On the Senate floor, Rutland Republican Kevin Mullin said the tax was unfair.

(Mullin) “I think if you tax most businesses on a percentage of gross revenues, you’d push them into bankruptcy. Mr. President, it just seems like this is the wrong message at the wrong time.”

(Dillon) The opposition to the tax came from both parties. Chittenden Democrat Doug Racine said that while he is leery of nuclear power, he disagreed with the tax on Vermont Yankee. He says other energy companies – such as those proposing wind projects in Vermont – should be worried about the proposed tax.

(Racine) “If we pass this section, what we are saying to wind developers – and other businesses – but wind developers — is that you cannot count on the state to be predictable. You will not have the stability you are looking for. Because if we can do this to Vermont Yankee today, well next year, we can do it to you.”

(Dillon) But Senate President Peter Shumlin said the money was needed to fund new conservation programs – which he says will save Vermonters money, and lessen dependence on foreign oil. He said the tax was fair because of Entergy’s unexpected profits, and because the company will be storing high-level nuclear waste on the banks of the Connecticut River.

(Shumlin) “Change is on the way, we’re going to have to be bold. I would say that this is a great step forward. And I urge you to support this revenue source, and have Vermont help lead other states in reducing our dependence on fossil fuels and putting dollars back in Vermonters pockets.”

(Dillon) In the end the vote on the tax was extremely close. The Senate approved it by just one vote. The measure comes up for a final vote on Wednesday, and it still has to go back to the House for its consideration. Meanwhile, Governor Jim Douglas says he’s opposed to the new tax.

For VPR News, I’m John Dillon in Montpelier.

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