Gov. Malloy might have found the mythical Eldorado of tax policy — a way to raise taxes on a business without actually raising costs to consumers.
Malloy wants to tax coal, nuclear and oil-fueled power plants.
Immediately, the thought is that these generators will just pass on the cost to consumers, therby driving up rates.
Problem is, Connecticut’s and New England’s energy market isn’t so simple that a tax on some energy companies would automatically lead to higher rates.
You see, nuclear and coal in particular have, for the last decade, enjoyed the benefits of a competitive auction-rate market place.
The way the region’s energy system works is that every day power plants, called generators, bid to provide power for the grid. The last price accepted to fill the necessary amount of power sets the price for all the generators that are accepted.
For example, say the grid needs 3,000 megawatts. A nuclear plant bids zero dollars to pump 2,000 megawatts into the grid, a coal plant bids $20 per MW to provide 500 megawatts and a gas-fired plant bids $50 per MW and ships 500 MWs.
The nuclear and coal plant both would get the $50 MW price in this situation.
Ellen Foley, a spokeswoman for grid operator ISO-New England, said it is typical for a nuclear plant and other baseload operations to bid zero, but she said that’s generally because those plants have already sold their power by contract to another enttity. She said ISO does not know how much these plants are getting for that power, but she noted they do not get paid twice.
Foley said generally natural gas sets the price of wholesale electricity in the state, though it’s not impossible for oil to set the price in periods of high demand.
Oil makes up less than 1 percent of the power produced in New England.
How a tax would impact ptivate contracts for nuclear or coal derived power is clear, but it might trim the profit margin for those generators.
And there is a question over whether the state can single out power plants by fuel type, which would probably lead to a legal challenge.
And a key argument against the tax is that it could create even more dependence on natural gas in the state.
Foley noted that natural gas sets the wholesale clearing price because more than 40 percent of the region’s power is derived from it.
And Connecticut prices are already very high.
According to the U.S. Energy Department, Connecticut has the second highest energy prices in the nation at more than 17 cents per kilowatt hour, which is almost double the 8.56 cents they pay in North Carolina. Only Hawaii pays more for electricity in Connecticut.
Financial Mines
Malloy finds Eldorado of tax policy?
Phishers use survey as bait for scam
Berlin-based Achieve Financial Credit Union confirmed on Monday an email blast that went out this morning offering $50 to take survey is a phishing scam.
The email asks credit union members to click a link, and if the link does not work, to paste a url address into your browser.
Generally, the thief behind this scam is attempting to get your account number to pillage it.
When receiving emails like this, people should contact their financial institution to report it.
Don’t click on the link or reply to the email.
Wells Fargo Wagon is now in town
Wells Fargo has finally erased the Wachovia name from the state cutting into the hegemony over Connecticut banking held by North Carolina. Wells Fargo, the California-based bank, officially changed the name of Wachovia branches in Connecticut this week.
Wells Fargo got to Connecticut by taking Wachovia in the financial collapse of 2008. At the time, Citi, itself in massive trouble, had entered a bid to take Wachovia when Wells Fargo stepped in and snatched it away.
North Carolina-based Wachovia itself had been in Connecticut since 2001, when it merged with another North Carolina bank, First Union. Wachovia blitzed the state with advertisements explaining how to pronounce the name of the bank.
First Union got into Connecticut in 1995 when it acquired the old Stamford Northeast Bancorp.
While Wells Fargo has owned Wachovia since 2009, the change in name leaves only Bank of America as a major North Carolina bnak in the state. Though it is the biggest bank in Connecticut. Bank of America acquired Fleet Bank in 2003 to enter the Connecticut market.
Another holiday skipped
Webster Bank has joined TD Bank in remaining open on Presidents Day. Workers at Webster will get a floating holiday to be used later. It’s a growing trend in the workplace. What’s becoming of our shared national identity as holidays vanish to be replaced with personal, isolated time off?
Gov. Malloy expect jobless numbers to stagnate in state
On Friday, Gov. Dannel P. Malloy lauded a Rell administration project to create a paperless unemployment insurance payment system for saving the state $300,000 a month.
“This is absolutely the type of move the state needs to shift towards across all realms of governmental services – doing more with less,” Gov. Malloy said in a press release. “The electronic method will provide an even better unemployment insurance program for this state, while at the same time saving more than $3.6 million a year in unnecessary paper, printing and mailing costs.”
In order to arrive at his $3.6 million savings, the state would have to continue to issue about 140,000 unemployment benefit checks a week for the rest of the year.
In effect, the expectation is things will get no better or worse on the job front this year.
This does match expectations of many economists, who say job growth will remain elusive this year.
We can look on the bright side. The new Gov didn’t crow over the potential for even bigger savings in this program if we lose even more jobs.
First Niagara to cut 219 Connecticut jobs
New York-basedi First Niagara told the State Labor Department it will cut 219 jobs when it completes the acquisition of NewAlliance. Layoffs are expected at NewAlliance’s New Haven and Manchester operations beginning in mid April, First Niagara said.
Shareholders of the two banks approved the $1.5 billion deal in December, but Connecticut officials are probing the deal after objections from New Haven’s mayor. Both banks are federally regulated.
New twist on the jobless’ new plastic payments
About 1,000 people in Connecticut had their unemployment benefits delayed after they signed up to get debit cards issued through a check cashing company.
This week, the Labor Department started to only issue unemployment payments through direct deposit to bank accounts or onto debit cards issued by Chase Bank with the approval of the department.
But in an apparent move to stay in the game of providing payments to those who do not have bank accounts, the check cashiers created their own card.
The check cashing companies issued their own cards and took personal information from those awaiting UI payments, promising quicker access to the money.
Apparently, the check cashiers expected to be able to have customers’ UI payments direct deposited into the check cashiers’ account.
The Labor Department, however, did not do this and the payments were not made.
It’s unclear what happens next, whether the check cashiers will be able to continue forward with their programs. But for now, the Labor Department is advising people only to use the debit card issued by Chase.
Super Bowl an economic win?
I’m not sure what this says, but last week, we pried Super Bowl predictions from aerospace, financial experts and a lone economist. Only the economist, Don Klepper-Smith took Green Bay. Klepper-Smith even gave us the score, GB 30 and Pitt. 24.
“I was pretty close!… only 2 points off,” was his delighted reaction to the outcome. As the world knows, Green Bay won 31-25.
Let’s hope Don sees unemployment heading down dramatically in coming months…
While critics are crowing over the artistic values of commercials — Eminem’s stirring Chrysler moment, the Darth Vadar kid and the Volkswagon — the real test will be in coming weeks and whether people actually buy.
The days of having a jazzy commercial without generating sales, ala BK’s creepy commercials of nearly a decade ago, are over. It’s back to checking the balance sheet for those shelling out the cash for SB commercials.
On a side note, InBev appears to still be stumbling with its Budweiser campaign. It appears confused when it comes to peddling the working man’s brew.
But they did a nice job with Stella Artois piece. Sophisticated European setting and music number fit the beer.
