Lawmakers weigh uniform capacity tax for solar, storage and other renewables; developers and towns clash over retroactivity and rates

Developers, municipal officials and energy companies told the Finance, Revenue and Bonding Committee that a proposal to establish a uniform capacity tax for renewable projects raises unresolved questions about retroactivity, local revenue impacts and differences among technologies.

Jobie (Joby) Moss, director of business development at Verigee, told the committee Verigee "opposes unless amended House Bill 7,266" and asked the legislature to exclude projects that have already reached commercial operation or completed financing from the tax’s reach. Moss said retroactive application would increase expenses for projects that completed financing and might trigger defaults or foreclosures; he recommended protecting existing tax-stabilization agreements and pilot agreements negotiated with host municipalities.

Will Herschel, chief executive officer of Verigee, reiterated the company’s concerns and said he supported the Office of Policy and Management’s (OPM) written testimony. Jeff Hinske, vice president of policy for Greensky Clean Energy, pressed for three changes: the tax should be forward-looking, existing projects should be excluded or protected, and the tax should include a term limit to reflect declining revenues over a project's life.

Municipal representatives said preserving town revenue is central. Betsy Guerra, executive director of the Connecticut Council of Small Towns, said the per-megawatt rate "has to be sufficiently high to ensure that municipalities will not lose property tax revenues," and recommended treating prior tax-stabilization agreements as continuing commitments. Randy Collins of the Connecticut Conference of Municipalities said $12,000 per megawatt is a reasonable starting point and praised the bill’s attempts to protect collection priority and address inconsistencies in prior practice.

Developers and municipalities repeatedly clashed over three points: retroactivity, whether a uniform tax should sunset after a fixed term, and the design of an annual escalator. Developers asked that any escalator apply only to newly taxed projects going forward rather than to existing projects' full term; town officials said an escalator may be needed to protect future municipal revenues.

Key Capture Energy, a battery energy storage developer, and its state policy director Julian Boggs urged the committee to act promptly to create clarity, adding that storage projects are materially different from solar. "A megawatt of energy storage is 0.05 acres," Boggs said, and contrasted that with solar projects, which he cited as often requiring five to seven acres per megawatt; he said storage’s much-smaller footprint, different siting patterns and different revenue models argue for different treatment in any uniform-tax scheme.

Brandon Sharkey and counsel for VFS Energy Services raised a related tax point for fuel-cell projects: whether sales tax applies to sales of fuel cells. Sharkey said fuel-cell developers have relied on the manufacture-related sales-tax exemption but recommended legislative clarity to avoid investor uncertainty.

The committee heard consistent requests to exclude prior stabilization agreements from the tax, to avoid retroactive tax application, and to pursue a negotiating process with representatives from OPM, developers, municipal groups and trade associations. Several testifiers asked the committee to create a working group to design technical details for solar, storage and other technologies.

No formal vote was taken during the hearing. Committee members signaled interest in pursuing further work with stakeholders so changes would not cause sudden revenue losses for host municipalities or destabilize financed projects.

Ending: Lawmakers and stakeholders asked for more time and technical work. Developers urged nonretroactivity and protection of financing; municipal groups pushed for a per-megawatt amount and escalator to preserve local property-tax revenues; storage developers asked for distinct treatment reflecting smaller acreage and different economics.