Business & Economy

Federal court dismisses Entergy’s lawsuit against tax hike

A federal U.S. District Court judge dismissed Entergy’s lawsuit against the state of Vermont for imposing a higher generating tax for power from the Vermont Yankee Nuclear Power Plant.

Bill Sorrell, the Vermont attorney general, said the court ruled in favor of the state’s arguments that remedies through the Vermont tax department and the state court system are “totally adequate.”

“Our argument prevailed,” Sorrell said. “We’re very pleased with the decision.”

This past legislative session, the Legislature raised the generating tax on Vermont Yankee to $0.0025 per kilowatt-hour (kWh), which would raise roughly $12.5 million for the state instead of the previous $5 million.

The Louisiana-based corporation sued the state on four counts of allegedly violating the U.S. constitution before the first payment was due on Oct. 25. The tax hike, which is less than that of Connecticut’s $0.003-per-kWh generating tax, was aimed at replacing two agreements that funneled about $6 million annually into the state’s Clean Energy Development Fund.

After Entergy filed its suit on Sept. 11, the state moved to dismiss it on Sept. 24 based on the Tax Injunction Act, which prevents federal courts from intervening with the collection of state taxes. According to the court order, Entergy argued that the kilowatt hour generation rate was a levy not a tax. Entergy lawyers also contended that the case was outside of state court jurisdiction.

Judge Christina Reiss ruled that the generating tax was indeed a “tax” under the Tax Injunction Act, and Entergy does have a “plain, speedy and efficient” avenue through the state court system.

For that reason, she wrote, “This court lacks subject matter jurisdiction to consider Entergy’s requests for injunctive and declaratory relief whereby Entergy seeks to avoid payment of the (tax) based upon a federal court determination that it is unconstitutional.”

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Andrew Stein

About Andrew

Andrew Stein is the energy and health care reporter for VTDigger. He is a 2012 fellow at the First Amendment Institute and previously worked as a reporter and assistant online editor at the Addison County Independent, where he helped the publication win top state and New England awards for its website. Andrew is a former China Fulbright Research Fellow and a graduate of Kenyon College. As a Fulbright fellow, he researched the junction of Chinese economic, agricultural and environmental policymaking through an analysis of China’s modern tea industry. He is fluent in Mandarin Chinese and has been awarded research grants from Middlebury College and the Freeman Foundation to investigate Chinese environmental policies. A member of Investigative Reporters and Editors, his work has also appeared in publications such as the Math Association of America’s quarterly journal Math Horizons and When Andrew isn’t writing stories, he can likely be found playing Boggle with his wife, fly fishing or brewing beer.

Email: [email protected]

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  • Mike Kerin

    Entergy is an arrogant corporation trying to bully Vermont!
    We are Vermont strong and will stand up against such bullies.

  • Howard Shaffer

    What would you say if your town passed a property tax that applied only to your house?

    Isn’t this discrimination?

    The Federal court said “Go to the state court.”

    We’ll see what happens.

    • David Conner

      That’s great until you consider in this situation, your house would be the only one in the town. There is only one Yankee. It’s not like VT is singling Entergy out.

  • Bob Stannard

    Of the three choices you have for AG only one of them, Bill Sorrell, is 100% dedicated to defending Vermonters against this rogue corporation. When you vote on Nov. 6, vote for Bill Sorrell

    • Renée Carpenter

      Ed Stanak is also “100% dedicated to defending Vermonters against” VT Yankee. The problem is how our electoral system is not set up to accurately reflect the will of people if more than two strong candidates run for a single office. This is the quandary of this situation. Vermont needs statewide Instant Run-off voting, or some other way to allow people to vote for their candidate of choice without being afraid they will elect the undesired candidate because of splitting the more liberal vote.

      I appreciate your next set of comments, Bob, but let’s be accurate about electoral candidates and issues, please.

  • Bob Stannard

    RE: Mr. Shaffer’s comments, I believe the energy generation tax also applies to wind and other electrical generation in the state, which are already paying it. It’s not solely levied on the VY plant.

    Yes, VY would pay more than any other source, because it’s the largest source, however, they would still be paying a lesser rate than wind.

    In addition, the rate is on par with identical electrical generation taxes levied in our neighboring states.

    The tax does not just apply to one energy source as Mr. Shaffer would have you believe.

  • Howard Shaffer

    The tax I read about was for generators of more than 200,000kw, built after 1965. The rate per kw was less than that for wind. With the much greater power in VY’s generator the total amount collected would be much more.

    See “Yes Vermont Yankee” ‘s blog post today where the Chair of a certain legisltive committee said the objective was to hurt VY.