OFFICE OF FISCAL ANALYSIS
Legislative Office Building, Room 5200
Hartford, CT 06106 (860) 240-0200
http://www.cga.ct.gov/ofa
sHB-5004
AN ACT CONCERNING THE IMPLEMENTATION OF CERTAIN
CLIMATE CHANGE MEASURES.
Primary Analyst: TM 4/8/24
Contributing Analyst(s): LG, EMG, WL, PM, MM, JS, CW, EW
Reviewer: RP
OFA Fiscal Note
State Impact:
Agency Affected Fund-Effect FY 25 $ FY 26 $
Public Utilities Regulatory
Authority (PURA)
CC&PUCF -
Potential Cost
Potential
Significant
Potential
Significant
Office of Workforce Strategy GF - Cost Up to
200,000
None
Treasurer, Debt Serv. GF - Potential
Cost
See Below See Below
Department of Energy and
Environmental Protection
GF - Cost 800,000 None
Note: CC&PUCF=Consumer Counsel and Public Utility Control Fund; GF=General Fund
Municipal Impact:
Municipalities Effect FY 25 $ FY 26 $
Various Municipalities Potential
Revenue
Gain
See Below See Below
All Municipalities Potential
Cost
See Below See Below
All Municipalities Potential
Revenue
Loss
See Below See Below
Explanation
This bill establishes various requirements related to its climate crisis
declaration, and results in the costs to the state as described below
Section 2 establishes broad state agency targets for reducing
emissions affiliated with state agencies. This results in a cost to state 2024HB-05004-R000321-FN.DOCX Page 2 of 6
agencies that will be further covered in the ratepayer impact statement
below.
Section 4 establishes broad state targets for reducing emissions
resulting in a substantial cost. Connecticut as of 2021 had over 41 million
metric tons c02 (MMTC02e) equivalent in 2021
1
. The goal for 2030
would require the state to reach an emissions goal of 26.7 MMTc02e. The
cost to achieve the goal will be substantial but it is unclear what that cost
will be year-to-year or where that cost will be borne. This section also
requires DEEP to hire a consultant to submit a report on Greenhouse
Gas emissions (GHG), this is expected to cost $600,000.
Section 6 requires the Public Utility Regulatory Authority (PURA) to
conduct a docket to determine how the state can address future natural
gas usage in relation to the state's target emission levels. This is expected
to be completed within existing resources.
Section 8 is expected to result in a cost of $100,000 in FY 25 to the
Department of Energy and Environmental Protection (DEEP), which
will use a consultant to meet the requirement that DEEP's website
contain a variety of energy-related information in one place. DEEP
requires a consultant to develop the necessary components the
department does not currently report, and to create the webpage(s).
Section 9, which establishes a preference for certain "green" jobs
under the JobsCT tax rebate program, does not result in any fiscal
impact as it does not alter the aggregate annual $40 million cap on the
program.
Section 10 requires the Department of Revenue Services
commissioner, in collaboration with the Department of Economic and
Community Development commissioner, to identify business fees that
are appropriate for waiver for environmentally sustainable certified B
corporations and farms. This does not result in any fiscal impact as the
agencies have the expertise to accomplish this requirement within
1
DEEP GHG Inventory 2021 2024HB-05004-R000321-FN.DOCX Page 3 of 6
existing resources.
This bill establishes various requirements related to its climate crisis
declaration, and results in the costs to the state as described below
Section 11 results in a one-time cost of up to $200,000 to the Office of
Workforce Strategy (OWS) by requiring the Connecticut Clean Energy
Council, on which OWS is a participating member, to develop a plan to
transition workers from fossil-fuel-based jobs to clean energy jobs.
While OWS does have expertise on workforce development
strategies, it is anticipated that the agency will need to hire a consultant
to (1) assist in researching the costs of training for both new workers and
upskilling existing workers to meet industry demands and standards
and (2) complete the report by February 1, 2026.
Section 12 has no fiscal impact by requiring Connecticut Innovations
(CI) to submit a report on investments and assistance provided to
companies engaged in matters related to the mitigation of climate
change. CI has the expertise to accommodate this report within existing
resources.
Section 13 requires PURA to expand its statewide energy storage
program by increasing cumulative storage deployment targets and the
size of the incentives if PURA decides to do so resulting in a potentially
significant cost to the state. to reach the goals of the bill with existing
storage capacity. The bill establishes a goal of 1,000 MW and seeks to
establish a capacity of 580 MW by 2030.
Section 14 increases the reimbursement rate for school construction
projects that are "for the installation of a renewable energy or energy
efficiency project." To the extent projects are found to be eligible for the
reimbursement increase and relevant projects are submitted, there
would be increased costs to the state (paid by General Obligation bonds,
which leads to an increase in General Fund debt service) and increased
revenue to involved municipalities beginning as early as FY 25. The
impact of future projects on the school construction priority list will be 2024HB-05004-R000321-FN.DOCX Page 4 of 6
reflected when such projects are considered by the legislature in the
future.
Section 14 is unclear as to which school construction projects would
be eligible for the increase, which has a major effect on the magnitude
of the fiscal impact.
If all school construction projects are deemed to be eligible energy
efficiency projects, there would be a 10 percent increase in state
spending and revenues to municipalities with relevant projects going
forward.
2
Nearly all projects on the school construction priority list since
2020 have included energy efficiency as part of the project's stated
purpose.
If limited to just the portion of a school construction project that
directly involves energy efficiency upgrades, only that portion of project
expenses would result in an increased cost to the state and increased
revenue to municipalities. Given the complex nature of school
construction projects, and how interwoven different aspects of a project
may be, it is typically difficult to differentiate which parts of a project
are attributable to energy efficiency and which would be excluded from
the rate increase.
If limited to just standalone energy efficiency projects, limited fiscal
impact is anticipated. Since 2020, no projects on the school priority list
have been designated as solely or primarily "energy conversation"
projects. However, it is possible the increased reimbursement rate
would motivate municipalities to pursue eligible projects with such a
designation in the future.
Section 16 requires DEEP in conjunction with the Connecticut Green
Bank to develop a plan to install 310,000 heat pumps for residential
heating systems resulting in no fiscal impact.
Section 17 may result in a potential cost to municipalities as it
2
For context, the priority list under consideration for the 2024 session, within HB 5347,
authorizes more than $500 million of state obligations for school construction projects. 2024HB-05004-R000321-FN.DOCX Page 5 of 6
requires evaluations of environmental sustainability and climate
resiliency to be included in municipalities' Plans of Conservation and
Development (POCDs). This requirement applies to any POCDs
adopted after January 1, 2025. Any costs will be dependent on what is
needed to meet this requirement.
3
This section may also result in a potential revenue loss to
municipalities to the extent they are unable to adopt the POCDs with
the new requirements. Failure to do so, consistent with current law,
results in a municipality becoming ineligible for discretionary state
funding.
4
Section 18, which requires the Office of Policy and Management
(OPM) to develop a model policy for environmentally sustainable
purchasing that municipalities may voluntarily utilize and implement,
does not result in a fiscal impact as OPM has the resources necessary to
develop the model policy.
Section 19 is not anticipated to result in a fiscal impact, as it requires
the Office of Policy and Management to authorize additional
reimbursement of eligible expenses under the Local Capital
Improvement Program (LoCIP) for FY 25 using any resources
appropriated for said purpose. Administration of LoCIP was changed
from a reimbursement program to a prospective grant beginning in FY
24 (PA 23-124).
Additionally, the LoCIP program is bond funded. The bill makes no
additional resources available for the program, either through the
authorization of bond funds or appropriations. The fiscal impact of any
legislation appropriating funds for an expanded purpose would be
noted in the fiscal note relevant to the other legislation.
3
Under current law, municipalities are required to update their plan of conservation
and development at least once every ten years.
4
Discretionary state funding includes, but it not limited to, any source of funding that
a state agency administers through a competitive process. This may include: the Urban
Action Program and Small Town Economic Assistance Program. 2024HB-05004-R000321-FN.DOCX Page 6 of 6
Section 21, which requires DEEP to produce a report and plan for
implementing nature-based ways to support climate mitigation and
adaptation, results in a one-time cost of $200,000 in FY 25. The
department will use a consultant to complete the report as it lacks
sufficient resources to meet the reporting and planning requirements.
Ratepayer Impact Statement
5
This bill results in a significant increase in cost to ratepayers. The
costs associated with sections 2 and 4 come from the climate targets and
the costs of reaching them. Achieving the GHG targets described would
require a significant investment into the electrical grid, and electrical
generation. The changing of sources may increase costs to electric
distribution companies, in the form of capital costs and potentially
higher energy costs in the short term.
The Out Years
The annualized ongoing fiscal impact identified above would
continue into the future subject to inflation and the terms of any bonds
issued.
5
The state and municipalities are ratepayers and therefore may be impacted by policy
changes that affect electric rates