On Thursday, Florida TaxWatch released a report on how a proposed amendment to the state constitution deregulating parts of the energy industry in Florida would impact the Sunshine State.
“Florida electricity customers enjoy prices that are below the U.S. average for residential and commercial electricity,” said Florida TaxWatch President and CEO Dominic Calabro on Thursday. “While discussions about improving the Sunshine State’s energy market are healthy, such discussions should not be in a constitutional amendment. That said, Florida TaxWatch is looking forward to engaging policymakers in discussion about the financial impacts of the proposal.”
“Deconstructing Florida’s electricity market through the proposed constitutional amendment will likely have a significant negative impact on state and local revenues. This analysis uses the best available evidence to estimate that this amendment has the potential to cause a loss of state and local revenue from $426 million to $1.368 billion in 2026, the expected first full year of implementation,” Florida TaxWatch noted.
“A proposed 2020 ballot initiative currently making its way through the process, if approved by 60 percent or more of the voters, would deregulate only the segment of Florida’s energy market served by the investor-owned utilities (IOUs). Under the proposed language, IOUs would be limited to the construction, operation, and repair of electrical transmission and distribution systems, while municipal and cooperative utilities would have discretion whether to opt into competitive markets. The Florida Legislature would be required to create laws and regulations providing for competitive wholesale and retail markets for electricity generation and supply, and consumer protections, by June 1, 2023 and fully implement the new system by June 1, 2025,” Florida TaxWatch found in its report.
“There are a variety of significant tax and revenue implications of this amendment, and this Florida TaxWatch analysis finds that, unless very significant increases in the price of electricity for Floridians result, adoption of the proposed constitutional amendment will have a negative impact on state and local government revenues,” Florida TaxWatch added. “These impacts have the potential to be relatively large. Of course, the Legislature and local governments can change the tax structure in an attempt to offset any revenue loss, but that road is fraught with peril.
“This analysis provides estimates for both 2018 and 2026. The impacts were first estimated for 2018, the year of the latest tax data. Those estimates were then projected out to 2026—the expected first full year of implementation if the amendment were to pass,” Florida TaxWatch concluded.
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