Attorney General Richard Blumenthal’s plan for state-operated power plants and a windfall tax on generators, according to an energy expert, could thwart what Connecticut businesses and residents really need: an influx of private capital that could be invested in generation and transmission to bring down the high cost of power.

The real solution to the rising cost of energy – which makes it more difficult for Connecticut businesses to compete in the global economy – is to attract companies that want to generate and sell power in the state, not to put the business of power generation in the hands of the state government, said Rob Earley, who works on energy issues for the Connecticut Business & Industry Association.

“[Private capital to upgrade and increase generation and transmission] are the things that will allow Connecticut residents to have access to an affordable and reliable power source,” he said.

‘No Mystery’

Blumenthal’s plan, announced last week and presented to the state Legislature on Tuesday, calls for a state authority that could purchase power and finance, build and operate power plants, which he says would supply inexpensive power. The windfall profits tax would return excess power plant profits to consumers, and could provide seed money for a new agency called the Connecticut Electric Authority, according to the Attorney General’s Office.

But a state authority could not necessarily avoid high wholesale costs of energy, Earley said.

The extreme weather of the past year has put energy costs at the forefront of businesses’ concerns. The hurricanes that disrupted many of the nation’s oil refineries bumped up energy and gas prices significantly.

“There’s no mystery as to why prices spiked,” Earley said. “The fact of the matter is, this is a complicated marketplace.”

Connecticut’s power has long been at a premium because of antiquated generation and transmission infrastructure, some of which is scheduled to be replaced.

But because of the weather that has affected the wholesale cost of energy, many lawmakers are exploring ways to make it more affordable.

“I think we can appreciate that almost everybody in state government is looking at how to lower everyday costs,” Earley said.

‘Additional Risks’

Aside from the high wholesale price of energy that every state is experiencing, Connecticut’s high energy costs and problems stem from a failure to invest in and maintain infrastructure. A proposal to upgrade an antediluvian transmission system in southwestern Connecticut met with opposition as residents feared that high-voltage, aboveground power lines could cause health risks. Connecticut Light & Power Co. and United Illuminating Co. requested that the current, outdated transmission line serving southwestern Connecticut be updated. Part of the line is proposed to be buried, but controversy surrounds the above-ground part of the upgrade. Some residents in the area have been concerned about electric and magnetic fields, or EMFs, which some studies have suggested can cause health problems.

Experts said that continuing to use the existing system without an eventual upgrade would put the region at risk for power failures, which could cost businesses millions of dollars.

At the time, Blumenthal issued statements saying the decision-making body, the Connecticut Siting Council, should take more time to make sure any potential health risks were mitigated, but also acknowledged the need for the upgrade.

“The 345-kilovolt line from Middletown to Norwalk is critically needed to provide reliable electric service in the state – and the entire region,” he said in a prepared statement last year. “This project would also help ease the economic burden imposed on all Connecticut consumers by unfair and unwise federally mandated charges and energy policies. The line must be built so as to protect our environment and public health. I look forward to personally arguing this case before the Siting Council and urging a workable, yet responsible, solution to our state’s energy needs.”

It is unclear how many legislators, if any, support the idea. A spokeswoman from the Attorney General’s Office said the language likely would be worked into an existing bill, but did not provide the bill number.

Other opponents say Blumenthal’s plan could harm consumers.

A spokeswoman for ISO-New England, the region’s power grid operator, told the Associated Press last week that Blumenthal’s plan does not account for global market forces that are driving up the cost of energy.

“His plan does not appear to protect consumers, but it could expose them to additional risks,” said Ellen Foley of ISO-New England, which is based in Holyoke, Mass.

The plan could, in fact, keep the brunt of the cost of improvements like the southwestern Connecticut transmission line upgrade within the state, instead of spreading it out over New England, which is the goal.

“If we decided to secede, we would only bring the high costs of these massive upgrades with us,” Earley said.

Blumenthal claims his plan would “shield consumers and businesses from billions of dollars in future federally imposed charges by giving Connecticut the means to build or help finance new power plants demanded by federal regulators,” according to a statement.

“This public power authority would put the reins on a runaway market. Our new strategy should help cut and contain out-of-control electricity prices before they cripple Connecticut’s economy,” Blumenthal said in a prepared statement last week. “Customers of [Connecticut Light & Power] – 80 percent of our state’s electric consumers – now pay the second-highest power prices in the nation, enduring a nearly 70 percent increase in three years. Those prices will continue to spiral astronomically through 2010 and beyond if the state fails to act.”