TransCanada seeks large tax reduction for Connecticut River dam

Bellows Falls Dam, 2001. Photo by Al Braden. Used with permission

Bellows Falls Dam, 2001. Photo by Al Braden. Used with permission

Corporate energy giant TransCanada is appealing the property value assessment of their Bellows Falls hydroelectric dam, seeking to reduce the property’s value by $22 million, from about $108 million to $86 million.

TransCanada first filed a grievance notice on June 7 with Rockingham town’s Board of Listers for their Bellows Fall station at 20 Mill St. The notice details TransCanada’s analysis of the property’s value, which argues that falling energy prices among other factors make the dam less valuable.

Camilla Roberts, chair of the Board of Listers, described TransCanada’s case as “critique” of a 2010 state-funded and approved appraisal of the property. The company, she said, failed to provide an alternative independent appraisal.

On June 20, town listers decided not to allow the reduction in market value, after hearing TransCanada’s case about a week and a half ago. TransCanada is now appealing that decision with the town’s Board of Civil Authority (BCA), which will hear the case on July 17, and then make a decision within 30 days.

The dam in Bellows Fall village accounts for almost half of the property tax base, while in Rockingham it accounts for a third, Roberts said.

If TransCanada gets the proposed reduction, it would result in a total tax revenue loss of $640,000, which would have to be made up by other taxpayers.

“It’s all very intense,” said Roberts. “It’s an unstable situation, and we haven’t yet been able to find a way to stabilize that tax impact. Tax money is how work gets done in this town, and we’d have to compensate for a loss of revenue: services and budgets would be cut.”

“One hiccup or sneeze on that tax value, and the whole tax revenue system for the village swings wildly,” said Roberts. “It’s just incredibly important.”

TransCanada spokesman Shawn Howard responded that the company had an obligation, both as a taxpayer and a company, to pay the right amount of taxes based on an accurate appraisal.

“It’s unfortunate that there were issues in how this dam was assessed in the past, which created certain expectations,” said Howard. “We recognize that there are some impacts on budgets, but we have to make sure we’re paying an accurately assessed tax value. We’d also like to see this addressed as quickly as possible.”

Town officials say the drastic reduction in revenues would result in cuts to services and municipal employees, and less assistance would be available to other organizations in town.

“Our budgets are extremely tight as it is,” said Tim Cullenen, Rockingham’s municipal manager. If TransCanada won their appeal, he said, “very hard decisions would have to be made.”

There is also the threat of possible litigation if TransCanada is unhappy with the BCA’s decision. In the past, TransCanada has sued Littleton, N.H., and Concord, Vt., over dam property values. The company won its case in Concord.

Although both Cullenen and Roberts declined to comment directly on the likelihood of future litigation, Cullenen did say: “We’re talking a serious sum of money: It’s not likely that they’re just going to change their direction and say OK.”

The current appraised value of the dam, at $108 million, was based on a 2010 state-funded appraisal of all eight Vermont hydroelectric dams, conducted by utility consultant George Sansoucy P.E., LLC. The appraisal cost the state about $200,000.

In 2005, when TransCanada first bought the property, company vice president William Taylor also made promises in a letter to the town, in exchange for allowing the purchase to go through, including a payment of $42 million over 12 years, no matter the tax value of the property. Roberts said TransCanada has not delivered on that promise though it was not included in contracts or notarized documents associated with the sale. The statements may have been made for publicity’s sake, she said.

Though town officials seemed open to the possibility of negotiating after the BCA decision, TransCanada spokesperson Howard said he could not say either way whether negotiations were still an option at this stage.

Editor’s note: We found out about the TransCanada appeal thanks to an alert reader who used our anonymous Tip Drop form. There is a link to Tip Drop found at the end of each story on VTDigger.org. Tip Drop is part of our Tipster 2.5 project. If you have a tip, drop us a line.

Nat Rudarakanchana

Comments

  1. esteban folsom :

    i thought at the time
    [of the dam/s sale]
    why are we letting canada
    buy up our renewable
    generating capacity
    to begin with ?

    and now the have vt. gas
    and also gmp and sundry

    i noticed they won’t go near
    vt. yankee though
    and it all [$] goes to canada

    we are shooting ourselves
    in the foot here i believe

  2. Alex Barnham :

    Who is paying the taxes on the dam? The last I knew, the ratepayers have to pay. What does it cost the town to have a dam. Do the workers at the dam live in the town? I might be wrong but it seems the whining is not justified.

    • John Sayles :

      The power from these dams is sold in the market, I believe, and not in power contracts to VT utilities. Therefore, VT ratepayers do not pay the taxes, even indirectly.

  3. Barry Kade :

    Sounds like whining from both sides:
    1. The value of the dam is the value of the dam. It doesn’t matter what the effect will be on the tax base or who will have to pick up the difference. If the dam is worth less than the appraised 120 million, the appraisal should go down.
    2. It doesn’t appear as though the utility put forth any real evidence of a decreased value. Do they really want to argue that the price should be reduced because of a (likely temporary) decrease in electric prices? If so, they’ll have to accept an increase in the property’s value when the price goes back up and up and up.
    Unless the utility can come up with a convincing independent appraisal, the state appraisal should stand, no matter how loud the whining.

  4. DB Cooper :

    This article states that the only way to address the potential loss in tax revenues from the dam is to increase tax rates for all other payers. This is incorrect. Towns receiving the revenues have the option to decrease spending so that expenses are in-line with the new lower revenue level. To suggest the spending levels must be at the current fixed point, ignores what municipalities are having to do across the country and the world.

    • Doug Hoffer :

      Sure. Cut the budget.

      Which roads won’t get plowed?
      How much longer will it take to get a permit?
      Which parks won’t be maintained?

  5. Paul Hannan :

    Just curious: how is it that Vermont towns get to levy property taxes on a dam in the Connecticut River when NH’s boundary extends across the river to the Vermont shore?

    • Kenneth Hertz :

      Take a look at http://maps.google.com/, selecting “Bellows Falls, Rockingham, VT” and “satellite view.”

      The river is split by an island just above the dam. The state line follows the western edge of the eastern branch of the river, while the dam is wholly west of there.

    • John Sayles :

      Mr. Hertz is correct. The Bellows Falls station is the only Connecticut River hydro dam that is situated in Vermont. All the other power houses are in New Hampshire, although some of the dam infrastructure extends into Vermont.

  6. Alex Barnham :

    New Hampshire doesn’t give a dam.

    • Christian Noll :

      Ha ! No pun intended! Nice one Alex!

  7. Tony Redington :

    Agree with those who say the problem would not exist if the Town had bought the plant when they had the chance–but they voted against it. And if the Town owned it, they maximize financial benefit to the town. Utility plant values–particularly where they are a sizable part of a Grand List–always are an issue. Utilities want to use depreciated value (original investment less depreciation) which is what the PSB allows in the rate base; and Towns, understandably, want to use fair market value, i.e., what the plant would get if sold today (really whatever its maximum value would be).

  8. Marjorie Power :

    If the Douglas administration had not been so short sighted and misguided, the citizens of the State of Vermont would be the owners of this and the other damns on the Connecticut. The profits and the power would inure to Vermonters instead of going out of state.

    Driven by ideology disguised as financial prudence, the decision by the Douglas administration not to grab the once in a lifetime opportunity purchase the Connecticut river damns was unforgivable stupidity.

  9. Alex Barnham :

    One solution might be to check out other possible hydro sites and develop those. I’m sure there are many solutions if there are many interested in pursuing the options. Conserving resources is a good start though and nothing wrong with it either.

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