NewburyportNews.com, Newburyport, MA

October 23, 2012

Dispute over nuclear plant's taxes, value

By Angeljean Chiaramida STAFF WRITER
Newburyport Daily News

---- — SEABROOK — At its heyday, the owners of nuclear power plant in Seabrook paid almost $23 million in taxes, representing more than 90 percent of the town’s tax base.

The money helped the town’ construct badly needed new public buildings, like school expansions, police and fire stations, a town hall, library and community center/recreation facility, as well as pay for the abundant services residents receive, all without having to raise property taxes to support most of it.

But those days have been gone for years. In addition to the plant getting a sizable property tax exemption for its pollution control equipment since 1988, which has considerably lowered its taxable value, the implementation of the state wide property tax in 1999 siphoned off more of the plant’s local taxable worth, as the state took a chunk for its utility tax.

Seabrook taxpayers may soon find that plant’s share of local taxes will dip even lower. The town and the plant are currently negotiating an abatement, based on the plant’s argument that it is being assessed, and thus overtaxed.

Seabrook’s assessor, its lawyers and consultants have worked with officials from NextEra Energy hoping to come to an agreement on valuations for 2010 and 2011, Selectman Brendan Kelly said, but no accord has been reached. The town sent out its tax bills based on its belief on the plant’s value for those years, selectmen said, and NextEra filed for abatements.

Selectmen said over the two disputed years, the estimate is that the town and plant officials are about $333 million apart on their notions of the plant’s actual taxable value for 2010 and 2011. Once the abatement issue is resolved, Kelly said, negotiations will begin on the 2012 value of the plant.

But selectmen are hoping to hammer out a valuation agreement with plant owners that extends until 2015, Kelly said. The reason for that, he said, is so town officials can plan for the coming decreases in tax revenues over the coming years. A long-term agreement is preferable so officials can make adjustments to future budgets gradually, Kelly said, instead of being faced with the shock of having to deal with a significant reduction in revenue from its largest taxpayer all at once.

In general, the plant’s share of local taxes and assessments have gone down over the past several years.

For example, according to information found in the Tax Collector’s office, the plant’s worth in 1990, less exemptions, was about $3.2 billion, or 86 percent of Seabrook’s tax base. By the time that the statewide property tax was introduced, the plant’s worth had decreased to $2.057 million, or 67 percent of the tax base.

And over time, because of the dicey world of nuclear energy, the value of the plant continued to decrease steadily, hitting an evaluation low of $658,561 million in 2005, which represented about 33 percent of the overall value of the town.

But lately, things had been looking up a bit. As the price of oil began to increase in 2006, the value of the plant began to creep up again, hitting $1.666 billion in 2008. The price of oil has had an impact on the value of the plant over the decades, according to Seabrook selectmen, because part of the value of a power plant is its earning power, or how much it makes per unit of electricity it produces. And, the energy market used to determined the value of a unit of electricity by the cost to generate that same unit at oil-burning power plants, but that’s changed.

Due to the ever rising cost of oil, for the past few years, few, if any, new oil-burning power plants have been build. Most new plants are generating electricity using natural gas, and some old oil-burning plants have even converted to natural gas. And unfortunately for Seabrook taxpayers, currently the price of natural gas, “is at an all time low,” according to selectmen.

The result, said Kelly, has caused an impasse in the negotiations between town officials and those of its owner, NextEra Energy, of Florida. The last time the two entities came to an agreement over the taxable worth of the plant was 2009, Kelly said. At the time, the plant’s worth with exemptions was $1.32 billion, or about 49 percent of the town’s tax base.