SEABROOK — It took about three years of negotiations, but town officials and the owners of NextEra Energy Seabrook nuclear station finally reached an agreement on the market value for the power plant from 2010 through 2015.
The settlement resolves potentially expensive legal action against the town concerning its assessed valuation of the plant in 2010 and 2011, which was pending after NextEra filed an appeal of the town’s assessment for those years. According to Seabrook assessor Angela Silva, the agreement established the 2010 value of the plant at about $1.383 billion, instead of a previously assessed $1.439 billion. And in 2011, the new negotiated valuation is $1.381 billion, instead of $1.434 billion.
The settlement resulted in a total two-year tax refund to NextEra of $1,192,176, divided equally between both years, and the repayment was mailed to NextEra before the end of the year, according to Seabrook’s attorney, Rob Ciandella. The rebate was paid from the town’s tax overlay account and will not have a tax impact on other town taxpayers, he added.
Rebates included, NextEra paid more than $13 million in taxes to Seabrook in 2010 and $15,489,626 for 2011. The total represents about 50 percent of the town’s tax base for those years.
In 2012, NextEra will pay about $14.9 million in taxes based on the negotiated valuation in the agreement, Ciandella said. In 2013, NextEra will pay $15 million in taxes, and in 2014 and 2015, will pay $15.5 million for each tax year, based on the negotiated values.
The settlement established tax values for the plant from 2012 through 2015 that again represents about 50 percent of the town’s total tax base, Ciandella said, which was an important accomplishment to establish for the town’s future financial stability.
In anticipation of the power plant’s expected declining value, the Board of Selectmen held the town budget down in 2012 with a 3.9 percent decrease in the overall budget, according to Interim Town Manager Joe Titone. For budget year 2013, selectmen established a goal of another decrease in the budget, proposing a 1.54 percent decrease in expenditures as compared to 2012, he added.
For the past few years, plant officials argued that the worth of the power plant had decreased, protesting the value assigned to it by the town and its consultants as being too high.
When first completed more than 20 years ago, the owners of Seabrook Station paid almost $23 million in taxes, representing more than 90 percent of the town’s tax base. But those days have been gone for years, dropping the plant to about 50 percent of the tax base in recent years.
In addition to the plant getting a sizable property tax exemption for its pollution control equipment since 1988, which 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.
The worth of the plant has fluctuated as the nation’s energy industry has changed. Over time, because of the dicey world of nuclear energy, the value of the plant decreased steadily, hitting an evaluation low of $658,561 million in 2005, which represented about 33 percent of the overall value of the town.
More recently, 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 as well, hitting $1.666 billion in 2008. The rising price of oil affected the value of the plant because the energy market had determined the value of a unit of electricity by how much it cost to generate the unit at oil-burning power plants. The ultimate value of any power plant — nuclear or otherwise — is its earning power, or how much it makes per unit of electricity it produces.
However, due to the ever-rising cost of oil, for the past few years, few, if any, new oil-burning power plants have been built. Most new plants are generating electricity using natural gas, and some old oil-burning plants have even converted to natural gas. As a result, the cost to generate a unit became based on natural gas prices instead of oil, and the price of natural gas is at a historic low.
The lower assessed value for Seabrook Station is a result of lower market prices for the electricity and are a direct result of lower natural gas prices and a weak economy.