VERNON — Vermont Yankee's contribution to Vernon's coffers will drop by 26 percent this year, the first in a series of declines in a new tax deal between the town and plant owner Entergy.
Vernon Tax Committee members say they can't yet release many details of the six-year contract pending a state review. But this much is clear: Entergy's tax payments for the shutdown nuclear plant will be shrinking, and that will start with a $266,750 decrease in the company's 2016 payment to the town.
While acknowledging the financial blow, those who worked to negotiate the contract also praised Entergy for agreeing to the new tax assessments as well as an additional, annual payment in lieu of taxes.
“Entergy didn't have to do this. They're paying us hundreds of thousands of dollars more than they had to pay us,” said Patty O'Donnell, the Tax Committee's chairwoman. “But their purpose was to try to help the community step down slowly so that we can get past the burden of high taxes and have time to figure out what we want our town to be in the future.”
Entergy Vermont Yankee spokesman Marty Cohn released a statement saying the company is “pleased to have worked collaboratively with the town of Vernon to establish a long-term property tax agreement which both enables our host community to plan future town budgets and affirms our commitment to being a good corporate citizen of Vernon.”
“The details of the tax arrangement will be made available when all parties have executed the agreement,” Cohn said.
Entergy announced in summer 2013 that Vermont Yankee would cease producing power at the end of 2014, so Vernon officials have known for some time that the town would have to wean itself from the plant's steady stream of tax payments.
To some extent, that's already been happening. Three successive, one-year tax-stabilization agreements between the town and Entergy valued Vermont Yankee at $300 million, $280 million and $250 million, respectively.
That last deal expires at the end of this month, and Vernon officials have been working to come up with a longer-term agreement that will give the town budgetary certainty as Entergy's presence at the Governor Hunt Road site continues to shrink in coming years.
That deal is now done - with one caveat. O'Donnell said she couldn't yet disclose key details of the contract until the state also signs off on it.
That's due, she said, to the fact that there's been a major shift in how Vermont Yankee meets its state obligations. Entergy no longer pays the state a power-generation tax, so Vermont officials have a strong interest in the town's valuation of Vermont Yankee because that also will determine how much education-tax revenue the state receives.
“As long as Vermont Yankee was generating (power), the state never cared what we had them assessed for. Now, what we assess them at has to be approved by the state,” O'Donnell said.
There would be some risk, she added, in committing to the deal prior to the Vermont Tax Department's agreement. “If we sign a contract, and the state doesn't agree, the Vernon taxpayers are on the hook for the difference,” O'Donnell said. “So we're vetting this with the state before we sign the contract.”
Nevertheless, Vernon officials were confident enough to present some specifics of the deal at Town Meeting discussion on Feb. 29. In 2015, O'Donnell said, Entergy paid the town a little over $1 million; this year, that will decrease to $750,000.
The sharp decline, O'Donnell admitted, “doesn't look good.” But she said the town bolstered its negotiating position by enlisting the services of a noted utility appraiser and an attorney who specializes in utility issues.
“We had one shot at this,” O'Donnell said. “So we really wanted to make sure that we were doing the best for the town that we possibly could.”
She added that “Entergy was excellent to work with. Obviously, it was a negotiation, so there was give and take on both sides. But they really stepped up to the plate for the town of Vernon.”
That's because the contract includes not only tax revenue but also a payment in lieu of taxes meant to compensate the town for any problems related to Vermont Yankee decommissioning.
For example, O'Donnell said, “we're going to have huge trucks going up and down the road as they're decommissioning that plant. So the taxpayers in Vernon shouldn't have to pay for the costs of repairing roads that have heavy trucks on them.”
Because specific tax-contract figures have not been released, it's not clear how much of Entergy's $750,000 town payment in 2016 is based on the new tax assessment and how much is payment in lieu of taxes. It's also not clear how much the company's payment will decrease in the following years, though O'Donnell laid out the contract's basic structure.
“Next year, they will pay a little less. The year after that, a little less, and then for three years after that ... they'll pay the same amount,” she said. “Then, the community has to renegotiate.”
There were a few questions about the deal at Town Meeting. In response to one inquiry, O'Donnell said the value of Vermont Yankee's dry casks for spent fuel storage had been factored into the contract.
But there weren't any protests, and Vernon Selectboard Chairwoman Chris Howe was complementary of the Tax Committee's work. “You've done a wonderful job - a hell of a job,” Howe said. “Thank you very, very much.”
Vernon voters have approved the town's $2.13 million general fund budget for fiscal year 2017, and O'Donnell said Entergy's decreased payment was factored into the spending plan. The town has made some spending cuts in recent years, but O'Donnell - a former Selectboard chairwoman and state legislator - is advocating for more.
“It doesn't matter what department you're talking about. They all have a value. They all help the town to function,” she said. “(But) for two years, the Selectboard has said we need to start living like our neighbors. Well, now we are our neighbors. The party's over.”