VERNON — Vermont Yankee's property value has plummeted by almost 70 percent, according to a tax deal that has been approved by the Vernon Selectboard and the state.
The six-year tax-stabilization contract sets the shut-down nuclear plant's value at $78 million, down from a $250 million valuation that had been in effect.
The change affects the town and state differently, but the end result will be the same - a loss of millions of dollars in Vermont Yankee tax revenue over the life of the agreement.
But officials also say the deal contains some positives for Vernon, including a substantial annual payment in lieu of taxes to cushion the blow of lost taxes. That means Vermont Yankee owner Entergy will be paying much more than required, said Patty O'Donnell, a Vernon official who was involved in negotiations with Entergy.
“I think it was more than generous,” O'Donnell said. “It shows the working relationship we've had with Entergy right from day one.”
The value of Vermont Yankee's Vernon property has been incrementally declining: In three consecutive one-year tax agreements between Entergy and Vernon, the plant's assessed value had decreased from $300 million to $280 million to $250 million.
The Vernon Selectboard signed off on the $250 million figure in January 2015, less than a month after power production ceased at the plant.
As town officials subsequently sought a longer-term tax deal with Entergy, those involved in the talks warned that the plant's value was expected to drop significantly given Vermont Yankee's shutdown.
The new tax-stabilization agreement shows just how significant that drop will be. While officials in March announced that a deal had been reached, detailed figures weren't released until the Vernon Selectboard approved the document May 24.
Vermont Yankee's valuation stays at $78 million throughout the agreement.
O'Donnell, who is chair of the Vernon Tax Committee, said the figure - arrived at with the aid of an independent appraiser hired by the town - includes the value of all structures at Vermont Yankee with the exception of three residences owned by Entergy.
The assessment also includes all current and future dry-cask storage facilities for Vermont Yankee's spent nuclear fuel, O'Donnell said. Entergy expects to transfer all spent fuel into a total of 58 casks by the end of 2020, but currently there are only 13 casks at the site.
“This assessment is actually higher than it needed to be, because [all of] the casks aren't out there yet,” O'Donnell said.
Still, O'Donnell acknowledged that the new, much lower tax valuation could have dropped the town's Vermont Yankee tax revenue to just $230,000 based on current rates - a nosedive from the company's $1.1 million payment to the town last year.
That won't happen, as Entergy also has agreed to make annual payments in lieu of taxes to the town on a declining scale. When those payments and taxes are combined, Vernon will reap $750,000 from Vermont Yankee in the fiscal year beginning July 1.
The following fiscal year, the company's total payment to the town decreases to $600,000, and it shrinks to $450,000 the year after that. In the final three years of the deal, Vernon will get a total of $400,000 annually from Entergy.
Vermont Yankee spokesman Marty Cohn said the contract establishes “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.”
Entergy didn't agree to make any payments in lieu of taxes to the state of Vermont. Based on the plant's new $78 million valuation, the state Department of Taxes anticipates receiving approximately $600,000 in property taxes from Vermont Yankee in the coming fiscal year - down from a $2 million tax bill the state handed Entergy last year.
That's a big change. And it's even bigger when the previous tax arrangement between Vermont Yankee and the state is considered.
Before last year, Vermont Yankee was exempt from the statewide property tax because Entergy paid an electric generating tax instead. Generation-tax revenues fluctuated based on the amount of power produced at the plant, but the levy was lucrative: Records show that Entergy paid more than $13 million to Vermont in fiscal year 2014.
Despite the projected drop in revenues, the Department of Taxes has signed off on the six-year Vermont Yankee tax deal negotiated by the town of Vernon.
“Valuing a nuclear power plant in this state is a challenge,” said Doug Farnham, the department's property-valuation and review director. “We agree that $78 million is a reasonable fair market value based on the stage of the life cycle that this plant is now in.”
Changes at Vermont Yankee already have led to belt-tightening for state officials and for the town of Vernon. But O'Donnell, a former Vernon Selectboard chair, said she believes more cuts are in store.
Though she praised the Vermont Yankee tax deal, “the stark reality of this is, we're still in a world of hurt,” O'Donnell said. “There are still going to have to be more decisions made in the town of Vernon. It's never easy to figure out where to cut and how to cut.”