ROCKINGHAM—The town of Rockingham has notched a major victory in its years-long tax battle with energy giant TransCanada.
The Vermont Supreme Court has ruled that TransCanada’s Bellows Falls hydroelectric station should be valued at $127.4 million, just under the $130 million appraisal advocated by the town and set by a lower-court judge.
The justices’ ruling stands in stark contrast to TransCanada’s proposed $84 million valuation.
Though not all of that tax value lies within Rockingham’s borders, the majority of it does. Town officials see the Supreme Court’s decision as a major boost for their tax base and as a validation of their grand list.
“We’re very relieved,” said Camilla Roberts, who chairs Rockingham’s board of listers. “This has been ongoing, these appeals and trials, and Rockingham has prevailed now multiple times.”
A TransCanada statement said the company respects the fact that “the Supreme Court has made its decision after reviewing materials from all parties.”
“TransCanada has been operating these facilities and has been a proud and collaborative member of the community for more than a decade,” the statement said. “We expect a positive relationship with the town to continue.”
The Supreme Court’s ruling, which was released Sept. 9, is the culmination of a four-year tax dispute. It started in 2012, when the town valued Rockingham’s portion of the 48-megawatt generating station at $108.1 million.
That was the same value as had been set by the town in 2010 and 2011, court documents say. But TransCanada decided to appeal in 2012, first to Rockingham’s Board of Civil Authority and then to Windham Superior Court.
The case went to trial, where “experts’ opinions on value varied substantially,” Supreme Court justices noted.
TransCanada’s expert claimed the station should be worth $84 million, with the portion inside Rockingham valued at $67 million. But the town’s expert — New Hampshire-based appraiser George Sansoucy — concluded the fair market value of the station was $130 million, with $108.5 million of tax valuation within Rockingham.
It was up to Windham Superior Court Judge John Wesley to bridge that gap. Three months after a May 2015 trial, Wesley ruled in favor of the town and accepted Sansoucy’s numbers.
Wesley said he was persuaded by Sansoucy’s “overall superior credibility.” The judge also was critical of TransCanada’s arguments.
“The value TransCanada proposes is irreconcilable with the great weight of evidence and testimony presented in this matter, and TransCanada’s blatant undervaluation of the facility compels the court to resolve any doubts arising from the inevitable limits on precise predictions in favor of the town,” Wesley wrote.
TransCanada subsequently appealed to the state Supreme Court, again questioning Sansoucy’s assessment methods. The high court on Sept. 9 affirmed Wesley’s ruling, though the justices also adjusted the generating station’s overall valuation downward by $2.6 million.
That change also will lower the valuation of the town’s portion of the generating station by roughly $2 million. Since TransCanada had continued to pay taxes at the town’s rate during the appeal, that means the company is owed a refund from Rockingham.
How much the town will have to pay is still being determined, but it isn’t expected to be a big budgetary issue. “We’ve been prepared to deal with this,” Roberts said. “We’ve set aside some funds.”
The blow would have been much worse if the Supreme Court had sided with TransCanada.
“Had TransCanada prevailed in the case, there would have to have been substantial refunds of the taxes that they had paid for the years in question,” said Montpelier-based attorney Dick Saudek, who represented Rockingham throughout the case.
Instead, the court generally upheld a property valuation that provides a big chunk of local tax revenue. The generating station makes up about a quarter of Rockingham’s grand list and accounts for just under half the tax rolls in the village of Bellows Falls.
“The decision has great significance for Rockingham and for Bellows Falls,” Saudek said.
The state also played a role in the town’s victory, having intervened in the court case on Rockingham’s behalf. “We’re grateful for that,” Roberts said.
Battles still to come
While Rockingham won this battle, the conflict with TransCanada continues. The company also has appealed the Bellows Falls station’s value for 2015 and 2016.
Saudek said he expects the Supreme Court’s ruling could have an impact on the newer case. But at this point, TransCanada’s 2015-16 tax appeal still is pending in Windham Superior Court.
For years, TransCanada also was engaged in a tax dispute with Vernon. But officials in late 2014 announced a five-year agreement valuing the company’s Vernon hydroelectric station at $30.5 million.
Tax valuations are one of the uncertainties surrounding TransCanada’s proposed sale of its hydroelectric facilities on the Connecticut and Deerfield rivers. That package includes both the Vernon and Bellows Falls stations.
The company has said it expects to close on the hydro sale by year’s end. After studying the issue, Vermont officials say they won’t seek independent state ownership of the facilities but are pursuing a potential power-purchase agreement with whoever eventually buys the dams.