JAY – Androscoggin Energy LLC is appealing town officials’ denial of a $211.8 million reduction in real estate and personal property value over a two-year tax period.
It equals about $3.7 million in taxes that the power plant owners were assessed in 2004-05 and 2005-06.
If the company wins the suit, Jay taxpayers would have to repay the money.
Jay assessed the power plant nearly $1.9 million in taxes in 2004-05 and $1.81 million in 2005-06. The company has paid its 2004-05 taxes and half of 2005-06 with the second half of $908,140 put in escrow through a bankruptcy court ruling pending the outcome of the abatement process.
The Jay Board of Assessment Review will take up the company’s abatement application at 6:30 p.m. on Wednesday at the Community Building. Reviewers will determine whether the application is complete and if they have all the information they need before setting a hearing date.
Androscoggin Energy was jointly owned by Wisvest Corp. with 66.7 percent, Calpine Corp. with 32.3 percent and IP with 1 percent prior to March when ownership of the plant was transferred in a deal reached in bankruptcy court in February to International Paper in Jay to settle $90 million in claims IP had against the company. IP had won a breach of service contract in a federal jury trial among other claims in bankruptcy court.
The natural-gas fired power plant located at IP’s Androscoggin Mill site had been idled since November 2004 since it filed for Chapter 11 bankruptcy protection.
Androscoggin Energy LLC had filed for an abatement of $26.1 million in value from Jay in January and then amended that amount higher in February for tax years of 2004-05 and 2005-06. It also filed a similar suit in bankruptcy court claiming Jay overvalued the plant and its property and it was taxed too much.
The company wants to reduce the value of real estate including land in buildings from $7.8 million in 2004-05 and $8.5 million in 2005-06 to nothing. It also wants its personal property value of machinery, equipment and furniture to be reduced from $106.8 million in 2004-05 and $108.7 million in 2005-06 to $10 million each year.
Androscoggin Energy claims the assessed value of its plant is manifestly wrong and exceeds the facility’s just value.
The company alleges the town’s industrial assessing agent ValPoint only relied on the historical cost less depreciation method and did not give consideration to a replacement cost approach.
It claims state law requires assessors to consider all three approaches to value: cost, market sales and income methods.
Androscoggin Energy claims there is data available in the market to support significant obsolescence due to a lack of demand for power-generating facilities, declining equipment cost and the bankruptcy of Androscoggin Energy Center, which the company claims was available through published articles.
Since January of 2001, Androscoggin Energy claims that the project, as well as the entire independent power producers industry, has suffered from extreme economic obsolescence resulting from the failure of: electricity deregulation; creation of an over-capacity marketplace; drop in demand rates for electricity and drastic changes in natural gas prices. It also claims bankruptcy of Androscoggin Energy Center and contractual differences with IP and the loosened requirements of the Clean Air Act, which has allowed older “dirty” and less efficient plants to continue to operate, have contributed to the problem.