Experts debate over power plant gear
WAYNESBURG – While attorneys for Allegheny Energy Supply claimed Monday that the cooling towers, smokestacks and water intake structure at Hatfield’s Ferry Power Station are integral to the production of electricity, experts hired by Greene County said those same facilities could have alternative use. During a hearing before Greene County Judge William Nalitz, attorneys from both sides argued whether the structures in question are taxable and should be added to the power plant’s assessed value. In a ruling last December, Commonwealth Court ordered that Monday’s hearing take place after it said both sides failed to provide enough testimony to fully develop their claim on the taxability of the facilities.
Engineer David J. Bender, hired by Allegheny Energy, testified at length about the power station’s operation and, in particular, the role that the cooling towers, stacks and water intake structure play in the generation of electricity at the Monongahela Township plant.
Bender said the 700-foot-high smokestacks are integral in the plant’s thermal cycle by dispersing gas into the surrounding area and assisting in moving the combustion flow into the plant’s boilers. The stacks, he said, are custom designed based on four of the power station’s applications that he termed “integral and necessary” for the generation of electricity.
Cooling towers are used to cool water that had been heated for the production of steam in the power station and is then recirculated back into the system, he said.
“Their performance is vital to the efficiency of the power plant,” Bender testified.
The water-intake structure is another important piece, responsible for drawing 25 million gallons of water daily from the Monongahela River. Bender said 17 million gallons are used in the cooling towers, while the remaining 8 million gallons are used to wash the screen system that filters debris from the river water, for handling of bottom ash and for the boiler system.
Water-intake structures are also specifically designed for the site, based on the amount of water. The water is necessary for the plant’s thermal cycle and is therefore necessary for power generation, according to Bender.
On the other side, David Severson of Fairfax, Va.-based Pace Global Energy Services testified on behalf of the county that each of those structures could be used by other industries and are not exclusive to the power station.
He said petrochemical companies, cement and limestone producers, the pulp/paper industry, ammonia and ammonia chemical companies, irrigation systems and even municipal water authorities could use the facilities.
“Any one of those industries could use one or all three together,” he said. “They could mix and match, depending on their process needs.”
However, Allegheny Energy attorney Carleton Strauss argued, and Severson agreed, that there is not a site in the country where a pre-existing coal-fired power station had been converted into some alternate manufacturing process.
The county is claiming that because the three pieces in question can have alternate use, they can and should be made taxable, according to county solicitor David Hook.
In 1999, the Southeastern Greene School District appealed the station’s market value to the Greene County Board of Assessment Appeals, hoping to capitalize on a change in the Public Utility Realty Tax Act (PURTA), in which taxes were paid to the county, municipality and school district where a utility plant is located.
The change in PURTA took effect with the 2000 tax year, and the county assessment appeals board, in March 2000, increased the market value of the station from $2.75 million to $70 million.
That ruling led to the appeal by Allegheny Energy to the Court of Common Pleas, where Nalitz heard testimony for three days in December, 2000, from three experts, each of whom provided different figures as to the plant’s fair market value.
In a ruling in January, 2001, Nalitz set the power station’s market value at $27.9 million for 2000 and $29.1 million for 2001.
Last June, the county board of assessment appeals added $37.4 million to the station’s fair market value for 2001 after the assessment office learned the cooling towers and some excavation work had not been added back on the tax rolls after the 1992 countywide property reassessment.
That additional value by the appeals board also was a matter to be discussed before Nalitz at the end of the hearing Monday afternoon.
Strauss argued the properties were valued unfairly and were not assessed because of any new improvements that had been made at the site. County chief assessor H. John Frazier said an assessment correction notice was sent last year to the power station, a procedure that would have happened to any property owner if a clerical error had been made that affected the market value of their home.
Nalitz gave both sides until June 7 to file briefs in support of their claims to the taxability of the three pieces of the power plant and to the appropriateness of the 2001 change in assessment to the entire power plant site.