Commonwealth Court upholds ruling in power plant case
Commonwealth Court upheld a Greene County judge’s order that determined smoke stacks, cooling towers and a water intake structure owned by Allegheny Energy Supply Co. LLC are excluded from real estate taxation. And, Senior Judge Jim Flaherty affirmed Tuesday that Greene County Judge William Nalitz did not commit an error of law when he ruled last year that the improvements to the Hatfield’s Ferry Power Station were at 35 percent obsolescence, in accordance with the testimony of an Allegheny Energy expert during the common plea trial.
Functional obsolescence refers to the loss in value due to the lack of utility, or obsolete parts of the plant.
“A willing purchaser would buy the property as a power plant and to apply functional obsolescence factors based on the assumption that the plant would be used in an alternate fashion, such as a warehouse, ignores the facts and understates the value of the property,” Flaherty ruled.
The Greene County Board of Assessment Appeals and the Southeastern Greene School District appealed Nalitz’s 2002 order to Commonwealth Court to attempt to raise the taxable value for the power plant.
The case stems from the increase to the local tax assessment for the electric power station for 2000, after the school district sought an increase from the county assessment board.
The district took advantage of a change in the Public Utility Realty Tax Act, which allowed taxes to be paid to the county, municipality and school district in which a power plant resides. The power station had been assessed at $2.75 million in market value before the reassessment.
Allegheny Energy appealed in Greene County Court, and in December of 2001 the Commonwealth Court ruled that the overall value of the plant was about $8 million, not the reassessed value of $79.5 million found by the county board.
Last year, the higher court also remanded the case back to Greene County for further determination of taxable value concerning the smoke stacks, the cooling towers and the water intake facility.
On Tuesday, Flaherty ruled that the smoke stacks, cooling towers and water intake system are classified as machinery that is necessary for electricity production and therefore qualify for the machinery and equipment tax exclusion.
The assessed value for the plant remains under review on several different levels for 2000 and 2001.