Bow to pay $10M to Eversource to settle legal battle over power plant value

  • The Merrimack Station power plant in Bow is seen at dusk on Thursday, Oct. 12, 2017. (ELIZABETH FRANTZ / Monitor staff) Elizabeth Frantz

  • The Merrimack Station power plant in Bow is seen at dusk in 2017. The town of Bow has agreed to pay Eversource Energy $10 million over the next four years as part of a settlement over a lengthy dispute regarding how much property tax should be paid by power plant. Elizabeth Frantz / Monitor file

  • The Merrimack Station power plant in Bow is seen at dusk on Thursday, Oct. 12, 2017. (ELIZABETH FRANTZ / Monitor staff) Elizabeth Frantz

  • FILE - In this Jan. 20, 2015 file photo, a plume of steam billows from the coal-fired Merrimack Station in Bow, N.H. A global health commission organized by the prestigious British medical journal Lancet recommended in a report published Monday, June 22, 2015, substituting cleaner energy worldwide for coal will reduce air pollution and give Earth a better chance at avoiding dangerous climate change. (AP Photo/Jim Cole, File) Jim Cole

Monitor staff
Published: 7/1/2019 4:25:08 PM

The town of Bow has agreed to pay $10 million to settle a long dispute over how much property tax should be paid by the Merrimack Station power plant, with more than half of the payment coming in the form of tax breaks to Eversource over the next four years.

The settlement with Eversource Energy announced Monday comes in the wake of last year’s Supreme Court ruling that said Bow had over-valued the power plant in 2012 and 2013, charging $5.5 million too much in taxes. Bow paid that money last year.

The new $10 million settlement would cover excess tax payments from 2014-18, when Eversource sold the plant to investors. Bow decided not to take the issue of payments for those years to court, partly because it could have cost “well over $250,000” in legal fees.

“The same judge would be sitting on the case if we went forward. If we did contest assessment that it was unlikely, we would have a different outcome,” said select board member Harry Judd.

The settlement must be submitted to the Merrimack County Superior Court for a judge’s approval. Courts have ruled that the plant was worth about $66 million in 2012 and 2013, less than half the $159 million value that Bow used to calculate the tax bill.

Under the proposal, town officials would pay $4.25 million this year, using $3.25 million that has been accumulated from past years as well as a pair of $500,000 payments, one made in August and one in December.

The remaining $5.75 million would be paid out from annual installments from 2020-23 by collecting about $1.5 million less in tax each year on property that Eversource owns in Bow. This property includes a substation and transmission lines which connect the Merrimack Station power plant to the grid as well as a warehouse, Judd said.

“No town wants to offset a million and a half in taxes a year, but we’re happy to have this behind us,” said Christopher Nicolopoulos, chairman of the town select board.

Bow levied $13.9 million in property taxes in 2018, according to the town report. Foregoing $1.55 million in payments from Eversource, as would happen in 2020, could cut that revenue source by 11%.

Bow is in the process of negotiating the current and future valuation of the power plant with its current owners, the Connecticut-based investment group Granite Shore Power.

In a short statement Monday, Eversource welcomed the agreement: “The settlement provides certainty to Eversource, its customers and the town, and avoids the risk and costs of litigation.”

The 440-megawatt Merrimack Station has been making electricity by burning coal brought north by trains since 1960 when it was built by the electric utility PSNH, now part of Eversource. It is one of the last coal-fired power plants in New England.

Eversource had to sell Merrimack Station along with other electricity-producing assets as part of the long, drawn-out divestiture.

Granite Shore Power, a company created by investors to buy the Eversource assets, paid $175 million for Merrimack Station plus two coal-fired and one wood-fired power plants in Portsmouth, a natural gas-fired power plant in Newington, and two turbines powered by jet fuel in Groveton and Tamworth kept available for emergencies.

Granite Shore had to operate the power plants through the end of June under the purchase agreement but plans to continue running Merrimack Station for the foreseeable future, largely because it receives tens of millions of dollars a year by guaranteeing that it can produce large amounts of electricity at any time, known as capacity payments.

“We’re really happy with our two new owners. ... They have embraced the town,” Nicolopoulos said. The select board chairman said he had recently toured the plant. “It was running, delivering coal there. It is a going operation.”

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