POWNAL, Vt. -- Prior to this year, many wondered how renewable energy projects, such as the solar array at the Southern Vermont Energy Park, would be taxed. In 2010, legislation was passed that called for the Public Service Department to study the issue, and the law based on that study went into effect this year.
Rep. Bill Botzow, D-Pownal/Woodford, sponsored the study bill and said the law that was passed mostly reflects the findings. With the state pushing incentives for more renewable energy projects to be built, towns such as Pownal had been wondering how to tax the facilities.
In the case of the project at the energy park, just off Route 7 a few miles from the Massachusetts border, the solar panels are being built now by Gestamp Renewables, which bought the project from EOS Ventures early this year. The site, a former horse and dog racing track, is owned by Progress Partners, which seeks to develop the 144-acre property further.
There are two components to an entity’s tax bill: the state education tax and the municipal tax. William Johnson, director of the Division for Property Valuation and Review, said in the case of a solar facility the size of the one in Pownal (producing 2.2 megawatts), the state education tax is based on the size of the facility’s potential production. According to Act 127 of 2012, this rate will be $4 per kilowatt. Plants that produce less than 10 kilowatts are exempt from taxation,
Johnson said the nameplate capacity is established at the time the project receives a certificate of public good from the Public Service Board.
He said towns are free to tax the facility how they wish, but the bill requires his division to make recommendations to municipalities on how best to go about it. He said the department will be recommending towns tax solar fields based on their net income.
Johnson said the two tax methods are in line with the state’s desire to encourage renewable proliferation. By taxing based on potential, it makes a facility more likely to use efficient technology and by having towns tax based on the facility’s profits, towns are more inclined to welcome their construction.
He said wind turbines are taxed by the state more on how many kilowatts they produce a year, while hydro dam facilities are valuable by themselves and are taxed based on fair market value.
Pownal Lister Barbara Schlesinger said the town will seek a grand list value from the solar facility by April 1, 2013. She said she intends to contact the Department of Taxes for specific direction on how to value the property.