Saturday, February 16, 2013

MidAmerican property tax - part 2

Is MidAmerican Energy Company paying the correct property tax amounts at its Iowa wind project sites? Part 2  

I wanted to post an update on my effort to determine if MidAmerican Energy Company is paying the correct amount of property tax at their Iowa wind project sites. The Pocahontas county assessor agreed to let me access their MEC wind farm property documents after initially declining to let me see the records (see part 1). 
I received about 80 pages listing construction costs of the first phase of their wind project in Pocahontas County. The assessor informs me that these items were not used to determine the value of MidAmerican’s wind project. I also received 3 simple two page cover letters that MidAmerican sent to the assessor that stated the value of each phase of the project, those documents list the turbines, substation, land, and met tower. Since the 2 page cover letters copies I received mentioned these are actually 5 page reports not 2 as the assessor mentioned, I’m going to have to check with the assessor to determine if there are additional documents that need reviewing.
What is problematic to me is what’s missing from this process.  The 80 pages of construction costs MEC provided the assessor were probably capitalized by the utility and depreciated. Therefore, they probably should be included in the counties tax base. I sent an email to the assessor asking why there was no assessment for the power cables connecting turbines to the substation. Her response was to contact MEC and ask them. Other items not listed are construction insurance, contract labor expenses, overhead, interest, accounting charges, etc. land pre construction land easement cost, cost of compliance with regulations, etc. The cover letters by MEC to the county do not itemize these costs, so it is difficult for a taxpayer in the county to determine is this process was done correctly. 

As a rate regulated utility, MEC probably filed very detailed cost recovery documents for this project at the Iowa Utilities board.  Access to these documents would be an easy way for the county and its tax payers to determine the correct property tax due the county by MEC. This process does not appear to have been done.

I contacted Dean Crist at MEC and asked him for their utilities board filings in order to help sort through this issue. I also asked him to set up a meeting to discuss this in detail with interested parties from the county.  I’m paraphrasing his reply, but essentially, this is the response I received. He did not agree to let me and other tax payers see their IUB filings .He did say the cost recovery documents would not be useful to determine the property tax due the county.  He also mentioned the documents MEC filed with the county were from the companies tax department, were correct, taking all relevant costs into account. I have a rather lengthy email discussion concerning the property tax ongoing with Mr. Crist and thought copying the entire dialogue impractical here.   
I disagree that the IUB cost recovery documents would be of no use in this process.  The companies’ assertion that the property tax amounts are correct is fine… Then they should have no problem honoring requests from county tax payers for additional documents supporting that claim. Their submissions for rate recovery to a third party (that regulates the utility) should match the property tax submittals to Pocahontas County. These documents should be very useful to this effort.

As is, a two page memo stating the value of a $ ½ billion dollar wind project seems like an incomplete amount of effort by everyone involved to determine the property tax value of this wind project. In fact, if this process was also used at MEC’s other wind projects in Iowa; they should all be reviewed more thoroughly.  
 I’m not going to give up until I get more information. I find the fact that that the Utility does not wish to allow access to information and the county initially did not want to allow access to their information very troubling.   I may discover that this was done correctly. If so, fine. Then I wasted a little winter downtime digging into this issue.  Stay tuned. 

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