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CCA Property Tax Infrastructure Insights
August 2025 Edition

Property Tax Briefing for U.S. Energy Asset Owners

Cost Containment Advisors (CCA) is pleased to present the latest developments impacting property taxation for power, energy, pipeline, and infrastructure assets. In this issue, we also spotlight the ongoing expansion of our property tax compliance services, designed to streamline your compliance process and assist you to minimize tax liabilities.

Key Updates & Legislative Developments

Stay informed of the most recent legal and regulatory changes affecting the industry:

  • Recent Legal Decisions:
    Several recent rulings have reshaped the landscape for the taxability and assessment of intangible assets. These decisions are expected to have significant, long-term effects on energy asset owners nationwide. CCA is honored to have played a role in some of these landmark cases.
  • Legislative Activity:
    Our team is actively monitoring state and federal legislative initiatives that could impact the valuation and taxation of infrastructure assets. We will keep you updated on any changes that may affect your operations and tax planning.

🏛️ National Legislative Landscape

Federal Push to Repeal Clean Energy Incentives Raises Long-Term Tax Risk

In May, the U.S. House passed the “One Big Beautiful Bill Act,” which proposes scaling back key clean energy tax credits, including the Investment Tax Credit (ITC) and Production Tax Credit (PTC). If passed by the Senate, the bill would materially impact the economics of new renewable energy projects. Although this change doesn’t directly alter property tax assessments, removing federal subsidies could reduce the net present value of projects—thereby affecting asset valuation disputes and appeals at the local level.

🗺️ State-by-State Property Tax Developments

New York – New Assessment Models and Tax Incentive Bills

New York finalized its 2025 assessment model for solar and wind projects, adjusting expense ratios, revenue forecasts, and discount rates. The revised model also includes updated wind capacity factors reflecting technological improvements. These changes may increase assessments for high-performance projects, especially those with long-term PPAs or merchant exposure. Separately, Senate Bill S2475 proposes exempting utility property tied to renewable grid modernization from property tax on incremental value increases. A complementary proposal, S6169, would offer abatements for emission-reducing capital improvements in large cities like NYC—providing tax relief for plant owners undertaking carbon-intensity upgrades.

Ohio – Utility Property Tax Relief Enacted

Ohio signed Substitute House Bill 15 into law, reducing the taxable valuation of certain public utility property. Asset owners with regulated natural gas or electric infrastructure may see marginally lower assessments, as the state aims to encourage infrastructure investment. This law becomes effective August 14, 2025, and could improve cap rate assumptions in IRR models for new investment-grade assets.

Montana – Shift in Burden to Industrial and Utility Property

Montana passed HB 231 and SB 542, reducing residential property tax liabilities while explicitly shifting more tax responsibility to second homes, utility-scale, and industrial properties. While not targeted at energy infrastructure, the broad classification of “industrial” means power plant owners—especially fossil fuel and peaker plants—could face higher assessed shares in rebalanced millage rate calculations.

Indiana – Major Expansion of Personal Property Tax Exemption

Indiana’s newly enacted legislation increases the personal property tax exemption from $80,000 in 2026 to $2 million in 2027 and beyond. This could sharply reduce the taxable footprint for mid-size natural gas and cogeneration plants with expensive movable equipment (e.g., turbines, generators, SCADA gear), improving long-term asset performance metrics.

Georgia – Legislative Push to Cap Annual Assessment Growth

Georgia’s legislature is pressuring localities to enforce a voter-approved cap that limits annual increases in assessed value to inflation. Although not yet binding, House Bill 92 would mandate this cap. If implemented, the measure could stabilize tax liabilities for asset owners in volatile or appreciating areas—especially suburban counties with rising land values tied to grid-tied solar and battery assets.

Texas – Renewable Projects Face Legislative Headwinds

Several bills under consideration in Texas threaten to limit the expansion of renewable energy projects, particularly wind and utility-scale solar. Although not explicitly tax-focused, legislation that increases permitting hurdles or narrows eligibility for Chapter 313-style abatements will raise effective tax rates for new infrastructure. Stakeholders are watching whether substitute bills revive former abatement frameworks or allow them to sunset.

North Dakota – Governor Proposes Elimination of Property Taxes

Governor Kelly Armstrong has proposed eliminating property taxes altogether, including for energy infrastructure. While focused on primary residences, the proposal may force a broader tax reform package that shifts burdens toward industrial and energy property. Details remain limited, but infrastructure owners in the Bakken and Red River Basins should track this closely.

Michigan – State Override on Local Siting Could Affect Tax Appeals

Recent Michigan legislation grants the state authority to override local governments on siting decisions for solar and wind projects. While this improves permitting timelines, it may complicate property tax appeals, especially in counties seeking to contest state-led assessments or push back on PILOT (payment in lieu of tax) frameworks negotiated at the state level.

Kansas – Legislative Update: HB2609 Hearing Summary

On February 15, 2024, the Kansas House Committee on Taxation held a hearing on HB2609, a bill proposing to extend property tax exemptions for pollution control devices, peak load power plants, and certain electric public utility properties. Proponents, including representatives from Midwest Energy, Evergy, and Kansas Electric Cooperatives, argued the bill is critical to ensuring grid reliability and meeting future electricity demand. The bill aims to standardize a 10-year property tax exemption across all forms of generation, regardless of ownership, to encourage investment in new dispatchable and renewable energy infrastructure. No opposition was presented.

Connecticut – Uniform Capacity Tax In Lieu

The Connecticut General Assembly enacted legislation establishing a statewide uniform solar capacity tax to replace traditional property taxes for certain renewable energy systems. House Bill 7266 sets a tax of $12,000 per megawatt for solar photovoltaic (PV) systems over 2 MW that supply energy to the grid, effective July 1, 2026, with a 2% annual increase unless an alternative schedule is negotiated with the host municipality. The legislature also approved House Bill 7265, creating a working group to evaluate a similar uniform capacity tax for battery energy storage systems (BESS), with recommendations due by January 1, 2026, to guide potential future legislation.

⚖️ Legal Landscape

New York’s Renewable Assessment Statute Ruled Unconstitutional

In a closely watched ruling, Albany County Supreme Court declared Real Property Tax Law § 575-b unconstitutional. The law required use of a uniform state appraisal model for solar and wind systems. The decision, pending appeal, could re-open valuation disputes between local assessors and asset owners, especially for legacy projects with previously “locked-in” tax agreements under the invalidated model.

Connecticut establishes a uniform solar capacity tax on solar photovoltaic systems replacing traditional property tax

Solar photovoltaic systems in Connecticut are currently subject to traditional ad valorem property tax which can vary by location and assessment. A new public act establishes a separate annual tax for these facilities beginning July 1, 2026, based on the capacity of the solar system (measured in kilowatts or megawatts) rather than its assessed value (House Bill 7266 ). This “uniform solar capacity tax” applies to owners of “solar photovoltaic systems,” which are equipment and devices that: (1) have the primary purpose of collecting solar energy and generating electricity by photovoltaic effect; (2) have a nameplate capacity over 2 MW that also exceeds the load for the location where the equipment and devices are located; and (3) are approved on or after July 1, 2026, by the Connecticut Siting Council or, if the system is not subject to the Siting Council approval, the municipal zoning authority of each municipality in which the equipment and devices are located.

System owners must pay the tax to the finance department for the municipality in which the system is located. For systems located in more than one municipality, the bill requires the tax to be allocated in proportion to the nameplate capacity of the system located in each municipality. The bill establishes a “uniform solar capacity tax year” which runs from July 1 to June 30, and the tax must be paid annually for a period of 20 uniform solar capacity tax years. For any system approved during the initial uniform solar capacity tax year (i.e. July 1, 2026, to June 30, 2027), the tax for the 20-year period is $11,000 per MW of nameplate capacity, including any fractional portion. The $11,000 base rate increases by two percent in each subsequent uniform solar capacity tax year and the initial rate for systems approved in subsequent years is the rate effective in the year they are approved.

The Office of Policy and Management is directed to develop a form to be submitted with the tax and provide it to municipalities. The municipal finance department or tax collector determines whether to require a single annual payment or semiannual or quarterly payments. Delinquent payments accrue interest at 1.5% per month or partial month, from the due date until paid. The Act allows anyone aggrieved by the tax to appeal to the Superior Court for the judicial district in which the system is located.

SOUTH CAROLINA – Company that transports refined petroleum products through underground pipes does not meet definition of an “industrial plant,” and thus is not entitled to pollution control property tax exemption for pollution control devices

Colonial Pipeline Company transports refined petroleum, jet fuel, gasoline, diesel, heating oil, kerosene, and blend stocks through underground pipes in South Carolina. These products can be combined with one another creating a fluid called “Transmix.” Transmix is a fluid that does not meet the specifications for a fuel that can be used or sold for use. Each product that combines to create Transmix can be separated into a once again saleable product. At least 90 percent of each product transported by Colonial is of the same specification and quantity when it enters the pipeline as it is when it leaves the pipeline. Colonial does not own the products it transports.

Colonial has tank farms, delivery facilities, and booster stations in South Carolina. Its tank farms receive and store product from the transmission pipeline and pump the product to individual truck terminals. Colonial’s delivery stations are located at the tank farms and deliver product on a transmission line to a truck terminal. Colonial has three booster stations which push the product through the pipeline.

Colonial filed applications for pollution control tax exemptions pursuant to Section 12-37-220 of the South Carolina Code for property tax years 2017 and 2018 but the Department of Revenue denied the exemptions on the basis that Colonial was “not a facility or equipment of an industrial plant” and was “more similar to railroads and delivery companies and not a manufacturer whose plants would qualify as industrial plants.” Colonial appealed to the Administrative Law Court, which concluded that Colonial was entitled to the exemptions because the tank farms, pipelines, and pump stations, working as a whole, constituted an industrial plant, and that the disputed cathodic protection equipment, pipeline coatings, and automatic shut-off valves were designed for the elimination, mitigation, prevention, treatment, abatement, or control of water, air, or noise pollution, required by state and federal government, and used in the conduct of Colonial’s business. The Department of Revenue appealed to the Court of Appeals, claiming that the Administrative Law Court erred in granting the exemption to a transportation company that is not a production plant.

The South Carolina Constitution exempts from property tax “all facilities or equipment of industrial plants which are designed for the elimination, mitigation, prevention, treatment, abatement, or control of water, air, or noise pollution.” S.C. Const. art. X, § 3(h).  The South Carolina Code exempts from property tax “all facilities or equipment of industrial plants which are designed for the elimination, mitigation, prevention, treatment, abatement, or control of water, air, or noise pollution, both internal and external, required by the state or federal government and used in the conduct of their business.” S.C. Code Ann. § 12-37-220(A)(8). The issue was whether Colonial, a company that transports petroleum products via more than 500 miles of pipeline across South Carolina, is an industrial plant, which would entitle it to the exemption.

The Court of Appeals agreed with the Department of Revenue’s construction and reversed. The exemption applies only to manufacturers or other entities engaged in production. Both the statutory and constitutional provisions apply only to “facilities or equipment of industrial plants” and Colonial has no industrial plant to which the exemption would apply. The Court of Appeals noted that tax exemptions are strictly construed. Although the Court acknowledged that the legislative purpose of the pollution control exemption is presumably to compensate those who are required to install equipment to prevent or minimize pollution, the Court found that the Administrative Law Court did not apply the plain and ordinary meaning of the term “industrial plant.”

Colonial Pipeline Company v. South Carolina Department of Revenue,  -443 S.C. 448, — S.E.2d —,(March 5, 2024)

CONNECTICUT – Generation of electricity does not constitute “manufacturing” for the purposes of an exemption from personal property taxes

McHenry Solar LLC is the owner of solar electric equipment located within the Town of Hampton. McHenry alleges that the personal property is used in the generation and manufacture of electricity and is therefore exempt from personal property taxation under Connecticut General Statutes § 12-81 (76). The Town Assessor refused to apply the tax exemption to the gross assessment and valuation of the equipment and instead listed it as taxable personal property. McHenry appealed to the Superior Court and moved for summary judgment on the basis that the facts were undisputed.

Starting with the language of the statute, the Court noted that § 12-81 (76) exempts machinery and equipment in manufacturing facilities from personal property taxes. Section 12-81 (76) incorporates the meanings of “machinery” and “equipment” as defined in § 12-81 (72). “Machinery and equipment means tangible personal property which is installed in a manufacturing facility … and the predominant use of which is for manufacturing, processing or fabricating[.]” § 12-81 (72) (A) (i). “Manufacturing means the activity of converting or conditioning tangible personal property by changing the form, composition, quality or character of the property for ultimate sale at retail or use in the manufacturing of a product to be ultimately sold at retail.” § 12-81 (72) (A) (iii).

The Court observed that the Connecticut Supreme Court previously held that the generation of electricity is not manufacturing within the meaning of the Sales and Use Tax Act in United Illuminating Co. v. Groppo, 220 Conn. 749, 601 A.2d 1005 (1992). Subsequent legislative action (§§ 1 and 2 of P.A. 92-193) unified the definition of “manufacturing” for property tax exemptions and sales tax exemptions, without making any changes to the definition of “manufacturing” in § 12-81 (72).  Because the legislature is presumed to create a harmonious body of law, and because the legislature is presumed to be aware of the Supreme Court’s interpretation of the term “manufacturing” in United Illuminating Co. v. Groppo  but chose to make no changes to its definition, the Court held that the generation of electricity is not “manufacturing” under the statute and that McHenry was not entitled to the exemption.

McHenry Solar LLC v. Town of Hampton, Superior Court, Judicial District of New Britain, Docket No. HHB-CV-22-6078896 (January 2, 2024) 2024 WL 94160

RHODE ISLAND – Valuation of real property may be increased due to construction of a solar energy development on the property even though renewable energy systems are tax exempt.

Polseno Properties Management owns 14.6 acres of property located in Lincoln, Rhode Island. As of December 31, 2017, the assessed value of the property was $1,084,000. On June 28, 2018, Polseno entered into a long-term lease with Green Development, LLC, for the construction and operation of a solar energy development on approximately ten acres of the property. The property was then developed in 2018 with a 3.0 megawatt solar development. The 2019 assessment of the property was $1,382,000. That 2019 assessment increased the assessed value of the ten acres upon which the solar energy development was located from $7,500 per acre to $40,000 per acre. The 2019 assessment contained a notation stating: “2018 Adjusted Land to 10 AC for Solar.” Polseno appealed the 2019 tax to the Lincoln Tax Assessor, who denied Poliseno’s appeal. Thereafter, Polseno appealed to the Tax Review Board, which also denied its appeal, and  Polseno then filed a complaint in the Superior Court.

The Superior Court determined that R.I. Gen. Laws Ann. § 44-5-3, upon which plaintiff’s appeals were based, does not “express[ ] an intent to exempt from taxation the land upon which [a] renewable energy system is built.” The Court held that the property should be assessed by the Assessor at its full and fair cash value; and that, “[i]f the assessor may value the land,” then it is relevant that a solar energy development exists upon it. Poliseno appealed.

On appeal, Poliseno claimed that § 44-5-3(c) prohibits municipalities from increasing the valuation of real property due to the presence of renewable energy projects. Poliseno argued that the only tax permitted on solar projects is the tangible property tax imposed in accordance with the rules and regulations established by Rhode Island’s Office of Energy Resources, and that, except for that tax on tangibles, a solar energy development is tax-exempt and that it should not be appraised. Consequently, Poliseno claimed, the Tax Assessor erroneously took into consideration tax-exempt property when assessing the value of its real property.

The Supreme Court affirmed. The Court began by noting that tax exemptions are strictly construed. Section 44-5-3(c), on which Poliseno relied, makes no mention of real property. Because, said the Court, the unambiguous language of the statute clearly indicates that the statute does not address the real property upon which a solar energy development is located, it agreed that the presence of a solar energy development could be considered as an element of value assessed to real property. This was not a case in which tax-exempt property had been taxed, because the underlying real estate was not tax-exempt. It was therefore reasonable for the Assessor to consider the existence of a solar energy development when assessing the fair market value of the underlying real property in accordance with § 44-5-12.

Polseno Properties Management, LLC v. Keeble, 288 A.3d 988 (R.I. 2023)

ARIZONA – Applying White Mountain Apache Tribe v. Bracker, the Court of Appeals sanctions state and local taxation of  electric power generating plant on reservation land

Calpine Construction Finance Co., a non-Indian-owned entity, leases 320 acres of undeveloped land on a long-term basis from the Fort Mojave Indian Tribe to build and operate an electric power generating plant on reservation land. South Point Energy Center subleases the land from Calpine. The plant began operations in 2001 and is a “merchant plant” that sells electrical energy to public and private utility companies for resale to end-users. It does not supply electrical power to the Tribe or any person or entity on the reservation. The Tribe did not finance the plant and does not contribute any operating funds.

Mohave County assessed ad valorem property taxes against the plant based on valuations determined by the Arizona Department of Revenue, which assessed the value of the plant itself and the personal property used to operate the plant, but not the value of the underlying land. Having paid the property taxes based on the assessment, South Point sued, seeking a refund of payments from 2010 to 2018, to the extent they were based on valuations of the plant.  South Point argued that § 5 of the Indian Reorganization Act of 1934 (25 U.S.C. § 5108), expressly preempts states from imposing property taxes on any real property improvements, regardless of ownership, located on land held in trust by the federal government to benefit Indian tribes or individual Indians. The trial court granted summary judgment in favor of the County and the Court of Appeals reversed, holding that § 5 of the Act expressly and categorically exempted permanent improvements on the Tribe’s land from state taxation regardless of ownership.  The Arizona Supreme Court granted the County’s petition for review to decide whether § 5 “expressly preempts taxing permanent improvements constructed on tribal lands acquired under that section when those improvements are owned by non-Indians,” and then vacated a portion of the Court of Appeals opinion, holding that the Act does not expressly preempt Mohave County’s ad valorem property tax on the plant. The Supreme Court remanded the case back to the Court of Appeals to decide whether the Tax Court correctly ruled that the plant was also not impliedly exempt from the County’s valuation and taxation under White Mountain Apache Tribe v. Bracker, 448 U.S. 136, 100 S.Ct. 2578, 65 L.Ed.2d 665 (1980), which employs a balancing test.

In this second appeal, the Court of Appeals affirmed the trial court. Bracker imposes a balancing test that applies when “a State asserts authority over the conduct of non-Indians engaging in activity on the reservation.” 448 U.S. at 144. To determine whether a state or local tax on non-Indians doing business on the reservation is preempted, a court undertakes a “particularized inquiry into the nature of the state, federal, and tribal interests at stake, an inquiry designed to determine whether, in the specific context, the exercise of state authority would violate federal law.

Applying Bracker, the Court of Appeals ruled that extent of federal and tribal regulations governing the area of state-imposed ad valorem taxes on structures owned by non-Indians did not weigh in favor of implied federal preemption, that the economic burden of the state and county property tax fell on South Point rather than the tribe, which weighed against implied federal preemption, and that a substantial state interest existed “in the form of funding the school districts involved and providing local services to South Point, its employees, and the Tribe which outweigh the federal or tribal interests asserted and thus justify state and county taxation of the plant. The Court of Appeals concluded that taxation was not impliedly preempted by federal law.

South Point Energy Center LLC v. Arizona Department of Revenue, 118 Arizona Cases Digest 18, 546 P.3d 1130 (March 19, 2024)

ARIZONA – Income generated from a Power Purchase Agreement may be considered under the income approach in valuing an electric generating plant

Mesquite Power, LLC owns and operates an electric generation facility in Arizona.  Through a “Power Purchase Agreement” between Mesquite and a group of buyers, Mesquite guarantees them a specific amount of electrical capacity during a particular period in exchange for fixed payments to Mesquite. The payments to Mesquite are mandatory and remain the same whether the buyers actually take delivery of any power. The Power Purchase Agreement does not require that the Mesquite produce the electricity that fulfills Mesquite’s obligations to the buyers. Mesquite may purchase power on the open market or from another source to cover the capacity guarantee to the buyers. The Power Purchase Agreement provides that, with the buyers’ prior approval, the agreement may be severed from the Mesquite Power Plant and transferred separately. The original Power Purchase Agreement was entered into on 2011, and subsequently amended several times. Currently the guaranteed payments total approximately $48,000,000 per year.

Mesquite challenged the Department of Revenue’s statutory valuation of its electric generation plant for tax year 2019 by appealing to the Tax Court. Although both parties used the income approach to value the plant, they disputed whether the income approach permits consideration of income from the Power Purchase Agreement. Mesquite’s expert valuation did not include income from the Power Purchase Agreement. Instead, Mesquite’s valuation was based on income from what it considered the taxable property, a hypothetical income model that valued the Mesquite Power Plant as a merchant base load plant competing in the market by selling energy at wholesale prices. In contrast, the Department’s expert valuation under the income approach included income from the Power Purchase Agreement and did not deduct the value of the Power Purchase Agreement. The Tax Court entered partial summary judgment for Mesquite, ruling that the Power Purchase Agreement “is a ‘non-taxable, intangible asset’ that is separate and severable from the tangible property and the valuation of Mesquite’s tangible property for property tax purposes cannot include the value of the [Agreement.]”

The Department of Revenue appealed, and the Court of Appeals reversed the Tax Court, holding that where intangible assets enhance the real and tangible property’s value, a competent appraisal must consider the effect such intangible assets have on the taxable property’s value, and that any valuation approach must appraise the operating unit by its current usage to be competent. The Court of Appeals found Mesquite’s appraisal to be inappropriate under the circumstances because, by assuming the Power Purchase Agreement did not exist, it did not reflect the property as it currently operates. Mesquite appealed.

The Arizona Supreme Court concluded that income from the Power Purchase Agreement is not automatically and entirely irrelevant to the Mesquite Power Plant’s valuation under the income approach, and that income from the Agreement may be considered in the valuation if it is relevant to the calculation of income derivable from the property itself in its continued use as a power plant. The Court explained that income generated from an existing Agreement may evidence a facility’s expected income, which the income approach capitalizes to value the facility. However, the Court cautioned that the Tax Court should consider other factors bearing on the strength of that evidence for property valuation purposes, such as whether the Agreement is severable from the subject property, how many other like facilities have similar agreements, and the facility’s historical role in generating the product under the Agreement. And, said the Court, the taxpayer may demonstrate that the Agreement has independent value that should be subtracted from the final expected income figure.

The Court further concluded that A.R.S. § 42-11054(C)(1)—which provides that the property’s “[c]urrent usage shall be included” in the valuation—does not require consideration of the Power Purchase Agreement, reversing the Court of Appeals on this point. Here, the Court said, the Mesquite Power Plant’s “current usage” is as a base load power plant. By its terms, the Power Purchase Agreement requires Mesquite to provide a certain amount of electrical capacity to the buyers, but the Agreement does not alter or restrict the way the Mesquite Power Plant property is used or what activity occurs on the property. The Power Purchase Agreement does not implicate how the property is used—as a base load power plant—at the time of valuation. Because the Power Purchase Agreement does not implicate

“current usage,” the statute does not mandate consideration of the Power Purchase Agreement.

Mesquite Power, LLC v. Arizona Department of Revenue, 127 Arizona Cases Digest 120, 552 P.3d 502 (July 22, 2024)

OHIO – Court of Appeals rejects replacement cost appraisal of synchronous condenser facility for failure to show that federal and state regulators would approve the replacement configuration

Energy Harbor Generation, LLC owns property in Eastlake, Ohio, which was previously operated as a coal-fired electricity generation plant. The Eastlake property had five generator units. As a result of changing environmental regulations, in 2012, the plant was decommissioned and the coal-fired generators were retired. In evaluating the closure of Eastlake as an electric generation facility, the manager of the area’s electrical grid identified reliability issues if the generators were retired and taken offline. American Transmission Systems, Inc., a transmission-only public utility, acquired the generators, in addition to other property at Eastlake and converted convert the plant to synchronous condensers.

A synchronous condenser is a device that functions as a storage unit in an electric system and, among other things, serves to buffer for changing conditions on a power transmission grid. Synchronous condensers support the instantaneous and peak loads and load losses of a system. They are controlled by a voltage regulator to either absorb or generate reactive power to stabilize a grid’s voltage or to improve power. The service offered by synchronous condensers to a grid is to produce VARs (volt amp reactance) and to sell those VARs as necessary and essential products of electric transmission systems for load serving entities in the area. Energy Harbor owns the real property, while American Transmission Systems owns and operates the synchronous condensers.

The Lake County Auditor valued the real property at $59,300,000 for the tax year of 2021. Energy Harbor subsequently filed a complaint against the Auditor based upon the 2021 valuation, and after having the real property independently appraised, Energy Harbor sought a reduction in valuation to $7,200,000. The Auditor and the Willoughby-Eastlake City School District filed a countercomplaint seeking to retain the Auditor’s value. The Board of Review upheld the Auditor’s valuation, and Energy Harbor appealed to the Lake County Court of Common Pleas, which affirmed the Board of Review ‘s decision. Energy Harbor appealed.

Energy Harbor’s appraisers used a replacement cost approach to valuation, arguing that it provided the best method for valuation because it took into the consideration the age of the buildings, depreciation, the “superadequacy” of the buildings (i.e., that the buildings were overbuilt for their current purpose) and the obsolescence of the buildings (i.e., the reduction in the buildings’ usefulness due to an outdated or different design). They created a cost estimate for a replacement configuration that would use smaller condensers (in both size and capacity) that would be housed outdoors and air-cooled, rather than indoors and water-cooled, like the current condensers. The replacement facility would not require a wall-mounted crane for servicing the condensers and the replacement configuration could be built on the existing property. Energy Harbor’s appraisers subtracted depreciation from the cost estimate, added an agreed value of the land, and concluded that the regulated value of the land was $7.2 million.

The County’s appraiser used a modified version of the reproduction-cost method. The appraiser determined the percentage of the current configuration being used at the site, which is 25% of the entire property; he then calculated the reproduction cost of the entire present configuration ($648,000,000), less depreciation (roughly 65-70%, based upon the site’s age), then subtracted the reproduction cost of the unused portion (75%). In doing so, the County’s appraiser noted that 30-35% (undepreciated value) divided by $648,000,000 is approximately $216,000,000. That figure divided by 25% (the utilized portion of the site) is $54,000,000. He then added $4,500,000 as the value of the salvageable aspects of the site, along with the value of the land ($2,950,000) and testified the value equates to approximately $61,000,000.

The Court of Appeals affirmed the trial court’s judgment which accepted the County appraiser’s valuation. Although the trial court acknowledged Energy Harbor’s appraisers as experts, it emphasized that federal and state regulators would have to approve the replacement configuration which served as the basis for their appraisal–a matter not touched upon by Energy Harbor. The trial court observed that none of Energy Harbor’s witnesses could verify that regulators would approve the design or issue permits should they be necessary. And Energy Harbor’s appraisers could not point to any other approved installations of sites similar to that described in their report. The trial court concluded that “[w]ithout regulatory approval, the Replacement Configuration is just a hypothetical, and not a substitute with equal utility to the Present Configuration (which does have regulatory approval).” The trial court determined that Energy Harbor consequently failed to meet its burden of establishing the replacement value of the property, and the Court of Appeals agreed with its analysis.

Energy Harbor Generation, LLC v. Galloway, 233 N.E.3d 204 (2023) 2023-Ohio-4858

Enhancing Compliance & Value

CCA is committed to maximizing your financial performance by:

  • Boosting Operating Earnings and Cash Flow:
    We supplement your internal resources to ensure property taxes are assessed with precision, directly supporting your bottom line.
  • Tailored Property Tax Strategies:
    Our experts develop and present innovative, custom-designed strategies, specifically tailored to your assets, operations, and location. Implementation is collaborative, ensuring alignment with your business objectives.
  • Proven Results:
    Through our strategic approach, we have helped clients increase their equity value by over $1.0 billion in recent years.

How CCA Can Support Your 2025 Compliance Season

Our project managers and field specialists are available to discuss recent legal cases, legislative changes, and how CCA can strengthen your annual appeal efforts. Now is an ideal time to engage with our team for 2025 initiatives.

About Cost Containment Advisors

Cost Containment Advisors is a national consulting firm specializing in the valuation, assessment, and tax optimization of complex infrastructure assets, including:

  • Power generation
  • Transmission systems
  • Pipeline networks
  • Energy storage facilities

We continuously monitor legislative, regulatory, and market trends to help clients navigate evolving tax landscapes and reduce long-term liabilities.

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