Alabama divides property into four classes for property tax assessment. “Class I” utility property is assessed at 30% of market value. Single-family homes and farms are assessed at 10% of market value. Cars and trucks are assessed at 15%. All other property is assessed at 20%.
Alabama argued that a power plant that a Tenaska partnership owns and uses to supply electricity under a tolling agreement to William Energy should be assessed as class I utility property.
Two state courts have now said that the plant should be taxed at the lower rates for “other property.” In the latest decision, an appeals court said in October that the Tenaska project “bears none of the usual characteristics of a utility.” It has no obligation to serve the public, it has no power of eminent domain, and it is not subject to regulation by the Alabama Public Service Commission.
The case is State v. Tenaska Alabama Power Partners, L.P.