Unexpected taxes hit wheeling arrangements
An Oregon court said last month that the state can tax a local generating cooperative that was using a federally-owned intertie to transmit power. The coop was one of nine companies that purchased a “capacity ownership share” on the line. The coop got the right to 50 megawatts of capacity, but had to submit power schedules in advance before using the intertie. The court said this was enough of an ownership interest in “property” to subject the coop to annual property taxes on part of the intertie’s value.
The case is a warning to factor state and local property taxes into wheeling costs or to take steps to draft wheeling agreements to avoid such taxes.