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Lakeside towns seek power-line tax revenues

MIDDLEBURY — Four Addison County communities have joined a legal effort to compel developers of the proposed New England Clean Power Link (NECPL) to pay municipal property taxes on the entire electric power transmission line — including the segment located on the bed of Lake Champlain off their respective shorelines.
But developers of the 154-mile NECPL have argued the underwater portion of the transmission line should be exempt from property taxation, a position that — if affirmed by a Chittenden County Superior Court judge — could cost the affected Lake Champlain communities a combined total of around $10.5 million in annual revenues, according to Addison County Regional Planning Commission Executive Director Adam Lougee.
The Addison County towns of Bridport, Panton, Orwell and Shoreham joined Charlotte, Colchester and Isle La Motte in a lawsuit filed earlier this summer that asks the court to determine that the entire underwater transmission line is subject to property taxation.
“The basis for the lawsuit is that we think all companies and all municipalities should be treated the same,” Lougee said.  “Therefore, this company should pay property taxes on its electrical infrastructure, just like all Vermont’s electric utilities do. And each town should share fairly and proportionately in that tax revenue, as well as the state’s education fund, under the current property tax scheme.”
The NECPL is a proposed high-voltage, direct-current transmission line that would run from the Canadian border at Alburgh to a transfer station in Ludlow. The line — capable of delivering 1,000 megawatts of electricity — would consist of two cables, each roughly 5 inches in diameter. Approximately 56 miles of the NECPL is to go over land, with the remaining 98 miles to be buried three-to-four feet beneath the bed of Lake Champlain.
Plans call for the line to end in Ludlow at a converter station that would change the electrical power from direct current to alternating current, whereupon the energy would be funneled to the Vermont Electric Power Co. (VELCO) substation in Cavendish and assimilated into the New England power grid.
TDI officials have argued Vermont would reap substantial economic benefits during the estimated 40-year lifespan of the NECPL, including a combined total of $274 million in property taxes, $414 million in corporate income taxes, $31 million in sales taxes (during construction) and $212 million in lease payments to the state for right-of-ways.
In addition, TDI has promised contributions of $202 million to Vermont’s Clean Water Fund, creation of a $61 million fund to support habitat restoration and recreation improvements to Lake Champlain, and a contribution of $109 million to the state’s Clean Energy Development Fund.
But the seven communities involved in the lawsuit believe TDI should pay property taxes on the underwater portion of the transmission line running near their shorelines — and they pointed to a VELCO power line as a precedent. Attorney Hans Huessey of the Burlington law firm of Murphy Sullivan Kronk is representing the towns in their complaint.
“The only other transmission line in the lake is (subject to property taxes), so we don’t see why this line shouldn’t be,” Huessey said during a recent phone interview. “At one point, the VELCO line went into the lake offshore of South Hero and Grand Isle, and the state Legislature passed a law that said that line was taxable. So there is a precedent for an underwater transmission line being taxed, even though it is not within the town boundaries.”
Huessey alluded to Vermont State Statutes chapter 32, section 3655(2) as further evidence to support the plaintiffs’ claims:
“Utility lines, including but not limited to submarine cables or pipelines, constructed or maintained in Lake Champlain and not otherwise within the limits of the towns of South Hero and Grand Isle shall be considered as being in whichever of those towns adjoin those facilities as if the northerly and southerly lines of those towns were extended easterly and westerly to the county lines.”
Meanwhile, TDI — identified in the lawsuit as Champlain Vt. LLC — has obtained an advisory opinion from the Vermont Department of Taxes suggesting the underwater portion of the $1.2 billion NECPL is exempt from property taxes.
Lougee argued the tax department opinion TDI received on the tax status of the underwater transmission line dates back a few years, during the administration of former Gov. Peter Shumlin.
“That Department of Taxes memo was basically one line and was completely unsupported by any legal research,” Lougee said.
The current tax department, under Gov. Phil Scott, might offer a different opinion, he said.
“We have done extensive legal research on this, for both the state statute we are relying on and Vermont’s Constitution,” Lougee said.
TDI New England spokesman John Lacey issued the following statement on behalf of company CEO Donald Jessome:
“TDI-NE is in receipt of, and is reviewing, the lawsuit. Due to the fact the litigation is pending, the company has no comment at this time.”
Huessey plans to file a motion in court for summary judgment in the case within the “next couple of weeks.” But he hopes to meet soon with representatives of Champlain Vt. LLC and state officials before moving ahead with the motion.
“We are at the very early stages,” Huessey said.
Roughly $9 million of the estimated $10.5 million in annual property taxes that could be generated by the underwater transmission line would be owed to the state’s education fund, according to Lougee. The remaining $1.5 million would be earmarked for the affected municipalities.
More information on the company and the project are available at www.necplink.com.
Reporter John Flowers is at [email protected].

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