Claremont
Robert King, president of Ashuelot River Hydro Inc. of Keene, N.H., told the council he needs an answer on the payment arrangement soon because his purchase and sales agreement on the property expires at the end of the year.
King said he proposed a 10-year arrangement because it will give him the “certainty” he needs as he looks to restart the facility.
“We’ve got a mess down there,” King told the council, referring to the facility off Lafayette Street. “It is in bad shape. It has not run for five years.”
The council’s authorization instructs the city to negotiate an agreement of between 5 and 10 years that would have Sugar River Power LLC — the company that King would set up for the plant — paying a percentage of gross revenues. In addition, there would be a “baseline” amount to ensure the city receives some revenue even if the plant does not operate.
King first approached the council last month and Finance Director Mary Walter presented an analysis at Wednesday’s council meeting of a payment plan and its potential impact on two other active power producers on the river.
Under a payment in lieu of taxes, the property owner does not pay the full amount of taxes owed based on the assessed value but a different, negotiated amount. Walter’s analysis shows the other two hydro facilities — one on Plains Road and the other off Factory Street — pay property taxes of $24,500 and $12,650, respectively, based on the full assessments. The Lafayette facility would pay about $52,000 but Walter said in her report the property will need to be revalued from its assessment of $1.3 million because it has been disconnected from the grid and will require a large capital investment to get it started.
Walter cautioned the council about any potential payment agreement because, she said, whatever is offered to King must be offered to the other two facilities and that could mean less revenue for the city overall depending on the amount they are paid per kilowatt hour and the percentage of revenues.
For example, a payment of 5 percent of revenue at 13 cents a kilowatt hour would result in about $20,500 in revenue from each of the three facilities. But at 3 cents, that figure declines to around $4,700 for each plant, according to Walter’s analysis.
King said he currently has an eight-year power purchase agreement with Green Mountain Power. “The rate I am getting paid is eight-cents for the PPA so you could be sure of payments,” King said.
He has proposed a payment arrangement with a graduated rate payment of 2.5 percent of revenue the first four years; 3.5 percent for the next three; and 4.5 percent for the last three. It would not take effect until the plant is back on line, but there was no indication from King how long that would take.
When the last payment arrangement expired in 2012, the owner ceased operation and left.
New tax bills were not issued and city attorney Jane Taylor said the city can’t retroactively send out bills.
Patrick O’Grady can be reached at pogclmt@gmail.com.
