New England Power Co. v. Town of Littleton

• Decision Date: 30 September 1974
• Docket Number: No. 6692,6692
• Citation: 326 A.2d 698,114 N.H. 594
• Parties: NEW ENGLAND POWER COMPANY v. TOWN OF LITTLETON.
• Court: New Hampshire Supreme Court

Page 698

326 A.2d 698

114 N.H. 594

NEW ENGLAND POWER COMPANY v. TOWN OF LITTLETON.

No. 6692.

Supreme Court of New Hampshire.

Sept. 30, 1974.

Orr & Reno and Richard B. Couser, Concord, for plaintiff.

Dodge, Moulton & Smith, Littleton, and McLane, Graf, Greene & Brown and Robert A. Wells, Manchester (Arthur A. Greene, Jr., Manchester, orally), for defendant.

LAMPRON, Justice.

Petitions for abatement of property taxes assessed by the town against the company for the years 1969, 1970, 1971. By agreement of the parties the cases were heard by a Master (Arthur H. Nighswander, Esq.) with the further agreement that his decision would have the same status as a decree of the superior court.

Following a hearing, the master made certain findings, including a finding 'that the true value of the properties of New England Power Company in Littleton as of April 1, 1969, was $25,772,388, as of April 1, 1970, $25,570,242., and as of April 1, 1971, $25,610,908. The town, by its selectmen, had assessed the company's property for each of those three years at $35,050,450. The master ruled that the company was entitled to an abatement of the difference between the above true values found and the assessed values for each of the years in question. 'The amount to be abated will be the amount of the abated assessment ($9,278,062., $9,480,208., and $9,439,542.) multiplied by the applicable tax rate for the year, and when paid, should be refunded with six percent interest from date of payment by the taxpayer.' Defendant's exceptions to denial of its motions; to the master's rulings admitting and excluding evidence; to the granting and denial of requests for findings and rulings; and to the master's report were reserved and transferred by Batchelder, J. as was defendant's exception to the court's denial of its motion to return the master's report to him for corrections.

The main issue involved is the 'full and true value in money' (RSA 75:1) of the taxable real estate and fixtures owned by New England Power Company in Littleton on April 1, 1969, April 1, 1970, and April 1, 1971. The town's basic contentions are succinctly stated in its brief to be the following: '(T)he master erred in applying the law of valuation and went on to further error in his understanding and use of the different evidences of value presented, both in its treatment per se and its treatment vis-a-vis other evidence of value.' The town further claims that the company failed to carry its burden of proving 'with evidence which (the master) was entitled to use under the law' that it was entitled to an abatement. At oral argument the defendant expressly waived its claim that if an abatement was warranted, the formula prescribed and used by the master for the determination of the amount of the abatement was erroneous.

The property in question is a hydroelectric power facility known as 'Moore Station' located on the Connecticut River between Littleton, New Hampshire and Waterford, Vermont. Approximately 90% of the project is in Littleton. It was constructed between 1951 and 1957 under a license issued by the Federal Power Commission (16 U.S.C. § 797(e)) for a period of 50 years from August 1, 1951 to July 31, 2001. The land consists of approximately 4300 acres. In the project itself are 1900 acres permanently under water or flowed as part of the reservoir, and 1400 acres which are subject to a 40 foot draw-down by the dam and are above water. The remaining 1000 acres are above water but outside of the project itself and not subject to the terms and conditions of the license which apply to the project land. 16 U.S.C. § 799 (1970).

A dam about 5,325 long creates a reservoir about 11 miles in length having a usable storage of about 115,000 acre feet. Approximately four miles of it borders the town of Littleton and about 40% of the stored water for that four miles is in Vermont. There are additional sources of stored water at Second Connecticut Lake and First Connecticut Lake, owned by the company, and at Lake Francis owned by the State of New Hampshire, all of which are outside of Littleton. Being a conventional hydroelectric station it includes four turbines each connected to a generator; buildings to house the equipment; a transmission yard with transformers and transmission lines running from the vicinity of Littleton to Tewksbury, Massachusetts. Since February 1971 the station has been completely automated at an additional cost of $500,000 over its original cost of $27,770,793. Moore 'is an integral part of the New England Company complex, generating electricity which is carried out to the Company lines to meet demand.' It has a generation capability of between 190,000 and 200,000 kilowatts (KW) sometimes referred to as 190 to 200 megawatts (MW).

The demand for electricity varies greatly from day to day, season to season, and hour to hour within each day. For New England, the highest demand is in December and a smaller peak in midsummer. The demand is met by three kinds of generating plants: a base load plant which is designed to run at a constant rate 24 hours a day; an intermediate cycling plant which can come on line during periods of high demand; finally by a peaking plant which does not run anywhere near capacity but which should be ready to take care of the extreme peaks of demand for relatively short periods of time. Conventional hydroelectric plants, such as Moore, fall in the latter category, although to a certain extent Moore can serve also as a cycling plant especially in periods of high runoff. These occur, however, in the spring which are low demand months. Moore's average operation is at less than twenty percent of capacity, its annual capacity factor being 13.5%.

With the advent in the 1950's of the reversible turbine, 'Pumped storage' plants became available. Water is pumped from a lower reservoir to a higher one by cheap off-peak power. In periods of high demand the turbines are reversed and the water running down again into the lower pond generates electric energy. It takes 3 KW to pump water for every 2 KW of returned useful energy. These plants have an advantage over conventional hydro plants like Moore in that they can be a dependable year round source of power.

The parties made the following stipulations. The property generally in Littleton, other than the property of the company, was assessed for the three years 1969-71 at amounts, the sum of which represented its 'full and true value in money' as required by RSA 75:1. The highest and best use of the project property is for the generation of electric power. The value of the nonproject property was $43,760 for the three years in question. The town appraisal of $35,050,450 for each year was $6,040,680 for land ($43,760 to be deducted) and $29,009,770 for buildings and equipment.

RSA 75:1 reads as follows: The selectmen shall appraise all taxable property at its full and true value in money as they would appraise the same in payment of a just debt due from a solvent debtor, and shall receive and consider all evidence that may be submitted to them relative to the value of property the value of which cannot be determined by personal examination.' It is agreed that this same standard was to be applied by the superior court, the master in this case, in determining whether or not the company was entitled to an abatement. Edes v. Boardman, 58 N.H. 580, 584 (1879). Although their calculations differed in many respects, the experts presented by each party agreed that there are five approaches to valuation. They are: (1) original cost less depreciation; (2) reproduction cost less depreciation; (3) comparable sales; (4) capitalized earnings; (5) cost of an alternative facility capable of delivering an equivalent amount of power and energy.

Under original cost less depreciation both sides arrived at substantially the same value in the form of year end figures adjusted to reflect the value as of April 1 of the following year. They were as follows: 1969, Company $24,090,896, Town $24,085,478; 1970, Company $23,767,222, Town $23,744,304; 1971, Company $23,889,203, Town $23,848,500. The reproduction less depreciation values presented were as follows: 1969, Company $31,504,707, Town $40,350,000; 1970, Company $32,430,930, Town $42,829,000; 1971, Company $33,883,736, Town $45,885,000. Under comparable sales, no figures on value were submitted as no sales of comparable projects had taken place. There was evidence presented to the effect that the value of hydroelectric plants sold or acquired by eminent domain has not been limited to original cost, or such cost less depreciation. Under capitalized income no figures of value were introduced either. There was evidence that this approach is not helpful because sale of a non-competitive product whose price is regulated is involved. Furthermore because Moore is part of a larger unit it is difficult to segregate its share of the income. Finally both experts presented figures of value based on the cost of an alternate source of power, a pumped storage plant. They were as follows: 1969, Company $19,926,447, Town $33,248,000; 1970, Company $21,613,075, Town $36,843,000; 1971, Company $24,025,112, Town $38,710,000.

All of the above approaches to valuation are recognized as valid. Public Service Co. v. New Hampton, 101 N.H. 142, 136 A.2d 591 (1957). Evidence thereunder, with the resulting values arrived at by those approaches which were deemed relevant, was properly admitted in evidence. There is no rigid formula which can be used to arrive at full and true value of Moore for ad valorem tax assessment. See New England Tel. & Tel. Co. v. State, 113 N.H. 92, 95, 302 A.2d 814, 817 (1973). Nor is specific weight required to be allocated to any of the several approaches. Kittery Electric Light Co. v. Assessors of Town, 219 A.2d 728, 737 (Me.1966). Judgment is the touchstone. If the master has considered and assigned such weight to each value indicator as...