DTE Energy Co. wants to reduce the property taxes of its 1,161-MW Fermi 2 nuclear power plant by 60%, or $242 million, from $404.3 million to $161.7 million, along with the tax value of its 3,086-MW Monroe coal power plant by 45% to a still undisclosed amount. The final value of the plants are still being negotiated with local tax authorities but the company said the problem is that the plants were assessed at too high a rate, not that the facilities have lost value.
As reported by the Monroe News, DTE proposed the property tax reductions as part of appeals filed May 29 with the Michigan Tax Tribunal that were just made public. The Fermi 2 tax appeal said that the boiling-water reactor in Monroe County, Mich., about 25 miles northeast of Toledo, Ohio, had an assessed taxable value of $404.3 million for 2018 and that DTE "believes, as it relates to taxable value, that there is a dispute relative to the value of a loss." The separate appeal for the nearby Monroe coal-fired plant has yet to be disclosed.
DTE said in the filing that the plant's property assessment, including state and equalized value and taxable value, and their taxes are "invalid and unlawful" as the assessment exceeds amounts permitted by the Michigan Constitution. The appeal also said the assessment is at a higher percentage of true cash value than allowed and is based on "erroneous determination" of the true cash value. In addition, the filing said the assessment "discriminates" against DTE and denies the company its constitutional rights to uniformity, equal protection and due process of law.
Much to the dismay of local governments and their municipal budgets and revenues, the devaluation of Fermi 2 and the Monroe plant would cut county property tax revenues by nearly $11.6 million and $12.1 million, respectively, according to Monroe News.
In an interview, DTE spokesperson Peter Ternes said the issue has "more" to do with tax authorities overvaluing and, thus, overtaxing the two plants, and not with any depreciation of the true financial value of the generating assets. Ternes said that any potential tax reduction would be passed along to consumers through lowered rates.
DTE also sees a long future ahead for both the Fermi 2 and Monroe plants, with the former coming online in 1988 and the latter starting operations in 1971. Ternes said the coal-fired Monroe plant is not scheduled to cease generation for another 22 years, while Fermi 2's operating license was renewed in 2016 by federal regulators and extended from 2025 to 2045.
Further, Ternes said DTE has been working with local tax authorities in Monroe and Frenchtown since summer 2017. He said the latest filings are just protective appeals that allow DTE to continue working with local authorities and to negotiate the final taxation amount.
"We've been making [local officials] aware of our need to reassess the taxes, and our negotiations are ongoing," Ternes said in an interview. "But due to the nature of the Michigan property tax ... procedures, we're required to file an appeal to any proposed assessed taxable value" by a May 31 deadline for responses.