PPL Montana and the Montana Department of Revenue have reached a negotiated compromise on the company’s property taxes for 2000 through 2007.
PPL Montana had been paying its taxes under protest, as permitted under state law, because it believed the company was being treated unfairly compared with similar companies. This settlement ends that protest and ensures that the money — which PPL paid and the state kept in escrow — can be distributed to schools and municipalities.
“Working with the Department of Revenue, we’ve reached what we believe is a fair agreement for tax years 2000 through 2007,” said Brad Spencer, PPL Montana’s vice president and chief operating officer. “The DOR staff acted quickly on revised assessments to conform to last month’s decision of the Montana Supreme Court.
“PPL Montana now considers this matter closed,” he said. “We’re pleased that this issue is behind us so that we can continue work on productive relationships with our counties and communities.”
PPL Montana reached the agreement with the Department of Revenue based on calculations approved by the court.
In a split ruling for the company, the Montana Supreme Court in December upheld a State Tax Appeal Board’s decision to lower the appraised property tax values of PPL Montana assets for 2000, 2001 and 2002. But the court also ruled that PPL Montana’s property could be valued higher than similar property owned by other companies.
The court’s ruling affirmed the tax board’s 2005 decision to reduce PPL Montana’s property tax for tax year 2000-02. The settlement agreement also reduces the values for tax years 2003-07. Based on the court’s reduced value and the negotiated settlement values PPL Montana will be receiving approximately $6.7 million in refunds in addition to an estimated $1 million to $1.5 million in accrued interest.
The court ruled that PPL Montana should pay higher property taxes for its hydroelectric and coal-fired power plants than what is paid by other companies that own similar facilities in the state.
The court reaffirmed the Montana Department of Revenue’s position that PPL Montana should pay higher property taxes because it sells electricity in unregulated wholesale and retail markets rather than regulated markets like utility companies in Montana.
PPL Montana argued unsuccessfully that selling electricity in unregulated markets carries a higher degree of risk than selling in regulated markets and that differential tax treatment gave a competitive advantage to other utilities operating in Montana.
The decision itself did not affect the protested taxes paid by PPL for the period of 2003 to 2007. PPL and the Montana Department of Revenue resolved issues associated with taxes in those years as well.
“The tax issue was never about avoiding paying taxes,” Spencer said. “This was simply an issue of fair treatment. In the end, both sides recognized the value of reaching an agreement for the benefit of programs that are important to Montanans.”
PPL Montana paid 100 percent of its taxes each year as they became due and will receive a partial refund based on the court’s ruling to uphold the decision to reduce the state’s appraisal of PPL Montana’s assets.
The remaining protested funds will be released to the affected counties — Cascade (Great Falls), Sanders (Thompson Falls), Rosebud (Colstrip), Lewis and Clark (Helena), Lake (Polson) and Yellowstone (Billings) — and the state treasurer.
PPL Montana provides safe, reliable energy from coal-fired power plants at Colstrip and Billings, as well as 11 hydroelectric plants along West Rosebud Creek and the Missouri, Madison, Clark Fork and Flathead rivers. It has a combined generating capacity of more than 1,200 megawatts and has offices in Billings, Butte and Helena. PPL Montana and its 500 employees are dedicated to Montana and its communities, supporting educational, environmental and economic development programs across the state. PPL EnergyPlus operates a trading floor in Butte that markets and sells power for PPL Montana in wholesale and retail energy markets throughout the western United States. PPL Montana and PPL EnergyPlus are subsidiaries of PPL Corporation (NYSE: PPL).