Newbury, Vt., Wins Dam Lawsuit

  • Pumpkins float in floodwater that inundated the fields of Walter Gladstone’s Newbury, Vt., farm land on Oct. 18, 2005. About 50 acres of land used for growing pumpkins on both sides of the Connecticut River were flooded. (Valley News - James M. Patterson) Copyright Valley News. May not be reprinted or used online without permission. Send requests to permission@vnews.com.

  • The Wilder Dam over the Connecticut River, seen from the air on Saturday, Dec. 9, 2017. (Valley News - Charles Hatcher) Copyright Valley News. May not be reprinted or used online without permission. Send requests to permission@vnews.com.

Thursday, December 14, 2017

Montpelier — The town of Newbury, Vt., prevailed before the Vermont Supreme Court this week in a case that will bring thousands of dollars in tax revenue from impoundments by a dam located 41 miles downriver.

The case hinged on the value of legal instruments the dam owner possesses, called flow easements or flowage rights, that permit the dam to flood land situated below its reservoir’s high-water line.

The Wilder Dam’s reservoir extends 46 miles up the Connecticut River from the structure, which is just north of White River Junction.

Flowage rights in Newbury, near the top of the reservoir, are a type of real estate asset, the Supreme Court wrote in its Dec. 8 decision. Consequently Great River Hydro, the dam’s owner, must pay property tax on these assets.

Great River Hydro owns rights to flood around 2,000 acres in Newbury, according to the suit. All those acres are currently used as farmland, the suit states. The case evolved out of a 2012 assessment by Newbury on the value of the rights to flood that land. It was fought by TransCanada, the dam’s former owner. TransCanada sold the dam to Great River Hydro earlier this year.

Great River Hydro can’t comment on why Trans-Canada continued to fight the case even after the sale, said Shawn Keniston, Great River’s director of external affairs and relicensing. But Great River Hydro intends to pursue a cooperative approach with municipalities in the future, Keniston said.

The company is still evaluating the Supreme Court decision, Keniston said.

TransCanada — the dam’s former owner, which fought the Supreme Court case — sought to convince the courts that the flowage rights are worth $500 per acre. It also asked the courts to assess that value on only 19 of the acres for which the company owns flowage rights.

This theory would have led Newbury to collect taxes on what would amount to $9,500 worth of assets the flowage rights represent.

The town argued the rights are actually worth $1,000 an acre and that there are 1,964 acres within the town that have flowage rights attached, all of which should be assessed for tax purposes.

A lower court arrived at a figure of $836 per acre for the flow easements, except that certain easements had no value because they attached to land outside the 100-year flood zone for the Connecticut River. There was no possibility the Wilder Dam would flood that land, the court found.

The courts’ revisions to Newbury’s figures meant Great River Hydro owns more than $1.55 million worth of flowage rights within the town.

That amount will bring the town around $9,000 annually and the schools about $30,000, said Newbury Town Treasurer Mary Collins.

The town’s been collecting taxes on the flowage rights all along, even after TransCanada first disputed the town’s valuation of them in 2012, said Newbury Selectboard Chairwoman Alma Roystan.

The Wilder Dam is undergoing a relicensing process with the Federal Energy Regulatory Commission, an event that takes place every 30 to 50 years.

The effort is likely to last through 2019, according to a report by legislative staffers written last year when Vermont officials were considering a purchase by the state of Wilder Dam and 12 others that TransCanada had put up for sale.

The Wilder Dam could see up to a 30 percent reduction in revenue, according to the legislative report, as a result of stricter water quality standards.

Keniston said Great River Hydro is still conducting studies for the relicensing push, and said he’s unable yet to comment on projections of the dam’s output.

The hydroelectric plant in the Wilder Dam produces around 37 megawatts, according to the legislative report.

TransCanada sold the Wilder Dam and 12 others in April to Great River Hydro.