Tax commissioner’s decision based on ‘sound principles’
Clermont County Auditor Linda Fraley has decided with assistance from Prosecutor Don White’s office not to appeal Tax Commissioner Richard Levin’s decision to award Duke Energy a $10.5 million reduction in the value of generators at their Beckjord plant.
“We worked with our representatives at the prosecutor’s office and researched the law,” Fraley said. “Our due diligence did not find a basis for an appeal, and to go forward it would have been very expensive.”
White said that while the auditor will not appeal the decision, should one of the affected communities of U.S. Grant Career Center, Pierce Township, or the New Richmond Exempted Village School District choose to appeal the decision at their own expense his office and the auditor would support them as needed.
While Duke had petitioned for a blanket devaluation of all their distribution and transmission equipment state-wide as well as under-used generating equipment at the Beckjord and the Miami Fort Station in western Hamilton County, the reductions were only awarded for the generating plants.
Duke argued that Beckjord was running at 40 percent capacity and the difficulties of maintaining two inactive turbines reduced their value. Duke classified the generators as impairments in their Securities and Exchange Commission filing.
“If you have an asset that does not generate enough cash flow to cover the cost of purchasing and maintaining it over the course of its life it’s considered an impairment,” White said.
White said Duke submitted its 2009 tax filing and SEC filing as well as a number of third party appraisals and the Commissioner made his decision based solely on the SEC filing. Fraley said the SEC filing followed a well established accounting practice to estimate the value of an impaired asset.
“It would be very difficult to appeal the decision of the tax commissioner because it is at his discretion and their are sound accounting principles supporting the commissioner’s decision,” White said. “It’s very much like a court case. If a decision is based on any reasonable evidence an appeals court will not overturn the judge’s decision.”
Clermont County Chief Deputy Auditor Chuck Tilbury said the devaluation resulted in a $700,000 of revenue in Clermont County. New Richmond Exempted Village Schools were hit with the brunt of the loss followed by Grant Career Center and Pierce Township.
Duke is expected to appeal the denied state-wide reevaluation of their their transmission and distribution lines.
“Our understanding is Duke is going to appeal globally throughout the state,” White said.