A debate between Consumers Energy and Tuscola County could result in essential bankruptcy for county school districts and Unionville-Sebewaing Area School District.
Since wind farms were constructed in the county in 2016 there has been an ongoing dispute between Consumers Energy and the county on the tax applied to the farms. There are currently 114 turbines that are being valued lower than what was originally agreed upon prior to construction. These turbines produce 231 megawatts of power for the county. According to a press release by the Michigan Renewable Energy Commission they are being valued at 45-80% lower than once proposed.
Because of this, Consumers Energy claims that they are owed back the taxes on them since 2016. Based on that claimed loss in value, Tuscola County would need to pay $8.5 million back in taxes. Consumers Energy Media Relations Specialist Tracy Wimmer said that Consumers is basing the valuation on set guidelines.
“In terms of the valuation, Consumers Energy doesn’t create or control the state’s personal property tax guidelines, and the current valuation reflects Michigan property tax law,” Wimmer said. “We are not assessing the turbines; we are paying based on the state’s assessment of the turbines.”
The Michigan Renewable Energy Commission was created to help deal with the number of tax appeals from around the state not only from Consumers Energy but DTE, Nextera, Exelon and AEP. These appeals came up in Gratiot, Huron, Tuscola and Sanilac counties where other renewable energy farms have been established.
“It has turned into a large process,” said Tuscola County Administrator Clayette Zechmeister. “We have since settled with DTE on a fair plan but we are still at the table with Consumers.”
It is not just the money coming back from taxes that is causing issues. Zechmeister said the legal process throughout the tax appeals is costing the locals a lot of money as the county needs to pay for the legal process.
“The corporations came into our counties and promised a partnership of renewable energy with a fair tax to support our local economies,” Zechmeister said. “Instead, they insisted on a lower tax rate and lower values of the Turbines they constructed in our communities.”
Even though Consumers Energy is filing the dispute, they’ve expressed interest in a compromise through litigation.
“More than anything I want to reiterate that Consumers Energy’s priority is to work with the county and local entities to reach a fair solution that still allows the community to prosper financially while ensuring a balance in costs that all of our Michigan residential and business customers ultimately will pay,” Wimmer said. “As we are obligated by law to distribute the costs of these assessments across all customers through our rates. We completely understand and share the frustration of those affected by this issue, and have been, and will continue to work toward, a just resolution.”
One of the biggest impacts this will have on Tuscola County is in the school districts. According to the press release, this would result in layoffs and cutbacks in educational services and would negatively impact students who are still trying to recover from “COVID-related learning loss.”
Some of the districts that would be impacted would be the Akron-Fairgorve and the Unionville-Sebewaing Area districts. The tax exposure for Akron-Fairgrove is over $377,000 with USA schools’ tax exposure over $1,189,000. According to USA district superintendent Josh Hahn, paying the money being asked of them would completely empty their fund balance and would require them to raise millages and cut programs.
“It would be a devastating hit to our school district and our community,” he said.
Though the Tuscola ISD has funds to help protect itself from CMS’s legal demands, the refunds would still be paid out from different fund balances such as special education, career and technical education and general education.
Despite the legal issues with Consumers, members and organizations in Tuscola County do recognize the need for alternative energy sources.
“Tuscola ISD has been and continues to be a promoter of alternative energy sources,” said Tuscola ISD Superintendent Gene Pierce. “However, the tax refund exposure is a very significant financial concern for us. Tuscola ISD would prefer to spend these funds on education rather than refund money to a publicly-traded power provider. We hope Consumers will see how important it is to keep these funds in our community.”
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