Vectren wins tax fight, will pay $2 million less

Vectren wins tax fight, will pay $2 million less Schools, cities, public agencies to be affected by reassessment.

As a result, area school districts will receive less in tax revenue than if Vectren had not successfully appealed its original assessment.

Vectren Energy Delivery of Ohio will pay about $2 million less in taxes to schools, cities and other public agencies in Montgomery County after winning a partial reduction to its tax bill.

But customers will benefit from a lower cost of service that delays the need for a rate increase, said Colleen Ryan, president of Vectren Energy Delivery of Ohio.

“Cost control is a central element of utility management,” she said. “We are continually looking for ways to reduce cost, and property taxes are a significant cost.”

The reassessment in Montgomery County alone will provide Vectren with $2 million in tax relief, money that would have been distributed to local school districts, parks, libraries, cities and townships.

A couple of years ago, Vectren Energy Delivery of Ohio submitted a petition asking the state to reduce the value of its public utility personal property, which includes equipment, machinery and pipelines.

The company asked for the value of its public utility personal property to be slashed to about $138.5 million from $348.8 million, according to state records. Vectren has about 5,500 miles of pipeline and more than 310,000 natural gas customers across 17 counties

Last year, the state tax commissioner officially rejected the company’s reassessment request. But Vectren appealed.

The Ohio Department of Taxation has reassessed the value of the company’s gas distribution system in 17 counties across the state, including Montgomery County, for tax years 2014 and 2015.

Vectren asked for a larger reduction than it ultimately received, meaning taxing districts were spared what could have been an even bigger hit to their collections.

Vectren’s personal property assessments in Montgomery County were reduced by 21 percent for 2014 and 16 percent for 2015, according to the auditor’s office. Vectren had asked for a roughly 60 percent reduction. The company saw an 11 percent reduction for 2016.

Ryan said taxes are a cost of service, and, when they rise, they ultimately must be reflected in customer bills.

“Our ability to avoid the higher costs that would have come from the higher/original assessments has allowed us to delay the timing of a rate case ...” she said.

But Vectren’s victory means that the Dayton Public Schools will receive nearly $458,370 less in tax revenue than it would have if Vectren had not successfully appealed its original assessment. That’s for tax years 2014 and 2015.

This was an unexpected loss of revenue for the Dayton Public Schools, said Hiwot Abraha, treasurer and CFO of the Dayton school district.

“The funds were already budgeted for use,” she said. “Now we have to come up with alternative cost saving measures to bridge the gap without affecting student learning.”

The other biggest losers include the Kettering City School District (-$358,270), the Montgomery County Human Services Levy (-$250,570) and Centerville City Schools (-$175,535), according to county auditor estimates.

But these and other taxing districts in the county will be receiving payments from Vectren Energy, because the company up until now only paid taxes on its own estimated value of its personal property, said County Auditor Karl Keith.

The company did not have to pay what it technically owed until it finished the appeal process.

At least local jurisdictions will have some closure on this matter and will receive the unpaid tax revenue soon, Keith said.

“They’ll be getting money as a result of it,” he said.

Vectren Energy is one of the larger taxpayers in the county, and millions of dollars were at stake for jurisdictions across the region, officials said.

Ryan said utility companies commonly challenge their assessments if there’s reason to believe they are too high.

“We presented support for that position and the tax board granted the reduction in assessed values,” she said. “Other gas utilities in the state have reached similar agreements, in fact, in some cases much larger than this reduction.”

Duke Energy challenged its assessment in 2009, seeking to reduce its tax bill by about $40 million. The company settled the case, and the terms of the agreement were confidential.