Utilities cut tax payments as power sales drop
America’s biggest government utility and its distributors may be exempt from paying property taxes by their government and nonprofit status, but they are still the biggest taxpayers in Chattanooga and most of the Tennessee Valley.
But as homeowners and businesses use more energy efficient appliances and machines and power sales stagnate or decline, the amount of taxes collected from power utilities is no longer increasing and could drop slightly over time.
TVA directors this week approved the final in-lieuof-tax payments to states and localities totaling nearly
$523.7 million for the fiscal year ending Sept. 30. Such payments were up $6.5 million from the previous year but are still down more than $11 million from 2016 and nearly $18 million below what TVA paid in 2015.
As a government identity, TVA does not pay state or local taxes or federal income taxes. But the TVA makes tax equivalent payments to state and local governments in order to compensate for the property tax exemption. Under the TVA Act, the federal utility pays 5 percent of TVA’s gross proceeds from its power sales.
As power sales slow and fuel costs drop, TVA is paying slightly less than it did at its peak a decade ago.
The payments are allocated across TVA’s sevenstate region — and in Illinois where TVA has coal holdings — based upon where TVA does business and has its power facilities.
Since 1941, TVA has made more than $13.5 billion in tax equivalent payments with payments in the past decade alone totaling more than $5 billion.
“These funds represent another way TVA works with state and local government to invest in continued economic development, improved quality off life and overall community growth to benefit those we serve,” TVA President Bill Johnson said in an announcement of the tax payments for 2018.
As the power headquarters for TVA and home to the Sequoyah Nuclear Power Plant and Chickamauga Dam, TVA paid Hamilton County government this year $2.4 million — the fourth highest of all property taxpayers in the county.
The biggest taxpayer in the county is EPB, which sells TVA-generated power to more than 160,000 homes and businesses in the Chattanooga are. The city-owned EPB also is exempt from property taxes, but EPB pays cities and counties where it operates based upon its franchise agreements and facilities in each area.
Hamilton County Trustee Bill Hullander said EPB is the biggest single taxpayer to county government, paying $11.2 million this year. Among all the 17 municipalities and counties where it operates, EPB pays more than $20 million a year, spokesman John Pless said.
As EPB has expanded EPB Fiber Optics and reached nearly 100,000 customers of its telecommunications services, EPB’s property tax payments to local governments has jumped by nearly 50 percent over the past decade since the electricity distributor began its telecom business in 2010, Pless said.
Contact Dave Flessner at dflessner@timesfree press.com or at 757-6340.