Earlier this year, both the Wyoming House and Senate rejected a bill that would retain central assessment by the state of property of independent power producers (IPPs). Based on this action, IPPs will no longer be centrally assessed by the state and will be locally assessed.
This month, local assessors across the state voted to outsource the valuations of property owned by IPPs to a Texas engineering firm. Dallas-based Thomas Y. Pickett was selected by several assessors and will be charged with the valuation of these properties.
The valuation of an IPP’s property presents several challenges because these properties are not rate-base regulated utilities. IPPs must recover the cost of generation from the markets either as merchants or via fixed-price power purchase agreements with wholesale customers—then, bolt on the added risks of transmission constraints, intermittent generation, and seasonal demand. Additional intricacies created by tax credits creates several valuation issues that also must be addressed. The appraisal issues regarding the outright exclusion of the tax credits from being reflected in the cost or income approaches to value are statutory in some states; however, other states require these incentives to be proven through obsolescence.
A letter from Dave Divis, President of the Wyoming Assessor’s Association will be sent in the coming weeks to those impacted. The experts at Ryan will continue to monitor bills that impact power producers across the U.S. We encourage you to subscribe to our industry updates and stay informed.
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