That’s certainly the current situation with Comanche Peak Nuclear Power Plant near Glen Rose in Somervell County, southwest of Fort Worth.
In recent social media posts and comments in news stories, there are facts ignored, distorted or misinterpreted. Let’s fill in the entire record for what’s going on and why Comanche Peak’s value is much lower than it used to be due to low wholesale power prices caused by inexpensive natural gas and subsidized wind generation.
Luminant’s goal from the outset has been to determine Comanche Peak’s taxable value for 2015. As a longtime corporate citizen, we’re committed to pay our fair share and are pursuing the process available to any taxpayer. Any opinions contrary to our stated goal are misinformed.
After the Somervell County Appraisal District assessed Comanche Peak’s 2015 value at $2.2 billion, we appealed to the county’s Appraisal Review Board which agreed with the assessment. We then turned to the courts, as provided by law, and in March, the state district judge for the 18th Judicial District, who’s elected from Somervell and Johnson counties, sided with the appraisal district.
Luminant believes the court decision doesn’t reflect the 2015 taxable value of Comanche Peak given the market conditions, $949 million. On this undisputed amount of assessed value, we already paid Somervell County taxing jurisdictions almost $16 million in taxes. We have appealed the district court’s decision to the Tenth Court of Appeals in Waco.
But how we got to this point is just half the story. The other half is why. And the reason is pretty simple for those who accept the clear hard fact that markets go up and they go down. When prices were higher, Comanche Peak’s value was greater and it paid more in property taxes. But power prices are now at historic lows and when Comanche Peak makes less revenue, its value as an income producing asset must follow.
How steep have power prices fallen? In 2008, average annual wholesale power prices in ERCOT were more than $63 per megawatt hour. In the first quarter of 2015, wholesale power prices averaged $26 per megawatt hour and they were about $17 per megawatt hour in the first quarter of this year. That’s a 35 percent drop in just the last year.
As power prices plummeted and especially in the past two years, we informed the Somervell County Appraisal District and county officials of our firm determination to arrive at a fair taxable value for Comanche Peak. So, we’re confident they’ve been aware for some time of how long this process may take.
We’re certainly aware of Comanche Peak’s impact on the school and county governments in Somervell County that decided to structure their budgets so that more than 70 percent of their total property tax revenue comes from the plant. During the process to reach a 2015 taxable value for Comanche Peak, those local governments that passed solid prudent budgets with adequate reserves are fully capable of evaluating their options.
Luminant and Comanche Peak are longtime members of Somervell County communities so, of course, we remain concerned about their overall success. With all the facts known, we’re also hopeful people will understand the importance of determining what’s fair in this sustained low power price market.