Distant Dome: New England's Last Coal-Fired Power Plant Closes

By GARRY RAYNO, InDepthNH

Anyone who travelled I-89 or I-93 in the winter months near the Capital City, would see a large white plume of smoke rising out of Merrimack Station, the coal-burning electric generating plant in Bow.

At one time, the plant produced a large percentage of the electricity used by Public Service of New Hampshire?s customers along with Seabrook Station.

In those days, the plant?s location along the Merrimack River was the prime reason Bow?s property taxes were much lower than surrounding communities.

While the plant required the town to have more fire fighting equipment, and more expensive ladder trucks than it needed for the rest of the town, the property taxes PSNH and in turn its customers paid, kept Bow?s tax rate among the lowest in the Capital region.

But as coal became a less acceptable fuel for generating electricity and heating homes and businesses due to its greenhouse gas emissions accelerating global warming and climate change, the plant ran less and less and for the past decade or so has been a ?peaker,? only used when the electric demand is high and the usual less expensive sources of electricity cannot produce enough to satisfy the need.

In its last half dozen years, the plant ran at less than eight percent of its capacity compared to 70 and 80 percent 20 years ago.

The plant last ran in September and is now officially shut down by its owner Granite Shore Power, which intends to convert the facility into a renewable energy park with large battery storage.

The plant was scheduled to shut down in 2028 under an agreement with the Conservation Law Foundation, the Sierra Club and the Environmental Protection Agency due to Clean Water Act violations from its cooling system

The plant also failed an emission test in recent years.

Merrimack Station was the last coal-fired generating plant in New England, and with its closure, coal emissions no longer fill New England skies to generate electricity.

The environmental benefits of moving away from coal are clear, but the slow reduction in use and now the closure are also examples of the complexities of the state?s reliance on property taxes to fund the vast majority of government in the state from Concord down to water precincts.

Several recent studies show what New Hampshire property owners already know, that the state?s property tax rates and collections are among the highest in the nation.

New Hampshire recently ranked fourth highest in the country for effective property tax rate behind only New Jersey, Illinois and Connecticut.

New Hampshire property owners pay the third highest median property taxes.

And New Hampshire is number one in the nation in collecting state and local property taxes.

The foundation of property taxes is the assessment and how it is determined.

Property taxes are assessed on the value of the land you own and the value of the building or buildings.

No one would argue the value of Merrimack Station goes down with the move from full-time energy supplier to peaker, but how?

The value of the land hasn?t changed. Its potential for development along the shores of the Merrimack River probably increased with the plant?s shutdown.

And the buildings and their use have not changed and still have the capacity to produce lots of energy if ever the coal rail cars begin traveling to Bow again.

To see what can happen in this convoluted property tax system, you only have to look to the turn of the century when state lawmakers cobbled together an education funding plan that included a statewide education property tax and a state utility property tax. The plan was the legislature?s answer to the State Supreme Court?s Claremont decisions.

The state utility property tax was a direct hit on communities that hosted generating plants like Bow, Seabrook, Portsmouth and Newington.

While Portsmouth and Newington were able to survive the added expense because of the communities? total property value, it transformed Bow and Seabrook from donor communities into receiver towns overnight.

At the time, the town of Bow had recently won a court case filed by PSNH objecting to the method the town used to assess Merrimack Station. It would later lose a similar case.

But when the state instituted its utility property tax, the Department of Revenue Administration decided what the assessments would be for poles, wires, transformers and yes the generating plants.

The DRA?s assessment for Merrimack Station used a methodology different than the town?s and produced a vastly different value.

With the two assessments tens of millions of dollars apart, PSNH threatened to sue the town unless it dropped its assessment down to the state?s.

A three-year step down agreement was reached to soften the blow to property taxpayers.

When the statewide property tax and the utility tax went into effect, the town of Bow lost multiple millions of dollars of its tax revenue to the state?s coffers.

Without making draconian cuts to schools or town services, those millions of now state dollars were downshifted to the local property taxpayers by the legislature?s actions.

I owned a home in Bow at the time and my property tax bill was a steady $1,500 a year.

In the next three years, my tax bill skyrocketed to over $6,000 a year and it kept going up as the value of Merrimack Station went down.

The town of Bow did not raise my property taxes 400 percent, the state of New Hampshire did as they did to every property owner in Bow, and most likely Seabrook as well. Portsmouth?s and Newington?s tax base softened the blow a little bit in those communities.

The value of my property did not change, if anything it went down because the community was no longer as desirable a place to live because the property taxes were no longer reasonable.

Just prior to this happening Bow had decided to build its own high school and leave Concord High School when the Concord School Board decided to increase Bow?s payments to attend the high school.

When the residents of Bow decided to build their own high school, they had no idea a few years later the state would manipulate the property tax system for its own benefit and drastically increase the property taxes for Bow residents and businesses.

A similar situation is developing with lawmakers messing around with local planning and zoning ordinances in the name of affordable housing after years of master plans being developed and approved, but now the state legislature knows best.

The same people who rail against the ?state knows best? when it comes to civil rights or public education are leading the charge to loosen zoning and planning regulations.

There is a long history of the state changing the equation from school funding to the victims of physical and sexual abuse at the hands of state employers at the Sununu Youth Services Center or the governor?s take over of the sale of the former Laconia School property.

What does not change, is things never work to the advantage of communities negatively impacted by the state?s heavy hand on the scales.

Garry Rayno may be reached at garry.rayno@yahoo.com.

Distant Dome by veteran journalist Garry Rayno explores a broader perspective on the State House and state happenings for InDepthNH.org. Over his three-decade career, Rayno covered the NH State House for the New Hampshire Union Leader and Foster?s Daily Democrat. During his career, his coverage spanned the news spectrum, from local planning, school and select boards, to national issues such as electric industry deregulation and Presidential primaries. Rayno lives with his wife Carolyn in New London.

This article first appeared on InDepthNH.org and is republished here under a Creative Commons license.