Equalization Ratios May be Applied to Fair Market Value Assessments of Electric Utility Property to Determine Appropriate Abatement

Appeal of Town of Chester & a.
New Hampshire Supreme Court Case No. 2020-0475
Thursday, September 16, 2021

PSNH, an electric utility company, sought abatements of taxes assessed against it for “electric utility property” –transmission and distribution (T&D) assets as well as transmission easements and the use of public rights-of-way (PROW) – located in the respective towns. The towns denied the abatements. PSNH appealed to the Board of Tax and Land Appeals (BTLA).

At the BTLA, each party submitted expert testimony on assessed value of the utility property, each largely concluding that the assessed value reflected the fair market value of the property. The BTLA then calculated the “equalized market value” based on application of the towns’ equalization ratios to the fair market value of the utility property. In comparing the equalized market value to the aggregate assessed value for each municipality for each tax year, the BTLA concluded that an assessment was unreasonable and granted an abatement when it determined that the difference between the equalized market value and the aggregate assessed value was greater than five percent.

On appeal to the New Hampshire Supreme Court, the towns argued that the BTLA erred by equalizing the aggregate fair market value of PSNH’s taxable property without first excluding the value of PSNH’s land interests, resulting in application of the equalization ratios to already-proportionate property values, creating inaccurate calculations.

The Court disagreed stating that the test in a tax abatement proceeding is whether the municipality assessed the taxpayer’s property at a higher percentage of fair market value than the percentage at which property is generally assessed in the municipality. In this case, the experts for parties calculated that the assessed value equaled the fair market value. As such, where the general level of assessment in the municipality is less than the fair market value, the taxpayer may demonstrate that the municipality’s assessment of that property was disproportionate. Here, that occurred. Therefore, PSNH’s abatement was granted.


Additional Information: 

Practice Pointer:  In taxing electric utility property, municipalities must be careful to ensure that they are taxing those utility assets on an equalized market value basis.