Sandwich Reaches Tax Agreement with NRG for Proposed Turbine

COURTESY OF NRG ENERGY The current plant in Sandwich.

The current plant in Sandwich.

SANDWICH – A new natural gas and oil turbine proposed for the Canal Generating Plant on the Cape Cod Canal will fetch Sandwich more than $57 million in future revenue.

Town officials and NRG Energy reached a payment in-lieu-of-taxes agreement and a host community agreement that will bring payments to Sandwich over 21 years once the plant is operational.

“We’ve been working on that for many months with the goal of it taking effect once the new plant becomes operational,” said Bud Dunham, the town manager in Sandwich.

The proposed 330-megawatt turbine would modernize the Canal Generating Plant and would be used during peak energy use, along with a community solar farm.

NRG Energy is still in the process of obtaining permitting for the turbine and hopes to have the plant online by the summer of 2019.

The agreements are slated to begin in fiscal year 2020.

“There [are] provisions in the legal agreement that if they are not operational by that date, like there are certain things that happen, once they become fully operational then the payment plan for taxes kicks in for 21 years,” Dunham said.

The payment-in-lieu-of-taxes agreement is just over $50 million for 21 years.

The host community agreement is a separate legal document includes payments of $100,000 to the town each year for public safety and emergency management equipment and training.

“Obviously a facility like that would be the biggest thing that could cause a problem emergency management wise in town,” Dunham said. “So that’s important.”

A $50,000 payment will also be paid annually to the school department for an innovative curriculum fund.

“If you add those two things up over 21 years it’s over $3.1 million dollars,” Dunham said.

Other payments include just over $1.5 million to the Community Preservation Act.

“That’s really important because under state law if the plant was valued as personal property like units one and two are they are exempt from paying the CPA fund,” Dunham said. “So this was a nice concession on their part understanding being part of the community that they would pay the 3 percent Community Preservation Act charge to help us with those types of initiatives.”

The two current power generating units were commissioned in 1967 and 1976.

Dunham said the agreements on those units last for another two fiscal years. That agreement is a value agreement which is based on the value of the facility multiplied by the town’s tax rate. As the units depreciate in value each year, the payments to the town continue to decrease.

“We need to get as much money as we can in the first year for our new growth for our tax levy,” Dunham said. “But we also recognize that they have huge expenses in building the plant and they are not allowed to charge as much in the first handful of years.”

The payments would decrease for the years after the first payment and then increase over the next 17 years.

“What’s nice is that in 21 years from now they’ll be paying almost the same as what they’d pay the first year, which is a big difference from a tax value agreement,” Dunham said.

The new agreement requires approval at Town Meeting.

Dunham said an article could be included on the Special Town Meeting in November or at annual Town Meeting in May.


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