Charlotte, other towns, want to tax proposed underwater powerline

Courtesy Transmission Developers Inc.-New England


A powerline project set to bring energy to New England from Canada through a cable buried under Lake Champlain has caught the eye of some lakeshore Vermont communities – including Charlotte – who see it as a possible new source of tax revenue.

The Clean Power Link Project is a high voltage direct transmission current line that would run under Lake Champlain from Canada to a converter station in southern Vermont, where it would supply power to Massachusetts and other New England areas. The state of Massachusetts requested bids from companies to create sources of renewable energy in order to comply with the state’s carbon reduction laws.

Transmission Developers Inc., the energy company spearheading the project, recently completed its permitting and approval process with state and federal agencies, but is facing a financial challenge from seven towns that want to collect property taxes on the project. Though the cables will be buried underneath the lake, Charlotte, along with six other towns, is claiming ownership over that land and therefore the right to collect taxes.

The project has support from Gov. Phil Scott’s administration and from Gov. Peter Shumlin beforehand. The power company has pledged to pay Vermont $1.5 million annually for 40 years to help fund cleanup efforts for Lake Champlain. The state is facing federal mandates regarding Lake Champlain, and how to pay for environmental remediation is a leading topic of debate in Montpelier now.

After a research and permitting process that began in 2013, TDI New England received final approval for the project in 2017.

The 154-mile-long transmission line consists of two cables, each five inches in diameter, extending from the U.S.-Canadian border entering Vermont at Alburgh. First underground, then underneath Lake Champlain for 98 miles, it extends on land to a transmission station in Ludlow.

Now seven towns are claiming ownership of the land underneath the lakebed where the cables will be buried: Charlotte, Colchester, Isle La Mott, Panton, Shoreham, Bridport and Orwell. Whether or not this is a valid claim is not certain.
“Right now the Vermont statute isn’t clear about this,” said Charlotte selectboard Chair Lane Morrison.

Josh Bagnato, vice president of project development at TDI, disagrees. In an email to The Citizen he said: “Based on Vermont state law and the Vermont Tax Department, TDI does not believe we are responsible for paying property taxes for the portion of the Project that is in Lake Champlain.”

He provided a letter from Will Baker, assistant attorney general at the Vermont Department of Taxes, that states: “Under federal and state law, the State of Vermont owns the lakebed subject to the public trust. Vermont municipalities have only those powers specifically granted by the State and there is no statute granting authority to tax within the ‘navigable waters’ of the State. Absent such clear delegation by the State, municipalities have no general authority to regulate or tax public trust waters and submerged land.”

Morrison said the municipalities are working with “a Burlington law firm,” that he wouldn’t name, to challenge this decision. He said they are also hopeful that the issue can be handled legislatively. The Senate bill S. 274 would allow towns to collect utility taxes on projects like the Clean Power Link. Introduced by Sen. Chris Bray, D-Addison, it is in the Senate Finance Committee.

James Ehlers is executive director of the nonprofit environmental organization Lake Champlain International and also a declared Democratic candidate for Vermont governor this year. He supports the municipalities’ efforts to profit from the project.

“It’s not for Vermont ratepayers. It’s for corporations and ratepayers in other states who don’t want these projects in their own communities,” he said. “It’s a luxury, really, to be able to live a comfortable modern lifestyle and not have your community impacted by your own energy production.”

Bagnato pointed out that TDI already is making a significant financial contribution of what should amount to $263 million to Vermont to fund lake cleanup efforts. “Furthermore, the project is estimated to being approximately $1.9 billion in economic benefits to Vermont over its expected 40-year operating life,” he said. This amount includes state property, sales, and income taxes; VTrans right-of-way fees; and other projected revenues from employment opportunities and energy savings. In addition, he said, towns will benefit from the much-needed lake cleanup, an assertion backed up by the Certificate of Public Good issued by the Vermont Public Utility Commission.

So far, the efforts to tax the project haven’t gained traction with many shoreline communities. Shelburne Town Manager Joe Colangelo said the selectboard there discussed it and opted not to join the effort.

The question of who owns the lake has been decided in part already — the land and water operate as a public trust. The transmission lines that would be buried underneath the lake, then, would be on public land, in a sense, and therefore not subject to property taxes.

Despite the planning and permitting for the project, the state of Massachusetts has not yet committed to buying power from TDI. Bagnato anticipates a decision will be made there this month.

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