County, Power Plant in Costly Valuation Dispute

How much is a power plant worth? To Orange County’s cash-strapped government, the answer could make a $2-million difference in revenue.

The AES Corp. contends that Orange County’s assessor has placed too high a value on its Huntington Beach power plant. The two sides couldn’t be much further apart.

Orange County assessed the property at $325 million, causing the company to pay $3.32 million in property taxes in 2002, the 10th highest property tax bill in the county.

AES officials appealed, contending the plant was worth about $102 million. If the company prevails, it could be due a refund of more than $2 million. A hearing on the appeal is scheduled in November.

It’s a decision with such serious implications for Orange County that the Board of Supervisors on Tuesday voted to spend nearly $100,000 to hire an outside agency to determine the value of the property and to testify about its findings at the appeal hearing.

In determining the value of the county’s only electrical power plant, the county researched valuations of other power plants across the country, said Orange County Assessor Webster J. Guillory.

“Our job here is to find a value that can be supported in the marketplace,” Guillory said. “If additional analysis and data shows the value is too high, then we would reduce that value. We have no vested interest in holding on to any particular value.”

In their appeal, AES officials contend the county’s analysis is “erroneous, arbitrary and contrary to standards prescribed by law.” The Huntington Beach plant was one of three that AES purchased from Southern California Edison in 1998.

“When we purchased these plants, they had all been valued by the State Board of Equalization,” said Mark Woodruff, president of the west North America region for AES. “When the valuation [decision] moved to the counties, they used different methodologies and came up with widely different property values.”

The responsibility for assessing the value of power plants was recently shifted back to the state, so the appeal decision will affect only the one assessment.