Editor’s note: Diablo Canyon’s closure in 2025 means an annual economic loss of about $1 billion locally. This is the third of a four-part series on how other communities dealt with the financial consequences when their nuclear power plants closed.
Once the plug is pulled on a nuclear power plant, how much is the behemoth worth?
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The plant was the major source of tax revenue for the town of Carlton, Wisconsin — a farming community of about 1,000 residents. Dominion paid utility taxes to the state, which were shared with Carlton and other local agencies.
But when the plant closed in 2013 and was no longer producing energy, Dominion stopped paying the utility taxes that had covered nearly all of Carlton’s expenses for services such as road repair, snow removal and emergency services.
Town officials say the private utility should not be off the hook. With Dominion no longer paying utility taxes, they believe the company should pay hefty property taxes on the plant and the lakeshore property around it. That’s led to a court battle expected to go to trial next year.
Carlton — or rather, the two appraisers it hired — placed the value of the nuclear plant and its surrounding acreage at $457 million. Based on that assessment, Dominion was billed nearly $7 million in property taxes last year, according to the Green Bay Press-Gazette. Dominion paid up under protest, but it sued the town of Carlton for a refund — with interest.
It’s just big business. That’s all it is. It’s a shame.
David Hardtke, chairman of the Carlton town board
In its lawsuit, Dominion says its single-unit, 556-megawatt nuclear plant is “physically and legally” inoperable, making it practically worthless. It assessed the value of its Carlton property at just under $1.3 million.
If Carlton loses in court and is ordered to refund the money, that will have repercussions beyond the small town, since a share of the property taxes also went to Kewaunee County and to the local school systems.
Kewaunee County Board Chairman Ron Heuer described the ripple effect in an end-of-year blog post last December:
“Now, what if Dominion prevails and the Court decides the valuation was not correct? Carlton Township would be required to refund money to Dominion and that would trigger events that would require the County to collect those monies from the taxpayers who received a reduction of real estate taxes.”
Dominion’s role in economy
For decades, the Kewaunee nuclear plant was a financial powerhouse in northeastern Wisconsin, boosting the annual economy in a three-county region by $630 million.
While the plant was operating, Dominion paid utility taxes to the state of Wisconsin, which in turn distributed roughly $750,000 annually to Kewaunee County and around $400,000 to Carlton.
After Dominion announced in 2012 that it was no longer economical to keep the plant open, the company offered financial packages to Carlton and to Kewaunee County in order to give them “a soft landing,” according to Dominion spokesman Richard Zuercher.
It also agreed to a $10 million assessment on its property.
“However, the town of Carlton sought to raise the property assessment on the station from $10 million in 2014 to $457 million in 2015, even though the station was permanently closed and would never operate again,” Zuercher said via email. “By contrast, the company bought the station in 2005 for about $220 million.”
The county eventually accepted an offer from Dominion; the town of Carlton did not.
Town officials say the assistance would have ended after five years, leaving them stuck.
“With them closing, how do you make up $400,000?” asked Town Clerk Linda Sinkula.
That $400,000 practically covered all of the town’s expenses in some years, Sinkula said. The annual budget in the small town — which has no full-time employees and contracts for most services — ranged between $500,000 and $600,000 for many years.
Now, the town is faced with bills for attorneys and assessors on top of everything else. It’s a situation that was never anticipated even five years ago.
On top of the battle over taxes and the loss of jobs related to the shutdown of the Dominion plant, David Hardtke, chairman of the town board, points to another effect: Demise of the nuclear power plant has put valuable lakefront property in limbo for decades.
“You can’t develop that property because there’s nuclear waste on it,” Hardtke said.
Closing shocks community
Residents of Carlton thought the plant would operate for decades, especially since it had been granted a 20-year license extension in 2011.
Yet the following year, the utility announced it would shut the plant down for financial reasons.
“Dominion was not able to move forward with our plan to grow our nuclear fleet in the Midwest to take advantage of economies of scale,” CEO Thomas F. Farrell said in a news release issued on October 2012. “In addition, Kewaunee’s power purchase agreements are ending at a time of projected low wholesale electricity prices in the region. The combination of these factors makes it uneconomical for Kewaunee to continue operations.”
Farrell also vowed to make the transition “as smooth as possible” for Kewaunee employees and their communities.
But like other communities that lose a nuclear power plant, the transition was not smooth; the economy of the entire region suffered, according to local leaders.
“The way we were devastated was the income — we no longer had the income levels,” said Jennifer K. Brown, executive director of the Kewaunee County Economic Development Corp.
The company’s payroll was $54 million per year; the highest-paid employees earned more than $100,000 per year, Brown said. Those dollars cycled through the community, creating more jobs.
For every 10 jobs in nuclear, there are an additional seven jobs generated elsewhere in the local economy.
University of Wisconsin Cooperative Extension
On top of that, the exodus of workers increased the number of houses on the market, lowering property values. The hospitality industry was affected too; temporary workers hired for refuelings were no longer renting rooms or buying groceries or filling their cars with gas.
Three years later, the economy is slowly picking up; in some areas of the region, employers struggle to find enough qualified employees to fill open positions.
“We have 1,100 jobs open we can’t fill in Manitowoc County,” said Peter Wills, executive director of Progress Lakeshore, an economic development agency in the county neighboring Kewuanee. Many of those open positions are in manufacturing, he said. There’s also a nuclear power plant still operating in Manitowoc County, NextEra Energy’s Point Beach facility near Two Rivers.
Yet the region continues to grapple with a sluggish economy.
Kewaunee County is considering a half-percent sales tax and a variety of fee increases, in addition to cost-cutting measures.
The town of Carlton doesn’t have many options for raising revenue — aside from increasing the local property tax levied on homes and farms — and there aren’t many costs that can be cut.
“It’s a rural community. We only have 1,000 people,” said Hardtke. “We run a pretty tight ship up here.”
A snapshot of Kewaunee County, Wisc.
2015 population estimate: 20,366
Median household income: $53,023
Individuals below poverty level: 10 percent
Percent without health insurance: 5.5 percent
Median housing value: $145,600
Total housing units: 9,324
Number of companies: 1,752
SOURCE: U.S. Census Bureau
How much is Diablo Canyon worth?
The total value of all PG&E property in SLO County is $2.54 billion, according to the state Board of Equalization.
Diablo Canyon accounts for roughly 80 percent of that — about $2 billion.
That will decline annually as the plant is depreciated. Once the plant closes in 2025, the improvements will essentially have no value for taxation purposes.
“When a power plant closes, generally the only value would relate to the land,” Jonathan Mendick, a spokesman for the Board of Equalization, said via email.
According to PG&E, the assessed value of the utility’s land in San Luis Obispo is approximately $64 million for the current fiscal year. Of that amount, $27.5 million is associated with the Diablo Canyon nuclear power plant.
The 4-day series at a glance
Day 3: Carlton, Wisconsin, is sued after assessing shuttered power plant $457 million
Day 4: Should communities get federal financial incentives when nuclear plants close?