Councilors question N.S. tax office following confusion on solar substation

NORTH SMITHFIELD – Those hoping the town might see a windfall in tax payments from the substation connecting Green Energy's solar array to the larger energy grid learned last week that the structure actually has been taxed – and was permitted – prior to its launch in late 2021.

Tax Assessor Jennifer St. George provided an update to members of the Town Council as a follow-up to questions at a previous meeting, where officials said that either Green or National Grid had not followed the proper process to launch the facility, and that the town could be owed money as a result.

The asset, St. George said, was reported by the energy company – now known as Rhode Island Energy – as part of the business's 2021 tax return. Permits for parts of the facility, such as the foundation and fencing, were applied for by Green as part of larger solar project. The structure itself, she said, was prefabricated and inspected by the state.

"We did receive taxes," St. George said.

The news that all permits and finances were actually in place came as a surprise to some, and led to more questions from several members of the board.

"Did we see an increase?" asked Council President Kimberly Alves of the business's tax payment.

"It wasn't substantial because old assets depreciate according to state law," St. George said, noting she's requested a detailed breakdown of the power company's tangible assets in North Smithfield.

"Who pulled the permit?" Alves asked.

Building & Zoning Official Larry Enright told councilors that Green Energy and Rhode Island Energy had joint responsibility for permitting, with each applying for their own portion of the project.

"That building is actually inspected and checked by the state, so that doesn't go through our system," Enright said. "That would go right directly through the Building Code Commission."

"Why do we know this now, and we didn't know this a few weeks ago?" Alves asked.

"The question came up after your meeting and I was able to look into it," Enright responded.

Councilor Paulette Hamilton pointed out that the town's e-permitting system is supposed to eliminate such confusion.

"Unfortunately, e-permitting only works well when information is entered into the system," said Enright, noting that on Green's larger permit, the substation is only identified as "other."

"I was under the impression that you have to pull permits for everything," Hamilton said, pointing out that for most projects in town, permitting is completed separately for various elements of construction, such as the electrical work. "We should have documentation that anyone can pick up and know exactly what's going on with a project of this magnitude."

Hamilton compared the limited records on the substation with another project completed in town by Green: the new concession stand by the high school athletic fields.

"We can tell you what happened with that project because it's highly documented," she said. "At the very least, I think there's been poor communication with the town. This bothers me that we don't have answers. The system is there. Somebody's not following it."

But Enright noted that certain things are excluded from the town's permitting system – such as federal buildings or assets governed by the PUC.

Councilor John Beauregard expressed some frustration with the initial lack of answers, noting he's even attended meetings on the issue.

"I asked about it, and was it being taxed, and I was told ‘it's very complicated,'" Beauregard said. "This whole thing could have been shut down right at that point in time. How can you not know you’re collecting hundreds of thousands of dollars?"

Finance Director Cynthia DeJesus said the issue is the result of the way the RI Energy reports assets.

"We added an acquired value of $18 million. We depreciated $11 million, so it netted $7 million," DeJesus said. "By looking at the tax tangibles that they reported, it was almost impossible to see that we were billing them for a substation."

"They don't give us a list," added St. George.

Town Planner Mark Carrulo said that he's been in communication with Green engineer Kevin Morin, who recently provided a copy of the blanket permit for the Iron Mine Hill Road solar array.

"He was very cooperative," said Carrulo, noting that companies always self-report their tangible assets, and that it's the town's responsibility to follow up with any issues or questions. "Businesses tell you what they have."

St. George said she did attempt to visit the substation two weeks ago with consultant Allan Booth from firm Winborne & Summertree in hopes to determine a value, but the gate to the facility was closed and they couldn't get in. St. George said she hopes to compare the town's assessment with what's been reported by Rhode Island Energy, but is still awaiting a detailed list.

"I hope it's this week that they get back to me," she said. "I have no response yet."

Town Administrator Paul Zwolenski said he had spoken to a representative from Rhode Island Energy just hours before the meeting on Tuesday, Jan. 17.

"Even to her, it's confusing. They list by classification," Zwolenski said, noting that regardless, the town plans to perform its own assessment. "Quite honestly, we want to trust, but I think we need to verify."

NRI NOW received a similar response last week to questions sent to the energy company.

"All permitting for the substation was done in compliance with local and state rules, and town officials have been provided the relevant materials," said Ted Kresse, senior communications manager of external affairs for the company. "We have also provided the town with documents showing that the new substation equipment was duly reported in tax years 2020 and 2021, as part of our annual tangible property filing in North Smithfield."

"Considering that utilities own multiple pieces of equipment, which may need to be retired or upgraded on an ongoing basis – poles, wires, transformers, manholes, conduits, substations, etc. – we report these tangible assets together under standard Federal Energy Regulatory Commission practices," Kresse added. " In the weeks since this issue was first raised, we have also offered to have the town assessor and their consultant come tour the new substation, so we can answer any additional questions the town may have about it. We hope to have them visit the station in the days ahead, and we look forward to resolving any outstanding concerns."

St. George is expected to provide another update on the town's progress with the issue at the council's next regular meeting.

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