We're the largest taxpayer in the state too.
NorthWestern Energy is Centrally Assessed. What does that mean?
Centrally assessed generally means that the state, rather than the county, assesses the entire business as a whole on the basis of several factors. The State then allocates a portion of that overall value to each local taxing jurisdiction who then proceeds to set local tax rates.
Montana has several different property classes. NorthWestern falls into four of them for the purpose of overall assessments ranging in rates from 3 – 12%. It’s worth noting that utilities in Montana can have similar property that is assessed at different rates. For example, a pole that is owned by a local cooperative falls into the class that is assessed at a 3-percent rate, while the exact same type of pole owned by an investor-owned utility is included in the class that is assessed at a 12-percent rate.
Assessing a business is different than personal property. To arrive at a business market value, the state weights several factors including income, cash flow, capital investments and property. The weighting criteria can change from year to year, which makes the valuation process unpredictable from year to year. Our tax experts work diligently with the Department of Revenue to understand the valuation methodology to make sure our assessments are accurate and fair. Click here to see how our total tax bill is allocated across Montana.
We’re responsible to customers when it comes to taxes.
Yes, taxing jurisdictions rely on our timely payments to fund necessary services, but we also want to maintain affordable bills for our customers. In between regulatory rate reviews, we are allowed to use a tracker to keep current on taxes because annual assessments have been proven to be very unpredictable and amounts can vary widely. Each year, starting with the amount that was actually paid the previous year, we adjust for the current year. The current year is placed into rates at about 60-percent of the estimated amount and the process begins again the following January. The 40-percent that is not included in rates is paid by the company’s shareholders.
Our billing statements now clearly display how much of your total bill goes to pay taxes. While we have some opportunity to negotiate how the state’s applies certain valuation methodologies, the actual model is a function of the legislative process. We would prefer a predictable model that provides fair and reasonable outcomes and we’re working to find better solutions that allow us and taxing jurisdictions with greater certainty.