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Meridian loses $1.2M battle over Wellington wind farm rates

Tuesday 31st January 2017

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Meridian Energy has lost its dispute with the Wellington City Council over $1.2 million in rates paid for its wind farms, with the High Court ruling the council acted lawfully in how it calculated the bill.

The electricity generator-retailer has 62 wind turbines at its West Wind farm, and 26 turbines at its Mill Creek farm, both in Makara. In March 2009, as the West Wind farm construction was being finished, the council re-assessed how it calculated rates on wind farms. 

The city council calculates rates depending on whether the land is considered 'base differential', which includes residential, vacant and rural land, or 'commercial differential', which includes property used for commercial or industrial reasons and utility networks. 

The council decided wind farms were an additional use of the land from the rural classification in place, and created a division for calculating rates on the wind farm equipment, rating them under its commercial rate billing category C8, rather than the base differential category D1. In the 2016 year, C8 rates in the dollar of the land's capital value were 0.820571 cents, while D1 rates in the dollar were 0.276524 cents. The council calculated rates on Mill Creek in the same way when that wind farm was completed in 2014.

Meridian's application for judicial review was heard in November, with Meridian's lawyers arguing that the wind farms should be placed in the base differential category, saying the council acted unlawfully in creating divisions in the rateable units to reflect two uses for the land. Meridian also argued the wind farm portion of the units should not be classed as commercial use.

Justice David Collins found the council had acted lawfully on both counts. The judge described the wind farm facilities as "a significant commercial enterprise" which falls within part of the larger business of Meridian, and "therefore fit squarely within" the commercial category.

Meridian will pay $1.32 million in rates for its wind farms in the 2017 financial year, but would pay just $475,000 if the base rate was applied. If the rates had been calculated using that category since 2009, Meridian would have saved $1.24 million. The judge ruled that Meridian must also pay the council's legal costs.

 

BusinessDesk.co.nz

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