| Electricity industry restructuring, technological advances, and changing environmental laws and regulations are providing opportunities for many electricity companies to substantially lower their cost of doing business. One such cost is property tax, which in a majority of states is based upon the fair market value of property. Traditionally, assets of a regulated utility were valued at fair market value based upon the regulated price of electricity or "rate base". Valuation methods such as the income approach, replacement cost approach, comparable sales approach, and the stock and debt approach are common assessment methods for property tax (ad valorem) purposes. The appropriateness of each valuation method is examined for the purpose of valuing electricity generation assets in a competitive environment. Some states do not tax intangible property and most valuation methods include intangible property value. This aspect is addressed in the different valuation methods. |
