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In two recent decisions, Connecticut Tax Court Presiding Judge Matthew Budzik found that three facilities consisting of solar panels and related equipment were entitled to property tax exemptions pursuant to Connecticut General Statutes § 12-81(57)(D). All three solar facilities were approved by the Connecticut Public Utilities Regulatory Authority (PURA) to participate in a virtual net metering (VNM) program whereby the energy produced was essentially purchased from the intermediary electric distribution company by specific state colleges and universities as well as municipal governments. In these cases, the solar facilities were not located in or co-located with the purchasing governmental entities.
As Judge Budzik described one of the VNM arrangements, “CFC-HBAN Solar uses the subject solar equipment at the subject properties to generate excess electricity. The excess electricity is transferred to Eversource and the general power grid and thereby creates VNM credits. Eversource distributes the excess electricity to the beneficial account holders, and the beneficial account holders pay CFC-HBAN Solar for generating the VNM credits.”
In each case, the host municipalities denied the owners’ property tax exemption applications because the solar panels and equipment used in the VNM arrangements were not deemed to be used for a “commercial” purpose as required by the exemption statute. Judge Budzik disagreed and found that the “transfer of electrical energy, the generation of VNM credits, and the sale of those VNM credits to the state beneficial account holders demonstrates that the subject solar equipment is being used for ‘commercial’ purposes.” As a result of this determination, all three facilities were found to be exempt from personal property taxation.
CFC-HBAN Solar Trust c/o The Huntington National Bank v. Town of Stonington and CFC-HBAN Solar Trust c/o The Huntington National Bank v. Town of North Stonington, Docket Nos. HHB-CV-22-6075999-S and HHB-CV-22-6075998-S, 2025 WL1639457 (Conn. Super. Ct. June 6, 2025); AFL-HBAN Solar Trust c/o The Huntington National Bank v. Town of Hampton, Docket No. HHB-CV-21-6076299-S, 2025 WL 1502858 (Conn. Super. Ct. May 23, 2025).
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