Mirant Corp., the bankrupt energy company that rattled three Maryland counties when it failed to pay its property taxes last year, will pay more than $30 million to cover this year's tax bill, company officials said yesterday.
The Atlanta-based utility, which supplies energy to Pepco and owns four power plants in the Washington region, is among the top taxpayers in Prince George's, Montgomery and Charles counties. When it filed for bankruptcy protection in July 2003, the company suspended its payments -- a loss of revenue that stung local governments. Mirant now plans to pay a total of about $33 million to these jurisdictions in September for its 2004 taxes, said spokesman Steve Arabia.
"While we did have this hiccup and we didn't pay last year, it's temporary, and all the debts will be satisfied through the bankruptcy process," Arabia said.
The loss of revenue from Mirant was particularly tough to swallow in Charles, where the company is the single largest taxpayer and where taxes from the Morgantown generating station account for about 7 percent of county revenue. This year, Charles had to come up with $826,000 to pay for fire and rescue service that relies on the fire tax revenue from Mirant.
Charles officials said that they were pleased that $12.7 million was on the way this year but cautioned that Mirant's troubles are not officially over.
"Are all the issues behind them? No," said Richard A. Winkler, the county's fiscal services director. "A major bump in the electric generation business could result in their inability to emerge from bankruptcy. If that were the case, then clearly our problems are not behind us either."
The delinquent taxes from 2003 -- which amounted to $14 million in Prince George's, $13.1 million in Charles and $4 million in Montgomery -- will be paid only when the company emerges from bankruptcy, Arabia said.
In June, Mirant paid the $1.4 million in taxes that it owed the city of Alexandria for the Potomac River coal-fired power plant, city officials said. Arabia said the company was likely to settle its debts in Maryland by next year.
Mirant's troubles stem from a larger fallout in the power industry. In the late 1990s, many energy companies identified a shortage of generating capacity and borrowed heavily to finance new plant construction and acquisition. In 2000, Mirant paid Pepco $2.65 billion for four power plants in the Washington region. Then the competitive energy market experienced a downturn, and Mirant and others found themselves deeply in debt. The company reported a net loss of $3.8 billion last year.
In Alexandria, Mirant also faces criticism about the plant's emissions of noxious gases and coal dust. The city is considering filing a Clean Air Act lawsuit that could lead to fines for violating state emissions standards. In June, the City Council also voted to revoke a 1992 agreement that allowed the plant to operate outside of current zoning regulations -- a first step in efforts to evict the plant from Old Town.
In addition to bankruptcy proceedings in U.S. District Court in Fort Worth, Mirant has filed to have the assessed value of its power plants decreased in Maryland. Arabia said the value of the company's plants skyrocketed after the purchase from Pepco, meaning Mirant pays several million more in taxes than the previous owner did.
Charles County has hired lawyers and economists to help fight the reassessment. The county has planned for a 30 percent decrease in revenue from Mirant and taken $4 million out of its fiscal 2005 budget. But if the company makes it through bankruptcy proceedings, Winkler said, he is optimistic about the future.
"I think they probably will be leaner and meaner, and a viable ongoing operation," he said.