Our Valuation Experience and Expertise
For over twenty years, Appraisal Economics has been meeting the power plant valuation needs power generating facilities throughout the industry. Our experienced team of engineers, tax, and appraisal consultants has provided expertise to companies all over the world for a variety of different power plants, including:
- Coal
- Wind
- Hydro
- Solar
- Nuclear
- Biomass
- Geothermal
- Waste to Energy
- Gas Turbine Cogeneration
Our power plant valuation experience consists of generation and transmission equipment, land, buildings, intangible assets, and all other assets in association with these facilities. We understand the importance of timely, accurate appraisal reports, especially in today’s economic environment, which is why we have dedicated ourselves to providing you with the information you need at the time you need it.
Power Plant Valuation Rationale
There are a number of reasons why an organization may choose to undergo a power plant valuation. One reason is to obtain leverage in buyer/seller negotiations. If you have decided to remove your assets from your utility rate base, it will be to your advantage to know the fair market value of these assets in order to minimize any stranded costs. A power plant valuation from Appraisal Economics will include any and all assets which make up your facility.
Another reason to undergo a power plant valuation is for federal accounting and tax purposes. We can help you determine an accurate and appropriate depreciation schedule for each of your asset categories to allocate the purchase price among the various assets.
Congress and the Federal Energy Regulatory commission (FERC) have deregulated the electric producing industry, causing it to become more competitive and initiating the need for taxpayers and assessors to know the fair market value of power plant properties. A power plant valuation from Appraisal Economics can also address property tax issues, and help in determining the proper assessment.
We can also help with an insurance claim. If your organization has a proof of loss, we can support your claim by appraising the value of any asset or property that is either damaged or destroyed.
If you lease your property, facility or equipment, a power plant valuation can help determine the residual value at the expiration of the lease term in order to aid in purchase price negotiations between the lessor and lessee.
Appraisal Economics provides litigation support as well. We have provided expert witness testimony before the U.S. Tax Court, U.S. District Courts, U.S. Department of Justice, State Appeal Courts, Bankruptcy Courts, and the American Arbitration Association.
A power plant valuation can serve many different purposes for many different types of facilities, and our application of the most up-to-date valuation techniques will ensure you receive the high quality information and service you deserve. Learn more about our valuation services including quality power plant machinery and equipment valuation services.
Deregulation Causing Changes
Through deregulation of the industry, Congress and the Federal Energy Regulatory commission have paved the way for a more open marketplace and an increase in competition for electricity producers. It is becoming more and more difficult for power producing plants to generate a profit, and with the increase in competition, valuations will now be driven by a facility’s ability to create a profit at the market’s existing prices.
Deregulation and an increase in competition have caused the need for power generating facilities to reevaluate the worth of their assets. Power plant valuation is performed two different ways. One way is by assessing a plant’s overall property value in “bundled” units. With a unit assessment, all utilities including generation, transmission and distribution are valued as a whole. The other form of power plant valuation involves the breakdown of utilities and assessing them based on the value of each separate piece of property. Deregulation and increased competition has also brought about changes in these methods of valuation, making it important for companies to reassess their current worth and position in this evolving industry.
To determine the fair market value of property, three techniques are used.
Income Approach
The income approach to power plant valuation declares that the property is worth the present value of the income stream it can generate. Traditionally, future income was predicted based on the utility’s rate of return on its rate base and discounted by the market cost of capital. Deregulation has caused this power plant valuation technique to now be based on a reasonable projection of what a facility will earn based on future market prices and not its contribution to the overall rate base of a regulated utility.
Cost Approach
The second power plant valuation technique is the cost approach. An investor would not pay more for an existing power generating facility than what it would cost to build a substitute plant with equivalent operating characteristics. Traditionally, net book cost or rate base has been the determining factor of a property’s value taking into account depreciation. This valuation technique has also had to be adjusted to accommodate the deregulated industry.
Comparable Sales
The comparable sales approach takes into account the market sales prices of comparable power generating facilities. Deregulation and an increase in competition have caused more of these facilities to be put on the market. With these sales occurring on a more frequent basis, a power plant valuation can give you the information needed to help negotiate an appropriate purchase agreement.
Our Power Plant Valuation Services
Appraisal Economics work has earned respect throughout the industry, as well as from regulatory and judicial agencies, including the IRS. We have an experienced staff of engineers, CPAs, CFAs, ASAs, and MAIs that are dedicated to providing you with accurate information when you need it most. Each power plant valuation project will be overseen and supervised by a senior manager to ensure deadlines are met. You will be given the attention you deserve at competitive fees.
At Appraisal Economics, we are committed to meeting or exceeding all relevant standards. Our opinions and reports are subject to rigorous internal review and have passed the scrutiny of clients, financial institutions, government agencies, and the courts. A firm specializing in power plant valuations needs a professional staff which offers strategic thinking, tax and accounting expertise, unparalleled appraisal knowledge, and the ability to meet deadlines while providing a high level of service. When you choose our firm, that is exactly what you will receive.
A Variety of Independent Valuation Services
Appraisal Economics offers a wide variety of independent valuation services to the business, financial and legal communities. Please take a moment to learn more about our industry expertise and services offered, from valuing intangible assets to goodwill impairment analysis and stock valuations. Please follow the links below for additional service information: