For What It May Be Worth

In its recent decision in FuelCell Energy, Inc. v. Town of Groton, 2024 WL 3529177 (2024), the Connecticut Supreme Court decided issues regarding the taxability of fuel cells.  The molten carbonate fuel cells and related equipment at issue are installed at the Pfizer facility in Groton.  The chemical reactions that take place in the fuel cells generate electricity for Pfizer’s buildings with the waste heat byproduct captured in a heat recovery steam generator and used to heat the buildings.

The Court employed various well-established rules of statutory construction to rule as follows:

• The fuel cells were exempt from taxation upon completion pursuant to Connecticut General Statutes (CGS) Sec. 12-81(57) which applies to renewable energy sources that meet certain requirements.
• While the subject property would also qualify for a local option exemption for cogeneration systems under CGS Sec 12-81(63), this does not impact its entitlement to the mandatory exemption provided for in CGS Sec. 12-81(57) for qualifying projects.
• During construction (which includes the completion of performance testing), the fuel cells were tax exempt pursuant to CGS Sec. 12-81(50) as “goods in process of manufacture”.
• Since the fuel cells were completely exempt from taxation, the owner was not obligated to file annual personal property declarations with the Town and therefore could not be penalized for not doing so.

While not central to its rulings, the Court did note that adopting opposite interpretations of the relevant statutes would be contrary to the legislative intent of encouraging the development of renewable energy projects.