Decision Nº RA 48 2011. Upper Tribunal (Lands Chamber), 13-02-2015
| Jurisdiction | UK Non-devolved |
| Judge | His Honour Judge Mole QCMr Peter McCrea FRICS |
| Date | 13 February 2015 |
| Court | Upper Tribunal (Lands Chamber) |
| Judgement Number | RA 48 2011 |
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UPPER TRIBUNAL (LANDS CHAMBER) |
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UT Neutral citation number: [2015] UKUT 0053 (LC) |
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UTLC Case Number: RA/48/2011 (Consolidated) |
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TRIBUNALS, COURTS AND ENFORCEMENT ACT 2007
RATING –valuation – combined cycle gas turbine power station – length of hypothetical tenancy – duration of rent – receipts and expenditure method – whether negative divisible balance – whether respondent’s valuation reflects actuality and has a basis in law – appeal allowed – rateable value determined at £1,012,500.
IN THE MATTER OF AN APPEAL AGAINST A DECISION
OF THE VALUATION TRIBUNAL FOR ENGLAND
and
BRITISH GAS TRADING LIMITED Respondent
Re: Peterborough Power Station,
Fengate Industrial Estate,
Peterborough
Cambridgeshire
PE1 5NT
Before: H H David Mole QC (sitting as a Deputy Judge of the Upper Tribunal)
and P D McCrea FRICS
Sitting at: The Royal Courts of Justice, Strand, London WC1A 2LL
on 9, 10, 13-16 and 20 October 2014
Timothy Morshead QC and Daniel Kolinsky instructed by Solicitor’s Office HM Revenue and Customs for the Appellant
Richard Glover QC and Rebecca Clutten instructed by Dalton Warner Davis LLP for the Respondent
© CROWN COPYRIGHT 2015
The following cases are referred to in this decision:
Liverpool Corporation v Chorley Union [1912] 1 KB 270 and [1913] AC 197
Robinson Bros (Brewers) Ltd v Houghton and Chester-Le-Street Assessment Committee [1937] 2KB 445
Tulang Properties Limited v Nobel (VO) [1985] RA 47
Poplar Borough Assessment Committee v Roberts [1922] AC 93
Humber v Jones (1960) 6 RRC 161
Hong Kong Electric v Commissioner of Rating and Valuation [2011] RA 399
Staley v Castleton Oversees (1864) 5 B&S 503
Consett Iron Co Ltd v Assessment Committee for North-Western Area of County Durham [1931] AC 396
Railway Assessment Authority v Southern Railway Co [1936] AC 266
R v Adams (1832) 4 B&Ad 61
R v Audley (1700) 2 Salk 526; 1 Const 110
Dawkins v Ash Brothers & Heaton [1969] 2 AC 366
Port of London Authority v Orsett Union Assessment Committee [1920] AC 273
Allen (VO) v English Sports Council [2009] RA 289
Orange PCS v Bradford [2004] 2 All ER 651
Great Eastern Railway v Haughley (1866) LR 1 QB 666
R v South Staffordshire Waterworks Co (1885) 16 QBD 359
China Light & Power Co Ltd v Commissioner of Rating & Valuation [1996] RA 475
The following cases were referred to in argument:
R v Paddington (Valuation Officer) ex parte Peachey Property Corporation [1966]
1 QB 390
Hoare (VO) v National Trust [1998] RA 391
Inland Revenue Commissioners v Gray [1994] STC 360
F R Evans (Leeds) Ltd v English Electric Co (1978) 36 P&CR 185
Mersey Docks & Harbour Board v The Assessment Committee of Birkenhead [1901] AC 175
St James and Pall Mall Electric Light Co v Westminster Assessment Committee [1934] AC 33
Northern Ireland Transport Holding Co v Commissioner for Valuation for NI [1997] RA 14
London County Council v Churchwardens & of Parish of Erith and Others [1893] AC 562
British Transport Commission v Hingley [1961] 2 QB 16
Kingston Union Assessment Committee v Metropolitan Water Board [1926] AC 331
Metropolitan Water Board v Hertford Corporation [1953] 1 WLR 622
Barking Rating Authority v Central Electricity Board [1940] 2 KB 493
Black v Oliver [1978] 1 QB 870
Dawkins (VO) v Royal Leamington Spa Corporation and Warwickshire County Council (1961) 8 RRC 241
Garton v Hunter (VO) [1969] 2 QB 37
Garton (VO) v Hunter (1969) 15 RRC 145
Civil Aviation Authority v Assessor for Strathclyde [1990] SLT 378
McVitie v Assessor for Edinburgh (1898) 25 R 601
Liverpool Corporation v Llanfyllin Union [1899] 2 QB 14
Imperial College of Science and Technology v Ebdon (Valuation Officer) and Westminster City Council [1984] RA 213
Eastbourne Borough Council and Wealden District Council v Allen (Valuation Officer) [2001] RA 273
Thomas v Manor Vinegar Brewery Ltd (1960) 6 RRC 353
Gilmore v Baker-Carr & Others (No.2) (1963) 10 RRC 205
Monsanto v Farris [1998] RA 217
K Shoes v Hardy [1980] RA 333
Pointer v Norwich Assessment Committee [1922] 2 KB 471
Lotus & Delta v Culverwell (VO) [1976] RA 141
Futures London Ltd v Stratford (VO) [2005] RA 75
DECISION
Introduction
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This is an appeal by the Valuation Officer (VO), Mr Keir Hardman, against the decision of the Valuation Tribunal for England (VTE) dated 14 March 2011 determining the rateable value of the Peterborough Power Station (PPS) at £1 with effect from 1 April 2005.
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PPS was originally assessed in the 2005 non-domestic rating list at a rateable value of £1,350,000 with effect from 1 April 2005. The compiled list assessment was subsequently altered by the VO on 4 May 2010 to RV £1,012,500, again with effect from 1 April 2005. The respondent’s agents, Dalton Warner Davis LLP, submitted appeals against both assessments. Those appeals (consolidated before us under RA/48/2011) were upheld by the VTE which determined the rateable value as above. The Antecedent Valuation Date (AVD) is 1 April 2003 and the material day is 1 April 2005.
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Mr Timothy Morshead QC and Mr Daniel Kolinsky of counsel appeared for the appellant. They called expert evidence from Dr John Bower in respect of the wholesale electricity market and related matters, Mr Colin Johnson in respect of receipts and expenditure, Mr Michael Rowbottom in respect of the contractor’s basis valuation, and the Valuation Officer, Mr Keir Hardman in respect of valuation. Mr Richard Glover QC and Ms Rebecca Clutten of counsel appeared for the respondent and called Dr Philip Lawless in respect of the electricity market and commercial operations of power stations, Dr Stephen Mancey in respect of Centrica’s operations, Mr Andrew Blumfield in respect of a power station at Coryton, and Mr Adam Davis in respect of valuation.
Facts
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In the light of agreed statements and the evidence we find the following facts.
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The appeal property is located on the Fengate Industrial Estate some 2.5km to the east of the city centre of Peterborough, Cambridgeshire. It directly abuts Storeys Bar Road and is situated on a site of approximately 7.3ha.
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The parties agreed a comprehensive explanation of how PPS operates. It is unnecessary for the purposes of this decision to replicate that in full. In essence, PPS is a gas-fired Combined Cycle Gas Turbine (CCGT) Power Station which was built between January 1991 and September 1993 when it started commercial operation. It has two gas turbines and associated generators and a steam turbine. The term “combined cycle” stems from the way in which electricity is generated. Fuel is burnt in the gas turbines – in a similar way to which a jet engine operates. This generates electricity, but also heat. This heat is recycled and used to produce steam, which generates further electricity via the steam turbine. The station can operate on either natural gas or gas-oil, known as dual fuel capability, although the use of gas-oil is limited by the site’s Environmental Permit and in practice is very rarely used.
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The electricity produced is exported from PPS via a switch yard onto the local distribution network which is connected to the national grid electricity network. There is a charge for this, based upon location, known as the Transmission Network Use of System (TNUoS). At the AVD, TNUoS charges were calculated at £1.88 per kW based upon PPS being located in TNUoS zone 7. Other areas of the country attract different TNUoS charges, the level of which is dependent upon the amount of capacity and of demand in those areas, ranging from £9.07 per kW for the “North” region, to -£10.54 per kW for Inner London.
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The Transmission Entry Capacity (TEC) of all large power stations is registered and agreed with the National Grid as the maximum amount of electricity, in megawatts (MW) taken over a half an hour period, that the plant can export to the grid. The National Grid maintains a publicly available TEC register which can be used for comparing the capacity of different power stations. At the AVD, PPS had a TEC value of 405 MW. This was the highest level of output which PPS could normally be allowed to export, rather than a measure of the level of generation output which PPS normally achieved at full output. The actual output would be influenced by commercial decisions on how many hours, days of the week and at what output capacity the plant is run, ambient temperature, air pressure and degradation of the turbines. Over a typical year, the average actual operating capacity of PPS is lower than the TEC figure.
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PPS comprises both rateable assets and non-rateable assets which are agreed at 35% and 65% respectively. The rateable assets include but...
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