The Calvert County Commissioners have reached a 15-year payment in lieu of taxes (PILOT) agreement with Cove Point LNG, LP, owned and operated by Berkshire Hathaway Energy.
This agreement ensures consistent revenue for the County while maintaining stability for one of its largest energy facilities. The deal, finalized after extensive negotiations, will generate $60 million annually for the County through 2038, with the agreement set to expire on June 30, 2039.
PILOT Agreement
The agreement follows an extended period of uncertainty after the previous PILOT agreement expired on June 30, 2023. Due to disputes over the facility’s taxable value, the County commissioned an independent assessment to determine a fair valuation.
The County hired a New Hampshire-based appraisal firm in November 2021 to assess the value of Cove Point LNG. The firm valued the facility at $8 billion — almost double the Maryland State Department of Assessments and Taxation’s $4.28 billion assessment.
With the new agreement, Berkshire Hathaway Energy will retroactively align its 2023 payments to the agreed-upon terms, adding $1.3 million to its prior payment of $58.69 million.
Impact on Public School Funding Education
The delay in reaching a new PILOT agreement significantly impacted Calvert County’s State funding for public schools.
The County’s assessed value for the facility was converted to a tax credit, which significantly altered the wealth formula used by the Maryland State Department of Education (MSDE) to calculate aid. As a result, Calvert County faced a $22.6 million reduction in state education aid — roughly 20 percent of its total aid.
Calvert County Commissioner President Earl F. “Buddy” Hance highlighted the importance of finalizing the new agreement before the State recalculates its wealth formula this November. Hance noted that with the new PILOT agreement retroactive to 2023, the County would advocate for the State to restore the $22.6 million cut from its education funding.
A Broader Context for Energy PILOT Agreements
This new agreement follows a similar deal that was reached last month between Calvert County and Constellation Energy Corporation, which operates the Calvert Cliffs Nuclear Power Plant. That five-year agreement secures $21 million annually for the County, providing essential revenue as the plant continues operations through at least 2036.
As Calvert County continues to negotiate complex agreements with energy facilities, the success of this PILOT agreement represents a significant win for both local government and residents. It stabilizes the County’s fiscal outlook and supports vital services, particularly education.
Stay tuned to Conduit Street for more information.
