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Repowering

State appellate court sides with municipalities in rulings

The Northport power plant. File photo

Huntington Town and Northport-East Northport school district’s fight to knock the lights out of a Long Island Power Authority lawsuit that looks to drastically decrease how much the utility pays in taxes on the Northport power plant recently got a big boost.

Last week, a New York State appellate court ruled in favor of the municipalities, clearing the way for both to go to trial against the utility and engage in pretrial depositions and discovery. In 2010, LIPA filed a tax certiorari lawsuit against the town, claiming the town greatly over-assessed the Northport power plant and that it should be paying millions less in taxes.

Northport-East Northport schools, along with Huntington Town, filed companion lawsuits in May 2011 that claimed LIPA didn’t have the right to file to reduce its taxes and that it breached a 1997 contract promising it wouldn’t. In 2013, a New York State Supreme Court justice upheld the district and town’s rights to sue LIPA and National Grid, and last week’s court ruling upheld that lower court ruling.

LIPA sought to have the school district tossed out of the suit, but the district claimed it was a legal third-party beneficiary of a 1997 power supply agreement between LIPA and the Long Island Lighting Company. Last week’s court ruling upheld that claim. It cites a 1997 letter from LIPA to the Nassau-Suffolk School Boards Association, to which Northport-East Northport belongs, that upon the issuance of a 1997 power supply agreement, “LIPA will immediately drop all tax certiorari cases against all municipalities and school districts,” and that “neither LIPA nor LILCO will initiate any further tax certiorari cases on any of their respective properties at any time in the future unless a municipality abusively increases its assessment rate,” as “spelled out in the [PSA].”

Stuart Besen, the town’s attorney on the case, said he believes the letter from Richard Kessel, former chairman of LIPA, was integral in swaying the judges to rule in favor of the municipalities.

“I just think that Supervisor [Frank] Petrone really deserves a lot of credit for having the foresight for one, making sure the clause was in the [power supply agreement], and two, demanding that Richard Kessel reiterate that position in a letter.”

If successful in the suit, the town wouldn’t have to pay approximately $180 million in taxes the utility claims it overpaid in a three-year period, Besen said. LIPA pays roughly $70 million in taxes on the Northport power plant, town officials have said.

The utility contends the plant is worth less than 11 percent of the value reflected by its current assessment. If LIPA was successful in lowering its assessment and thus the amount it pays in taxes, town residents could be hit with tax increases of up to 10 percent. Those who live in the Northport-East Northport school and library districts could get a whopping 50 percent increase in their taxes.

John Gross, senior managing partner at Ingerman Smith, who represents the school district in the case, said the next step is to move forward with discovery and a motion for summary judgment in favor of the district.

“And if we win that, that means the claims they made to reduce the value of the plant are thrown out,” Gross said in an interview on Tuesday.

The town and the school district are partners in the lawsuit, Gross said.

Asked what town taxpayers should take away from the development, Besen said “that the town is fighting.”

“The town is fighting a big entity, both National Grid and LIPA. But we feel we’re right. We feel that those three years we don’t have to pay, that LIPA and National Grid made a promise to the people of Huntington and the town is going to do everything possible legally to uphold that promise.”

Sid Nathan, a spokesman for LIPA, said the authority couldn’t comment on ongoing litigation.

The Northport power plant. File photo

A new Huntington Town citizens group will boost a movement to upgrade the Northport power plant, independently studying the issue and submitting ideas to town officials.

The town board, on Tuesday, unanimously supported a measure co-sponsored by Huntington Town Supervisor Frank Petrone (D) and Councilman Mark Cuthbertson (D) to create the Repower Now Citizens Committee, a group of nine who will weigh in on an analysis the Long Island Power Authority and National Grid are conducting with respect to repowering, or upgrading, the plant.

Earlier this year, the state charged LIPA and National Grid with studying the feasibility of repowering the Northport power plant, the Port Jefferson power plant and others. Having the Repower Now Citizens Committee can only boost that effort, Cuthbertson and Petrone said in interviews with reporters after Tuesday’s meeting.

Local leaders want to see the aging Northport plant repowered so it will remain a source of energy and property tax revenue for years to come. Several local budgets, including that of the Northport-East Northport school district, rely heavily on the tax revenue.

Upgrading the Northport power plant can be done, Petrone said. It will be the new group’s responsibility to support repowering by producing a factual analysis on the issue.

“Our plant is probably the most viable plant to be utilized for that,” Petrone said, explaining Northport’s advantages in being repowered. “It has property available and it can be expanded. The need now is to put together a group to basically put some kind of study together … to support this. And there are many people out there that have expertise that we would wish to tap.”

Membership would include at least one person each from Northport and Asharoken villages, someone from the Northport-East Northport school district and members with engineering and sustainable energy backgrounds.

Repowering has another benefit: It may help settle a lawsuit LIPA brought against the town, challenging it over the value of the power plant.

LIPA claims the plant has been grossly over-assessed and the utility has overpaid taxes to the town. If LIPA’s suit is successful, the judgment could translate into double-digit tax increases for other Huntington Town and Northport-East Northport school district taxpayers.

If, however, the utility chooses to repower by upgrading the facility, the town has offered to keep its assessment flat, preventing those skyrocketing taxes.

“It’s a lawsuit that’s a very, very high-stakes lawsuit,” Cuthbertson told reporters after the meeting. “We have to look at both legal and political solutions, and political being through legislation. This is a part of trying to formulate a legislative solution and come up with a compromise that we might be able to work through.”

Petrone said he hopes to have the repowering citizens group assembled within a month.

The smokestacks of the Port Jefferson power plant loom over the village and the local harbor. File photo by Erika Karp

The Long Island Power Authority must study the area’s aging power plants with an eye toward upgrading the facilities, according to a provision of the next New York State budget.

Language that Gov. Andrew Cuomo (D) and state legislators have agreed upon requires the utility to “perform an engineering, environmental … and cost feasibility analysis and study” of upgrading — also known as repowering — the plants in Port Jefferson, Northport and Island Park. The focus will be on using more efficient and environmentally friendly technology at the plants.

Those three sites have been on shaky ground because they are old and using outdated technology. The Port Jefferson and Northport host communities have feared losing essential property taxes from the plants, which would happen if the plants were to reach the ends of their useful lives without being repowered.

“We are extremely proud that our representatives and our lobbying efforts are working toward a repowered plant in [Port Jefferson],” village Mayor Margot Garant said in an email. “We always believed this was the best repurposing of our site, and in the best interest of the ratepayers of [Long Island].”

The utility must begin studying Port Jefferson and Island Park no later than Oct. 1, and must start working on the second study in Northport by October 2018, according to the budget language. The studies must be completed and presented to the LIPA board of trustees and the department of public service no longer than 18 months after they begin.

LIPA will repower the plants if it determines, based on the studies, “that repowering any such generating facility is in the best interests of its ratepayers and will enhance the authority’s ability to provide a more efficient, reliable and economical supply of electric energy in its service territory, consistent with the goal of improving environmental quality.”

Assemblyman Andy Raia (R-East Northport) said the studies “could change the whole tax certiorari issue.”

Huntington Town and the Northport-East Northport school district have been battling LIPA over the value of that property, with the utility arguing the plant is grossly overassessed and filing to be reimbursed for taxes overpaid as a result. Town Supervisor Frank Petrone has extended an offer to LIPA to freeze its tax assessment if it repowers Northport.

“Northport and East Northport are looking down the barrel of a gun,” Raia said Tuesday, “and if they repowered Northport that whole case would go away.”

Sen. Ken LaValle (R-Port Jefferson) said in a statement that the study requirement will be included in the state budget “since LIPA did not follow through on their [previous] promises” to complete economic feasibility studies on the aging plants.

PSEG Long Island, the private utility that has taken over management of LIPA, was on board with the repowering studies this week.

“After careful study last year, we determined that there was no need for additional generation on Long Island until, at least, 2024,” PSEG Long Island spokesman Jeff Weir said in an email. “We wholeheartedly embrace this process because all we want is to implement the lowest cost and most reliable solutions for our customers on Long Island and in the Rockaways.”

Rohma Abbas contributed reporting.

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