LIPA: New Agreement Includes Option to Repower Port Jefferson Plant

The Long Island Power Authority approved a new agreement with National Grid on Tuesday that will extend its existing contract with the British utility company to purchase power for its customers over the next 15 years.

The new agreement – called a Power Supply Agreement (PSA) – will replace the existing one that expires in May 2013 that was in effect for the last 15 years.

A statement released by LIPA said that the value of the new contract would be anywhere from $5-8 billion depending on certain factors such as retiring power plants.

On a conference call, a LIPA representative said that the utility company had three options: extend the existing agreement, expire the contract or negotiate a new PSA.

LIPA decided to renegotiate the contract and exact changes. One change of particular interest to Port Jefferson village residents is an ability to repower existing plants, according to a statement released by Michael D. Hervey, Chief Operating Officer of the utility.

According to Hervey’s statement, the new agreement “would establish procedures for the potential repowering of the Port Jefferson, Barrett and Northport steam plants as well as the Barrett and Holtsville combustion turbine sites.”

A request for proposals will be prepared once the PSA is in effect to assess economic impact of repowering either of the Port Jefferson or Barrett steam plants. Repowering costs would be subject to a new power purchase agreement and separate from those in the approved PSA.

Hervey recommended to the board that they adopt the new agreement.

At the village board of trustees meeting on Monday evening, Mayor Margot Garant addressed the new agreement saying that while village officials are glad to see the local power plants specifically addressed in the proposal as alternatives to retiring plants, it’s still not a forgone conclusion that Port Jefferson will be repowered.

The request for proposals also lets LIPA punt the decision on repowering down the road for many years and in the past National Grid did not bid in RFPs released by LIPA on repowering options.

“We certainly hope we are at the top of the list,” she said. “It says there will be an option.”

If the Port Jefferson plant was to be repowered it would need to be razed and rebuilt from scratch, according to Garant. Costs to take down the antiquated plant and built a modern one will have to be considered in the request for proposal.

According to Garant, the so-called “peaker plant” on the site can remain in operation while the main plant is rebuilt. If the main plant is eventually retired, the peaker plant can also still remain online.

The peaker plant is not part of the tax grievance filed by LIPA and is part of a Payment In Lieu Of Taxes (PILOT) program.

Garant said on Monday evening that if the board approved the PSA the next day, it will be “a good day for Port Jefferson” although the village still has more work to do and questions still remain.

"I don’t like the word 'option,'" she said. "Who pulls the 'option' trigger?"

The village will continue to work with state and Federal agencies to get the Port Jefferson plant repowered.

“We keep pressing our case,” Garant said.

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