LIPA Tax Challenge, Expiring Agreement May Result in Revenue Loss For Village, Schools

Port Jefferson faces the real possibility of a steep cut in revenue to the , , and if the that Long Island Power Authority brought to the Town of Brookhaven and Port Jefferson village is successful in reducing the taxes it pays on the power plant located on the edge of Port Jefferson Harbor.

A few years ago LIPA signed agreements to manage the power plants that National Grid owns on Long Island and to provide electricity to customers. National Grid owns 17 power plants on Long Island, including the plants in Port Jefferson and Northport.

“We have a Power Supply Agreement with National Grid,” said Vanessa Baird-Streeter, a LIPA representative. “Because we (LIPA) purchase the power, we pay the taxes.”

According to Baird-Streeter, all the costs for the National Grid-owned plant are passed through to LIPA and eventually on to ratepayers.

LIPA’s website says that “these taxes, along with other property taxes LIPA pays account for over 14.7 percent of customers’ bills and represent a significant part of each LIPA customer’s bill.”

The PSA expires in 2013, meaning that LIPA will be looking for options to generate local power for Long Island aside from the National Grid plants.

Baird-Streeter said she could not comment directly on what might happen with the National Grid power plants after a Management Services Agreement between the utilities expires, also in 2013.

The Management Services Agreement covers the day-to-day operations of the system while the Power Supply Agreement covers the supplying of energy. Both agreements are between LIPA and National Grid.

LIPA will have a need for electricity generated locally, according to Baird-Streeter.

“We’re always going to need on-Island generation to fulfill our state requirements regardless,” she said.

One place LIPA has found on Long Island for new power is from a 350-megawatt, natural gas-fired power plant, owned by Caithness Long Island, LLC – a private power producer – that opened August 1, 2009 in Yaphank. The Caithness 1 provides 350 megawatts of energy to LIPA.

At one point, National Grid offered to sell its power plants in Port Jefferson and Northport to LIPA and New York Power Authority but they both declined, according to the Port Jefferson LIPA Task Force’s timeline presented at a .

Seeking out other sources of electricity, LIPA put out a request for proposal for power last year with bids returnable by this March. The Port Jefferson LIPA Task Force met with representatives from LIPA and requested that the RFP be expanded.

“We heard from the community,” said Baird-Streeter. “We increased the size of the power generation RFP to include up to 2,500 megawatts.”

This increase from the original RFP of 1,000 megawatts issued last August makes room for the possibility of a option at the Port Jefferson plant.

The Port Jefferson LIPA Task Force has now put together an extensive campaign to push for .

Since the responses to the RFP are not due back until March of this year, Baird-Streeter could not comment on who has submitted bids to supply power but according to Mayor Garant, National Grid has revealed that they have not put a bid out.

A National Grid representative referred questions from Patch about the tax grievance and the power plant to LIPA’s spokesperson.

The LIPA Task Force said that it has also met with LIPA to remind the utility of its obligation to host communities like Port Jefferson.

According to Mark Doyle who is the acting president of the Port Jefferson School Board and a LIPA Task Force member, the committee is pushing for the repowering option for a number of reasons.

“We are advocating for a renewed investment in the plant in order to increase its value while contributing more substantially to Long Island's power needs,” Doyle said in an email last fall.

The Task Force thinks that repowering may be a better option for National Grid rather than the alternative, which is dismantling and cleaning up the industrial site.

“Closing the plant would be quite an expensive undertaking,” he said. “So there are good reasons to re-power the plant rather than shuttering it.”

An earlier version of this article confused the Management Services Agreement with the Power Supply Agreement between LIPA and National Grid.