Port Jefferson Calls For Investigation Into National Grid’s Energy Practices

In a filing with the Federal Energy Regulatory Commission charging British-owned National Grid with “perpetrating fraudulent practices and illegally exercising market power,” the village of Port Jefferson hopes to put the energy company under the microscope and expose a business that it says has kept prices on Long Island high and excluded competition.

Among the accusations are that National Grid has coerced the Long Island Power Authority into an extension of the 1997 Power Supply Agreement (PSA) on unfavorable terms for rate payers and stalled opportunities to repower existing and inefficient power plants like the one that sits on the edge of Port Jefferson Harbor.

These practices, according to the claim, block competitors from offering reasonably priced alternative energy or upgrading of inefficient plants running at minimal output.

In essence, the village claims that National Grid is a monopoly with Port Jefferson playing the part of trustbuster.

The village cites the fact that National Grid has not submitted to an open request for proposal by LIPA for repowering generation even though it owns existing aging plants on Long Island.

LIPA is also looking to extend its existing Power Supply Agreement with National Grid by the fall.

According to Thomas Bjurlof, a Port Jefferson resident who consults on energy and information technology for numerous international firms, the agreement was first drafted back in 1996, before the New York energy market was restructured by the Public Service Commission to allow for capital investment in legacy power plants among other changes.

"It's uncertain whether Port Jefferson would be repowered under that scenario,” said Bjurlof, who has worked closely with Port Jefferson Mayor Margot Garant on this issue.

Bjurlof said that the village is looking to halt both the negotiations for the PSA extension and for the award of contracts for new plants until the FERC has acted on the claim. The investigation is expected to take 12-18 months.

LIPA told Patch in an email that it will not be commenting on the issue.

Port Jefferson has a lot to lose if unsuccessful in attracting someone to invest in the power plant.

The school district gets about 40 percent of its revenue from LIPA and 30 percent of the budget for the village comes from taxes paid by LIPA on the power plant. LIPA says that challenging the taxes it pays on the power plants is the .

Repowering the plant or putting it to another use would mean preserving that tax revenue.

At a recent village board meeting Mayor Margot Garant said that the claim was explained to all interested parties including the fire department, library and school board. The village shouldered the cost of the attorney who drafted the document.

On Friday, village officials travelled to the New York State Comptroller’s Office to make it aware of the claim because, according to Garant, all new contracts, requests for proposals and any extension of the power agreements between LIPA and National Grid have to go through that office.

“We need to get their attention,” Garant said.

In a statement emailed to Patch in response to questions, a representative of National Grid said that the energy company is "reviewing the complaint and will submit a response to FERC at the appropriate time."

National Grid denied that it has been dealing with Long Islanders' energy needs unfairly.

"We believe the allegations in the complaint are without merit and that we have managed our Long Island generation assets in a manner that conforms with applicable market rules and regulations," the representative said.

When state Senator Ken LaValle, R-Port Jefferson, , he told members that one of the first bills passed in legislative session was oversight legislation on LIPA.

LaValle, who said he authored the bill, stressed that the law - called “Long Island Power Authority Oversight and Accountability Act” - will keep tabs on management, rates and operations at the utility.

“The process will be so complete it will take 18 months,” LaValle said.

"[The PSA agreement] should not be extended in any form until the Public Service Commission has had the opportunity to complete its review of LIPA as required by the LIPA audit legislation recently signed into law by Governor Cuomo," said Bjurlof. "This agreement is further the enabler of National Grid's market power on Long Island and as such is a part and parcel of the FERC complaint filed by the Village."

The pressure on LIPA is growing.

During New York State senate hearings regarding LIPA last summer on Long Island, LaValle said that LIPA is failing and its time may be short. (See clip attached to this article.)

“We may be at the time of saying that LIPA is not serving its stakeholders and we need to look and recreate another delivery system for the people of Long Island,” he said.

Newsday reported in a story on Thursday that officials close to Governor Andrew Cuomo say he sees LIPA as a "bloated" agency and it needs to be "drastically" reformed.

"With major contracts for the utility's power and grid management being negotiated or changing hands in coming months, Cuomo's office is seizing a chance to make changes and a 'better, quicker, smaller' LIPA is in the works, the officials said," the paper reported. "One said changes could be announced before summer's end."

The village is confident that it has a strong case but they still say that this is not their last hope to repower the Port Jefferson plant.

“It’s not the last arrow in our quiver,” said Trustee Larry La Pointe. “And we’re not done fighting.”

Find the letter and full filling by the village of Port Jefferson to the Federal Energy Regulatory Commission attached to this article as PDFs.

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