The Long Island Power Authority responded to a rally organized by the Town of Huntington last Wednesday protesting against LIPA's decision to file for a tax certiorari suit by defending its decision, saying that they have an obligation to all of their Long Island customers to do so.
Speaking on behalf of the company, LIPA director of communications Vanessa Baird-Streeter said that the company is looking for a fair assessment of the value of the plant to curb payments that they believe are spiraling out of control.
"We're not saying that we shouldn't have to pay any taxes," said Baird-Streeter. "We just want to pay our fair share."
Exaggerated Values, and the Ratepayers Who Suffer
The property taxes on the Northport Power Plant and other similar power plants across Long Island are projected by LIPA to cost $194 million in 2011, up from $185 million a year ago. The taxes account for 14.7% of the bill paid by LIPA customers, which is approximately three times more than the average amount of revenue (4.7%) that other power plants around the country pay to local and state governments (according to a 2008 American Public Power Association Report).
"These numbers are extremely skewed," said Baird-Streeter. "Some of our generating facilities are overvalued."
According to Baird-Streeter, since LIPA does not have shareholders, the entire balance of these taxes is reflected in the bills of ratepayers, who pay approximately $539 million in total taxes a year. Re-valuing the plant will help reduce the costs to these ratepayers.
"Any cost that LIPA incurs comes from them," she said. "We want to do what's in the best interest of our 1.1 million customers and manage the costs for them."
Town of Huntington public information officer A.J. Carter was skeptical that there would be any relief on taxpayers when reached for comment. He was more specifically skeptical of the idea that no shareholders would benefit from a re-assessment.
"LIPA is acting on behalf of National Grid, a private company with shareholders," he said. "If there is any tax relief, who gets the benefit?"
Support for Town, Village
The PILOTs (payments in lieu of taxes) on the Northport power plant, which are estimated to be $70 million, provide tremendous support to the Northport school, library, and fire districts. Baird-Streeter said LIPA understood this, and that they felt that the community deserved some tax benefits. But she added that the needs of all of Long Island came before the needs of smaller communities.
"We can't look at what we do myopically, at one particular community," she said. "It can't be a benefit that's disproportionate to the entire community."
As a reference point, she cited recent PILOT agreements that were negotiated in the range of a true assessed value. "[Our] five generating facilities are not in that negotiated PILOT range," she said.
She added that the payments on the Northport plant have risen by 21% in recent years, which is a greater rate than real estate taxes have risen over the same period.
When asked to comment, the Town of Huntington's Carter reaffirmed its stance that the harm inflicted on the town would be greater than the benefit for all of LIPA's ratepayers.
The Handshake Agreement
At the rally, multiple speakers referenced a handshake agreement made between the Town, then-State Governor George Pataki, and then-LIPA president Richard Kessel in 1998, where an understanding was reached that the newly-formed company would pay the PILOTs. ("The understanding was that this was not the usual business," said Town of Huntington Supervisor Frank Petrone.)
Petrone and Northport-East Northport School Board President Steve Waldenburg claimed that the tax suit filed this past October was in direct violation of the agreement. But LIPA sees it differently.
"I've heard of it," said Baird-Streeter. "It said we wouldn't challenge the taxes in five years. It's been 12 years. We fulfilled that handshake agreement."
A recent letter to LIPA from the Town in response to the suit stated that it violated an agreement made between the two parties in 2004 that the power company would not challenge the assessment of the plant until 2013. But Baird-Streeter was not aware of any such agreement when asked to comment.
Another part of the issue Town Supervisor Frank Petrone had with the certiorari suit was that he claimed LIPA "blindsided" him by filing for it, doing so without contacting him first. He stated at the rally that he would not talk with LIPA officials until the suit was dropped.
Carter reaffirmed Petrone's position that the Town will not negotiate with LIPA until the suit disappears when asked to respond to LIPA's position.
"We'll be happy to sit down with them," he said. "Just not under the threat of litigation."
Carter did add that the Town was trying to get the State to repeal a $45 million tax they imposed on utilities two years ago. "That would solve our problem," he said.
As for LIPA's stance on their suit, Baird-Streeter didn't say that LIPA would drop it, but she said that the company was willing to negotiate a settlement with the Town.
"We're in the correct position to file the certification," she said. "But we're willing to negotiate. We don't think it's beneficial for either party to take this to full litigation."