LIPA Pushes Case for Tax Cut on Northport Power Plant

 Long Island Power Authority chief executive Tom Falcone last week laid out the utility’s arguments  for why the Town of Huntington should significantly reduce taxes on the Northport power plant.

The two sides are locked in a lawsuit in State Supreme Court to resolve the issue, which LIPA has been arguing for almost a decade.

At the heart of the lawsuit to cut its taxes, Falcone said, is LIPA’s argument that the town has seriously overassessed the value of the 50-year-old Northport power plant. The town says the plant’s valuation is $3.4 billion; LIPA disagrees and says it’s no more no more than $198 million. The utility pays $82 million in taxes, with the Northport-East Northport school district getting as much as $54 million.

“The value is declining, not increasing,” Falcone said. “It has to bear some relationship to the cost.”

Among Falcone’s points are the age of the plant, requirements to achieve carbon neutral goals by 2040, consumer shifts to energy-efficient appliances, leading to a decline in demand, and changes in production that make energy production less costly.

Falcone describes the Northport plant as “A very old power plant. Usage is already down a lot. The future of the grid is down a lot. How sustainable is this tax burden? The forecast it not good.”

Should the town lose the suit, taxpayers throughout Huntington could be responsible for nearly $500 million in tax refunds that LIPA could seek for years of past tax payments, as well as decreased future taxes paid by the utility.

Huntington Supervisor Chad A. Lupinacci said  in a letter issued Friday night that the retroactive portion of the taxes “would be proportionately shared by every homeowner in the Town of Huntington. For a home with an average assessment, this could mean a one-time payment of well in excess of $5,000.”

Falcone  points to the settlement that LIPA reached in December with the Town of Brookhaven. That deal gradually cuts LIPA’s  taxes on the Port Jefferson power plant in half. The move would reduce the $32.6 million LIPA pays in annual taxes for the plant to just over $16.8 million by 2026.

LIPA offered Huntington the same tax cut, but Huntington has so far rejected it.

“There’s a 50 percent reduction in taxes for the Port Jefferson plant,” Falcone said. “You couldn’t come up with a trial outcome that is more generous than 50 percent. In Huntington, they rejected the settlement. If you think the court is the best for the community, who are we to judge?”

Town attorney Nicholas Ciappetta said  that the tax amount on the Port Jefferson plant is considerably smaller and a settlement would be spread out over far more taxpayers because of Brookhaven’s size.

Opponents of LIPA’s tax reduction point to assurances made in 1997 by LIPA’s then-chairman, Richad Kessel, that the utility would not challenge taxes in the future. But in August, State Supreme Court Justice Elizabeth Hazlitt Emerson ruled that Kessel’s statements were nothing more than “gratuitous promises” that didn’t “contractually bind” the authority.

“We are trying to seek a fair compromise,” Falcone said. “It is really hard for me to see how this is going to end well.”

Charts provided by the Long Island Power Authority

 

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