LIPA trustees approve gas pipeline reimbursement

Matthew Cordaro speaks during the LIPA Board of Matthew Cordaro speaks during the LIPA Board of Trustees meeting in Uniondale on Thursday, June 26, 2014. Photo Credit: Barry Sloan

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LIPA trustees Thursday approved spending up to $15 million for permits on a new gas pipeline to a proposed power plant in Yaphank, even though LIPA has yet to give the formal green light to either project.

After a spirited debate, trustees voted to authorize LIPA executives to reimburse Iroquois Gas Transmission System for costs to get permits for the line, which would extend from an existing undersea gas main on the Connecticut side of the Long Island Sound, and continue 10 miles on land along the William Floyd Parkway from Shoreham to Yaphank. The measure was passed by LIPA's board in a 6-2 vote.

The gas line is one of three proposals being considered for providing natural gas to the proposed Caithness II power plant, a 752-megawatt facility that LIPA initially selected in July 2013 to help meet a projected capacity shortfall by 2018.

PSEG Long Island is reviewing LIPA power projects, including Caithness II, to determine whether LIPA's plans are financially feasible and necessary. PSEG is expected to complete that review by September, and a vote on the Caithness II contract is expected before year's end.

"I would rather see that we wait until the fall to consider committing LIPA funds," said trustee Matthew Cordaro. He said the board would have the benefit of the PSEG review and a picture of summer demand, which has been slowing.

"I'm not real clear what the downside risk is of waiting three or four months when there is more information," said trustee Suzette Smookler, who along with Cordaro voted against the measure.

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Trustee Marc Alessi asked if a three- to six-month delay would mean "the lights go out."

"I hesitate to say the sky is falling . . . but heaven knows things could happen," said Rick Shansky, managing director of LIPA's Power Supply Long Island unit. The bigger issue, he said, is that a three-month delay could cost ratepayers $30 million by throwing off by a year LIPA's plan to power up Caithness II by May 2018.

The proposal calls for LIPA to advance Iroquois up to $3 million by Sept. 30, up to $8.6 million by Dec. 31 and up to $15.6 million by the end of next year.

Caithness II would cost $1.09 billion to build and equip, and LIPA ratepayers would pay more than $3 billion for financing, property taxes and other expenses over its 20-year contract.

Sources have said the gas line project could cost $300 million; a separate electric transmission line to send power from Caithness as far west as Nassau County could cost $300 million or more.

Ultimately, all costs for the plant, gas lines and new electrical transmission cables would be paid for by ratepayers. LIPA has said Caithness II could increase rates up to 3 percent by 2018.

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