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Hope for tax 'stability' in Cuomo LIPA plan?

Gov. Andrew M. Cuomo before delivering his state

Gov. Andrew M. Cuomo before delivering his state of the state and budget message at SUNY Old Westbury. (Feb. 14, 2013) Credit: Patrick E. McCarthy

Gov. Andrew M. Cuomo's proposal for restructuring LIPA includes a little-noticed plan for property tax "stability" that Long Island officials hope could mean an end to the authority's lawsuits challenging the high taxes for local power plants.

Huntington Supervisor Frank Petrone said his office has been in contact with the governor's staff to request that a tax grievance the Long Island Power Authority, seeking to lower its taxes, has filed against the Northport plant be dropped under any new structure. Last year, LIPA paid more than $72 million in taxes on the plant.

"That's how I'm reading this," Petrone said of Cuomo's use of the "tax stabilization" term.

Ultimately, Petrone said, he'd expect LIPA to drop its tax grievance cases. "That's what I'm hoping is the intention," he said.

In a meeting last week with a dozen board members of the Long Island Association, top energy officials from Cuomo's administration referred to the tax plan, said Kevin Law, LIA president. Law, who was chief executive of LIPA in 2009 when the authority first contemplated tax grievances, said Cuomo's staff didn't get into specifics. But he said the administration "doesn't want to hurt communities that have historically been good hosts for plants that generate power for Long Islanders."

Cuomo has begun an effort to overhaul LIPA, after giving it poor grades for power restoration after superstorm Sandy. He first broached privatizing the utility in his State of the State speech last month, but more recently has said he is open to all options. In any case, his staff has said, reform must include rate stabilization, better customer service, improved disaster preparedness and response and property tax stabilization.

Cuomo spokesman Matthew Wing declined to elaborate on the priorities, but he said, "The final decision will be based on the best plan that clearly shows it can meet these priorities, period."

Led by Larry Schwartz, secretary to the governor, the LIA meeting last week included the top administration energy officials, including New York Power Authority chief Gil Quiniones, newly appointed state energy czar Richard Kauffman, assistant state energy secretary Thomas Congdon and finance and energy consultants with the financial firm Lazard Ltd.

Most of the questions from LIA committee members focused on Cuomo's previously stated plan to sell LIPA assets to a private company, said Law, who attended.

"We asked a lot of tough questions," said Law, who noted the LIA has not taken a position on privatization or any other option for LIPA.

"It was an excellent discussion . . . They said they were open to all options, including privatization," Law said.

LIPA has filed tax certiorari cases to lower the assessments on Northport, Port Jefferson and other National Grid-owned plants by tens of millions of dollars. It also has filed grievances for most of its other properties, including substations.

Port Jefferson Village Mayor Margot Garant said that whatever the plan, she would welcome stabilization of property taxes paid by LIPA or a future entity. LIPA last year paid $29.4 million in taxes on the Port Jefferson power station.

"We want to make sure the plant gets repowered," Garant said of a plan that would modernize the plant to make certain LIPA uses more of its energy. She said she hoped the "state can assist us and we can get on a glide path" to stable tax rates. "We don't want severe adjustments. We want to see them happen over time."

Taxes in 2009 for the Port Jefferson facility were $26.1 million and $29.4 million last year. Taxes for the E.F. Barrett plant in Island Park were $38.9 million in 2009 and $40.3 million last year.

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