Last month, the State Senate passed a bill sponsored by Sen. James Gaughran that would bar the Long Island Power Authority from collecting refunds on overassessments of the Northport power plant or any other asset it claims is overassessed. The Assembly version of the bill, sponsored by Steve Stern, is sitting in committee.
The legislation is clearly unconstitutional because it would deprive ratepayers and utilities of all contract, property and procedural guarantees under state and federal law to prevent overtaxation. It’s dangerous because it would allow municipal assessors — LIPA deals with 13 assessing jurisdictions — to put any value they want on properties without fear of legal challenges seeking repayment.
The legislation also is counterproductive to the goal of those trying to stymie the revaluation of the Northport plant.
If it passes, National Grid, the owner of the three generating plants where LIPA is challenging tax assessments, would likely look to shut them down when its power-supply agreement with LIPA ends in eight years. There is no guarantee these warhorse plants will be needed in the future. Offshore wind, as well as other off-Island power supplies, are coming online.
If the plants became obsolete, their property values would plummet. Reducing assessments on the National Grid plants would make upgrading them more attractive, and mean continued local tax revenue.
A similar legal strategy to force continued oversized taxation on a LIPA plant failed famously once before.
In the 1986 law that created LIPA so it could acquire the bulk of the Long Island Lighting Co. was a clause dealing with the Shoreham nuclear power plant. Its intent was to strip LILCO of the right to seek a refund of excessive property taxes the utility paid to Suffolk County, the Town of Brookhaven and the Shoreham-Wading River school district.
LILCO challenged the law, suing to recover its tax overpayments. LIPA inherited those suits in the takeover and won a ruling from the state Court of Appeals that said it was owed $1.4 billion in past overpayments. LIPA agreed to take $620 million. Suffolk residents are repaying the money through a surcharge on their power bills — through 2028. Not a good track record. Any residents in the Town of Huntington or the Northport-East Northport school district blinded by the false promise that a new law will save them should think again.
The desire of lawmakers to respond to pressure for a favorable solution is understandable. But if that’s the goal, their best option is to persuade Huntington leaders to accept the fair deal LIPA has on the table. It would cut tax payments on the plant by 50 percent and spread that reduction, and resulting tax increases, gradually over eight years. That settlement also would set the table for LIPA to keep buying power generated at the National Grid plants. The judge in the Huntington case, set to reconvene the trial in July, is unlikely to issue a ruling as favorable as LIPA’s offer. And as history with Long Island’s dominant power provider has shown, an unconstitutional law might curry political favor, but it won’t help those communities recover once a devastating judgment is delivered.— Editorial board