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The Power Plant Revenue Issue


This website is intended for the families and residents of Port Jefferson to address the definitive financial challenge that lies ahead of us. The district has monitored the situation closely and the following includes facts about the history, most recent updates, our position and all other information you need to know about PJUFSD’s most critical issue.

 

Perspective on the LIPA Challenge Facing Port Jefferson

September 13, 2018

Legal actions taken by the Town, Village and School District to generate an equitable solution to the LIPA tax assessment challenges are intended to protect its residents and children against exorbitant property tax increases; especially in a very short interval of time. The Mayor and the Village of Port Jefferson Trustees, the Supervisor and the Brookhaven Town Council, and the Superintendent and the Port Jefferson Board of Education are all pursuing what they believe is best for their constituents.

The Port Jefferson School District is not a tax assessing entity like the Town of Brookhaven or the Village of Port Jefferson, although it does receive school tax revenue collected by the Town. Despite this fact, the District was criticized by some residents for not being more active in the LIPA legal battle back in 2010. After a few years of contributing to the Village’s research studies and legal fees to challenge LIPA’s claims, the District began its own course of action. The District’s legal battle is based on the premise that it has a vested interest in the tax assessment challenge because, although it does not assess or receive taxes directly, it can be significantly impacted financially should the court rule in favor of LIPA.

Please know, that the District fully understands that the decision about engaging legal counsel is one to be made with great care, as it always carries a financial implication while never guaranteeing a verdict in one’s favor. Therefore, as a District, we needed to consider if not being involved in a legal battle to protect those with whom we are entrusted is actually more costly than risking a court ruling that may not be in our favor. It was the District’s decision, after carefully weighing all options, that it was our obligation to our taxpayers to fight for our right to take part in the negotiation process – to at least attempt to allow our voices to be heard during the litigation process. With the support and encouragement of our residents, we worked to advocate for this chance instead of idling sitting by and waiting for a decision – one in which we had no input – to be made.  

We are disappointed that Justice Emerson did not rule in our favor in August with regard to our pursuit of having a third party interest in the legal issue with LIPA.  On a positive note, our legal action may have contributed to a delay in the process of reaching a tax assessment settlement.  This delay could very well have saved our district millions of dollars from the point we initiated legal action. This setback does not define how this lawsuit may influence the ultimate outcome of the Town’s negotiations with LIPA and may help to contribute to a more equitable resolution in the long-term. 

The Port Jefferson Board of Education is discussing whether or not to appeal the recent Judge’s decision. 

We have heard rumors that there may be a resolution to the LIPA issue this school year and that revenue from property taxes may not continue in its present form in the future. However, the details of which are not clear nor are they finalized. But the reality is, no matter what the resolution is, the status quo we are accustomed to in Port Jefferson is bound to be altered.  

As a School District, the real challenge for us moving forward will be to balance the impact of any reduction in LIPA’s assessment between our responsibility to maintain an outstanding educational program for the children of our community and our concern for the financial impact on our community residents’ property taxes. We believe the impact should be shared.

We have a deep sense of belief in our district and in our community.  We are strong and resilient. We can handle adversity and emerge stronger and wiser as a result.  We are committed to working together to persevere and continue to provide an outstanding education to the children of the Port Jefferson school community. 

 



The Infrastructure

National Grid (a UK-based corporation) owns the power plant located in Port Jefferson harbor. It has a power supply agreement with LIPA (the Long Island Power Authority) that expires in May 2013. This means that any power National Grid chooses to produce at the plant is ‘under contract’ for distribution to the Long Island electrical grid until then. After the power supply agreement expires, the future of the plant as a producer of energy is in question.

National Grid has no obligation to generate power at the site. As an older, less efficient plant, significant questions remain regarding whether an investment would be made by National Grid to 'repower' the plant, once again making it a significant part of LIPA's energy infrastructure. All of Port Jefferson's public agencies support this concept, noting that we are a willing host community that offers significant advantages in contrast to creating new power plants in other parts of Long Island, thereby further despoiling the environment, along with financially destabilizing Port Jefferson.

The Financial Challenge

National Grid has challenged the Brookhaven Town assessment of the plant. In essence, this means that it believes the plant is worth a significant amount less than the Town has assessed it for, which means it is trying to lower its annual tax bill by a substantial amount. If successful – and no decision has been made to date by the Brookhaven Town Assessor – it would reduce tax payments to the Town of Brookhaven, the Village of Port Jefferson, the Port Jefferson Schools, the Port Jefferson Library, and the Port Jefferson Fire Department by enormous amounts. That's because the current assessment of the plant results in a tax bill that provides for, in the case of the school district, nearly half of the annual school budget!

The District's Position

We are in full alignment with our Village leaders and residents in the concept that the current plant should be 'repowered' to produce cleaner energy, thereby providing Long Island part of what it needs (in terms of increased power capacity for the future). This would also preserve a substantial, historic revenue stream to our community. For more information detailing the issue, please refer to the Questions and Answers section of this webpage.

Recent Events

Statement From the Port Jefferson School District - August 2018

Earlier this week, the New York State Supreme Court ruled against the Port Jefferson School District’s claim that LIPA breached its promises to never seek a reduction of the assessed valuation of the Port Jefferson power plant. This decision, which follows a nearly four year process, now allows LIPA to go to trial against the Town Of Brookhaven, the assessing authority, and seek dramatic reductions in the taxes it pays to the school district for the plant. While this decision is not the outcome the district was hoping for, we vow to continue to explore our options as we work to protect our school district's financial future and the needs of our community. The district will work to keep the community apprised of any updates on the matter. 

  • April 2018, as a result of the potential deal between the Town of Brookhaven and LIPA, the district announced the following:

    Update on Budget Process – April 11

    At last night’s meeting, the Port Jefferson Board of Education tabled a motion to adopt a proposed 2018-19 school budget and a proposed contingent budget. If passed, the proposed budget plan would be put before voters this May. This decision was based on the recently announced tentative settlement agreement that the Town of Brookhaven is negotiating with LIPA.

    As many in the community are aware, the Town announced last week that they were close to a deal on the lawsuit it was facing that challenged LIPA’s assessed value and alleged repayment of back taxes. Despite our best outreach efforts, the district has been unable to receive the details of this tentative settlement – in particular, what it would mean financially for the Port Jefferson School District for the 2018-19 school year. As such, the Board felt it was necessary to refrain from taking action on a proposed budget until the details of this agreement are made available.

    We are hopeful that the parameters of these deals will be made available to the district prior to the required April 20 proposed budget adoption.

  • April 2018 update, below are two articles published regarding a potential deal between the Town of Brookhaven and LIPA.
    -- Newsday Op-Ed Response - April 6, 2018
    -- https://www.newsday.com/long-island/suffolk/brookhaven-romaine-state-town-1.17844215?pts=404345

  • In September 2015, The Village of Port Jefferson approved a lawsuit to block LIPA from appealing a property tax assessment of the Port Jefferson Power Plant. For more information, click here

  • Under the 2015-16 state budget, LIPA officials have been tasked with conducting feasibility studies to determine the cost and environmental logistics related to overhauling older power plants in Port Jefferson, Island Park and Northport . For more information, click below:

    http://www.newsday.com/long-island/caithness-ii-and-supports-make-push-to-build-power-plant-in-yaphank-1.10115282

    http://www.newsday.com/business/lipa-again-to-study-overhaul-of-port-jefferson-island-park-and-northport-power-plants-1.10160296

    http://www.newsday.com/business/lipa-again-to-study-overhaul-of-port-jefferson-island-park-and-northport-power-plants-1.10160296

  • In March 2015, Caithness Long Island officials commenced a new push to revive a 750-megawatt plant, called Caithness II in Yaphank. PSEG, however, is standing by its claim that a large power plant on Long Island is not needed. For more information, click here.

  • In July, 2014 PSEG Long Island determined that the proposed Caithness II power plant in Yaphank does not need to be built because Long Island has enough power to serve customers over the next five years. It is believed that if Caithness II is built, it will replace the Port Jefferson power station, For more information, click here

  • On March 14, 2013, comptroller Thomas DiNapoli signed off on the 15-year power supply agreement between National Grid and the Long Island Power Authority. This is progress towards the potential repowering of the Port Jefferson power plant. At this time the agreement has been approved by the state attorney general and is still waiting on approval from the Federal Energy Regulatory Commission. For further reading, please see the Port Times Record article:http://www.northshoreoflongisland.com/Articles-News-i-2013-04-04-95689.112114-sub-Powerful-step-forward-for-Port-Jefferson.html

  • On Nov. 16, 2012, FERC (the Federal Energy Regulatory Commission) denied a complaint by the Village (which was joined by the school district) against National Grid regarding its business practices and lack of investment in repowering the Port Jefferson plant. This has no practical impact on the current situation, other than further raising awareness of the matter.

  • In a follow-up communication on their website, LIPA has stated that this new power supply agreement DOES NOT prevent or alter the current tax assessment challenges. In other words, the new agreement DOES NOT change the current status of the assessment challenge and its looming financial impact.

  • On Oct. 2, 2012, LIPA announced that it had created a new power supply agreement with National Grid, which calls for a feasibility study for the potential repowering of Port Jefferson and other older plants on Long Island. This is a 'good news' development, but DOES NOT compel National Grid to repower the plant.
Wednesday, September 26, 2018