LIPA/National Grid Litigation FAQs (last updated March 11, 2019)
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In 1986, the New York State Legislature enacted the Long Island Power Authority (LIPA) Act. The LIPA Act created LIPA, a not-for-profit public authority with broad powers to effectuate the legislation’s purposes, which were primarily to close the Shoreham Nuclear Power Plant, to replace the Long Island Lighting Company (LILCO) as the provider of electric power on Long Island and to reduce power costs for Long Island ratepayers and to protect Long Island property owners against increased property taxes.
LIPA owns transmission lines and other properties throughout Long Island, including property in the Town of Huntington, and is primarily responsible for the transmission and distribution of electricity on Long Island. LIPA, however, does not own any power generating facilities on Long Island.
Does LIPA own the Northport Power Plant?
No. Since 2007, the Northport Power Plant has been owned by National Grid. Prior to 2007, the Northport Power Plant was owned by Keyspan, and prior to Keyspan, the Northport Power Plant was owned by LILCO.
Who pays the property taxes on the Northport Power Plant?
National Grid currently pays the property taxes on the Northport Power Plant. However, pursuant to the 1997 Power Supply Agreement (PSA), LIPA reimburses National Grid for all of the property taxes on the Northport Power Plant.
How much does LIPA currently reimburse National Grid for the property taxes on the Northport Power Plant?
The current total property taxes on the Northport Power Plant are the sum of $84,078,759.00.
How much of that sum goes to the Northport-East Northport School District?
The Northport-East Northport School District receives the sum of $55,451,464.00 of the total property taxes paid on the Northport Power Plant.
What are LIPA and National Grid seeking in their tax certiorari lawsuit?
In 2010, LIPA and National Grid filed a tax certiorari action challenging the assessment on the Northport Power Plant (essentially, they are arguing that their taxes are too high). Their tax certiorari action seeks a 90% reduction in the assessed value of the Northport Power Plant. Since 2010, LIPA and National Grid have filed tax certiorari petitions each and every year including the 2018/2019 tax year.
Have LIPA and National Grid filed tax certiorari actions on other power generating facilities on Long Island seeking the same or similar reductions?
Yes. Besides the Northport Power Plant, LIPA and National Grid filed tax certiorari actions against the Port Jefferson Power Plant, Glenwood Landing Power Plant and E.F. Barrett Power Plant.
What is the current status of the tax certiorari actions?
The trial on the tax certiorari actions started on Monday, February 25, 2019. The trial, which is focused on the assessment year 2014 only, lasted five days and is adjourned until Wednesday, April 10, 2019.
What happens if LIPA and National Grid are successful in the tax certiorari actions? Does the Town of Huntington have to reimburse LIPA/National Grid for over assessments in past years?
If LIPA and National Grid are successful, the assessment on the Northport Power Plant will be lowered, resulting in a higher tax rate for Town of Huntington residents. Further, if LIPA and National Grid obtain a judgment against the Town of Huntington that the Northport Power Plant was over assessed, any refund liability would be the responsibility of all taxpayers in the Town of Huntington. The refund liability would be assessed as part of taxpayers’ property tax bills for the year following the court judgment on the line of the bill referred to as “NYS Real Property Tax Law,” and would be based on the property’s assessed valuation.
What judge is handling the tax certiorari case?
The tax certiorari proceedings are assigned to New York State Supreme Court Justice Elizabeth H. Emerson. The case is pending in the Supreme Court of the State of New York, County of Suffolk.
Besides the tax certiorari action are there any other lawsuits involving this matter?
Yes. In May 2011, the Town of Huntington and the Northport-East Northport School District commenced separate actions against LIPA and National Grid alleging that the commencement of the tax proceedings challenging the property tax assessment on the Northport Power Plant breached the 1997 Power Supply Agreement between LIPA and Keyspan (currently National Grid). Even though the Town of Huntington was not a signatory to the Power Supply Agreement, the Town of Huntington together with the Northport-East Northport School District allege that they were third party beneficiaries to the Power Supply Agreement giving them legal status to enforce certain provisions of the agreement. Subsequently, the Village of Port Jefferson, Port Jefferson School District and Island Park School District commenced separate third party beneficiary lawsuits against LIPA and National Grid.
What relief was sought by the Town and the School District in the third-party actions?
The Town and the School District each brought separate third-party actions seeking a declaration that they are third party beneficiaries of the agreement between LIPA and Keyspan (currently National Grid) and that the Power Supply Agreement contained a promise not to file any proceeding challenging the property tax assessment on the Northport Power Plant. The Town and the School District further requested that the Court find that LIPA and National Grid were not permitted to file the pending tax certiorari proceedings and dismiss the tax certiorari cases.
What is the clause in the Power Supply Agreement that the Town and the School District are trying to enforce?
Section 21.16 of the Power Supply Agreement states: “After the contract date, GENCO (currently National Grid), in its sole discretion, may challenge any property tax assessment on its Generating Facilities or Generating Facility sites only if the assessment on any such challenged facilities is increased not in an appropriate proportion to the increase in value related to taxable capital additions affixed to the tax parcel between the last two tax status dates.”
Is there any other evidence showing what this section means?
Yes. Former LIPA Chairman Richard Kessel made both written and oral promises/commitments to former Supervisor Frank Petrone, the President of the Nassau-Suffolk School Board Association, Senator Kenneth P. LaValle, and other governmental bodies promising not to challenge tax assessments on Power Generating Facilities on Long Island and more particularly the Northport Power Plant. Additionally, former Governor George Pataki came to Norwood Avenue Elementary School and made similar promises and commitments.
What is the current status of the third party beneficiary case?
In 2011, LIPA and National Grid attempted to dismiss the third party beneficiary case commenced by the Town of Huntington and the Northport-East Northport School District. The lower court denied LIPA/National Grid’s motion to dismiss and they appealed to the Appellate Division, Second Department. The Town of Huntington and the School District were victorious in the Appellate Division. After extensive discovery, including the request and exchange of documents between the parties and depositions, both sides made motions for summary judgment.
On or about August 15, 2018, Justice Emerson, in two separate but substantially identical decisions, dismissed both the Town's and the School District’s third-party complaints and granted summary judgment to LIPA and National Grid.
The Town and the School District have each filed a Notice of Appeal (the Town filed its Notice of Appeal on Tuesday, September 25, 2018), appealing Justice Emerson’s decision. The Town and the School District have six months to perfect their appeals. Perfecting an appeal means filing copies of the record of the case and the appellant’s brief with the Clerk of the Appellate Division, Second Department.
It will take approximately two years to receive a decision on the appeal.
Who is representing the Town of Huntington in these cases?
Milber Makris Plousadis & Seiden, LLP is representing the Town in the third party beneficiary case. The Town is represented by Louis & Greer, P.C. and E. Stewart Jones Hacker Murphy LLP in the tax certiorari proceedings.
What is the Town's position on eminent domain?
In December 2018, the Town Board authorized relevant Town departments to research the feasibility of an eminent domain procedure as it relates to the Northport Power Plant property and possible benefits to Huntington’s taxpayers and the Northport-East Northport School District.
What other actions has the Town taken to protect Huntington residents?
The tax certiorari actions are currently scheduled for trial starting Monday, February 25, 2019. In July 2018, the Huntington Town Board voted to enter into voluntary, non-binding mediation with the Northport-East Northport School District, LIPA and National Grid in an attempt to reach a resolution. Non-binding mediation means that the mediator is not the fact finder in the case and cannot determine the outcome of the cases. Additionally, any party may terminate participation for any reason upon written notification to the mediator and the other parties in the litigation. Thus, the Town of Huntington can walk away at any time if mediation is not proving successful and continue to litigate.
At its November 8, 2018 meeting, The Town Board approved a resolution urging the New York State Legislature and Governor Andrew Cuomo to enact the Long Island Power Authority Ratepayers Protection Act, which would make the LIPA trustees responsible to Long Islanders, not Albany, and provide oversight and transparency needed to restore confidence by residents of the service area and ensure that the best interests of Long Island ratepayers are served.
Currently the LIPA Board of Trustees consist of nine unelected appointees of the governor, temporary president of the senate and speaker of the assembly. The LIPA Ratepayers Protection Act would require eight of the nine LIPA Board of Trustees be elected from districts of equal population established by the State Legislature and one trustee, serving as chairperson, be appointed by the governor subject to confirmation by the senate.
At its January 29, 2019 meeting, the Town Board voted to urge the New York State Legislature and Governor Cuomo to enact legislation and appropriate funding to protect taxpayers in the Town of Huntington and the Northport-East Northport School District in the event of a settlement or an adverse judgment in the pending tax certiorari challenges brought by the Long Island Power Authority (LIPA) and National Grid Generation, LLC.
What is the current status of mediation?
Mediation sessions were held on Wednesday, September 26, 2018; Friday, October 12, 2018; Monday, November 19, 2018; Monday, January 7, 2019; and Tuesday, January 15, 2019.
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