LIPA Fair And Controlled Tax Solutions (F.A.C.T.S.)

Our Mission is to provide highly reliable and economical electric service through our valued workforce with a commitment to superior customer service, accountability and transparency in all of our operations, while being recognized as a leader in the advancement of efficiency and renewable energy.

LIPA F.A.C.T.S

LIPA customers reimburse National Grid for property taxes paid on its power generating facilities under contract to LIPA. These taxes, along with other property taxes LIPA pays account for over 14.7% of customers’ bills and represent a significant part of each LIPA customer’s bill. These taxes have increased substantially over the years.
LIPA has begun the process to challenge the taxes we pay on the power plants owned by National Grid in the Town of Huntington and Brookhaven. Of the $539 million LIPA pays in taxes, $194 million is applicable to the properties owned by National Grid. These taxes are a direct pass through to LIPA customers. Challenging these taxes is not only the fiscally responsible thing to do, but it also a matter of fairness to our customers.

In an effort to control these costs, LIPA has obtained an expert analysis related to certain National Grid generating facilities, including Port Jefferson and Northport. National Grid has since filed tax petitions in the Town of Brookhaven and the Town of Huntington, similar to the practice followed by all other utilities, taking the next step to ensure that LIPA customers do not have to pay more than their fair share of taxes.
While a host of local community benefits are supported by these taxes, the impact on LIPA customers is significant. While LIPA supports the payment of property taxes and the benefits that accrue to local communities, LIPA seeks to pay only its fair share of property taxes on behalf of its 1.1 million customers based on a fair assessment of value for the taxed property.
In a 2008 American Public Power Association Report (APPA) entitled Payments and Contributions by Public Power Distribution Systems to Sate and Local Governments, APPA calculated net payments and contributions for 340 public power systems and determined that the median amount contributed to state and local taxing jurisdictions on behalf of the public power utilities was 4.7 percent of electric operating revenues. In contrast, LIPA currently pays almost triple that amount, approximately 14.7 percent of its electric operating revenues. In addition, the median net payment for the North East region of public power systems was only 3.1 percent of operating revenues. By this, and other available measures, LIPA customers are being burdened at a higher percentage than others.
It is also common practice among utilities to seek a fair and reasonable assessment of taxes. In fact, utilities regulated by the New York State PSC are expected as a course of business to challenge tax assessments. While LIPA is not regulated by the PSC, PSC regulation of LIPA has been proposed by some and it is certain that challenges would be expected of a company to minimize its property tax expenses and that it would be necessary that a company has aggressively sought to minimize its property tax assessments.
As part of LIPA’s mission to provide highly reliable and economical electric service, it is the fiduciary responsibility of LIPA’s independent Board of Trustees to manage and examine all of LIPA’s costs. LIPA will continue to pay property taxes to municipalities that host generating facilities and LIPA-owned equipment to the extent agreed to, but it should not be unfairly burdened with taxes that ultimately are passed on to our customers.