November 9, 1999

Suffolk Executive Plans Talks to Settle Bill for Shoreham


AUPPAUGE -- Less than a week after easily winning re-election to a third term, County Executive Robert J. Gaffney has taken on a far more daunting task: negotiating a settlement in the bitter two-year battle between the Long Island Power Authority and the county Legislature over taxes on the Shoreham nuclear power plant.

"I think the timing is right for all sides to settle their differences," Gaffney said Monday. "Election time is over and the Suffolk County Legislature has agreed to let me work out a deal."

The power authority says the county owes it $1.4 billion for overassessment of the power plant, which never became fully operational and was decommissioned in 1989. But the Legislature has resisted any form of settlement in the courts, arguing that under the state law that led to the creation of the authority in 1987, the county is free of all its past tax claims.

The authority's chairman, Richard M. Kessel, offered two years ago to settle for $625 million, half the earlier claim, but the Legislature continued to resist, even though it lost a series of critical legal battles, including a ruling last month by the Appellate Division of the State Supreme Court, barring further argument at that level.

"The members of the Legislature needed a way out, and I was available to take them off the hook," Gaffney said.

"If I arrange a settlement they don't like, they can blame me.

If the settlement is a success, I'll be a hero."

"I've just been elected to a new four-year term, so I'll take my chances on the outcome of the settlement four years from now, if necessary."

Gaffney said he believed that the battle with the power authority had run its course.

"I had believed from the beginning that the LIPA proposal was a good one and that we should have settled," he said.

Kessel said Monday that he was encouraged by Gaffney's initiative. "Hopefully, we can meet shortly with the county executive so that we can resolve this matter to the benefit of LIPA's ratepayers in both Nassau and Suffolk Counties and Suffolk's taxpayers."

The way for Gaffney's search for a settlement was cleared late Friday when the members of the Legislature, after a series of caucuses and heated debate during an executive session, agreed to a resolution giving Gaffney the power to negotiate a settlement.

The resolution did insist, however, that any settlement be less than the $625 million offered by Kessel.

After the executive meeting, some legislators said that their colleagues' interest in the legal battle had dwindled, and that there was a desire to settle as soon as possible.

"The overwhelming sentiment by everybody is, 'Let's put this issue to bed,' " said Fred Towle, a member of the Republican majority.

Some members, however, continued to resist any talk of a deal.

"I think it's an abdication for our responsibility," said George Guldi, who served as chairman of the committee that resisted Kessel's settlement offer.

The dispute began in 1976, when overassessments on the Shoreham nuclear plant increased the amount of taxes paid by the Long Island Lighting Company not only to Suffolk but also to the Town of Brookhaven and the Shoreham-Wading River School District.

Lilco passed the cost on in the form of higher rates to its customers in both Suffolk and Nassau Counties. At the same time, the utility took the matter to court, sued and won.

The initial judgment, with interest, has since grown to $1.4 billion.

After the power authority's partial takeover of the utility a year ago, the authority offered to settle for $625 million.

It then cut rates in both counties but began collecting on the debt by adding a 2 percent surcharge on its bills in Suffolk.

"Much of the required agreement is already in place," Gaffney said.

"All we need to do is work out the final figures and settle our differences over the final wording." He and Kessel said they hoped to work out the final details before Thanksgiving.

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