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Your LIPA Surcharge is Coming

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Bob Schepps talks about LIPA surcharge at southampton town board meeting

After months of consideration, the Long Island Power Authority (LIPA) decided last Thursday that it will charge many Southampton Town residents and businesses a usage-based fee to pay the roughly $10 million cost for the burial of high voltage power lines that the utility installed this summer between Southampton and Bridgehampton.

The decision came after a LIPA board meeting last week where 11 board members voted in favor of the usage-based fee and 1 voted in opposition.

The visual benefit assessment (VBA) surcharge will appear on LIPA bills for Southampton Town residents east of the canal, excluding the areas of Tuckahoe, Shinnecock Hills and Shinnecock Indian Reservation beginning in April 2009. LIPA representative Ed Dumas said on Tuesday that his organization is still finalizing the costs and working towards a better fee for the customers who will have to pay. It is estimated that residents who use 12,386 kilowatts a year, for example, will pay an additional $30-40 a year, while businesses using 36,903 kwh will pay an extra $120 a year for 20 years.

The decision of whether to adopt a usage-based fee or a flat fee had been at the center of controversy in the town of Southampton because some residents and business owners feel they will unfairly carry the burden of a usage-based fee.

Bob Schepps, president on the board of the Southampton Chamber of Commerce, said although he was in favor of burying the lines, he strongly opposes the usage-based surcharge.

“Last week’s vote – in the final hour — was not unanimous, it is economically unfair in my view and there are business that will be charged much more with this VBA surcharge,” Schepps said. “It unfairly impacts local people. I live in the village and my neighbor uses their house three weeks a year – same house, same property value – and I will be paying more. I will be penalized for living here year round,” he said on Monday.

The Town of Southampton passed a resolution earlier this year where the town settled in court to accept the surcharge as LIPA proposed. Community members began to speak up against the VBA surcharge, and a meeting was held in Hauppauge in mid-September to consider the option of a flat fee, where LIPA board members were able to hear the community concerns about the surcharges.

According to Schepps, the town assumed the liability of any lawsuits dealing with the surcharge, he said, “The chamber [Southampton Chamber of Commerce] got a letter from a retired lawyer that seriously questioned the legality to hold LIPA harmless in the collection of the surcharge because there is no precedent for this – it is very challengeable in court, people will get their bills and realize what they haven’t paid attention to – and say ‘what am I paying?’”

Schepps believes there will be a major revelation in April.

Schepps also spoke at Tuesday night’s town board meeting regarding the town budget. He asked the board, “How much have you budgeted for your VBA? How much did you budget and how much have you set aside to pay the VBA and for legal fees related to the VBA?”

The town attorney said that the information is internal and confidential.

Southampton Town Supervisor Linda Kabot’s office also released a statement this week that said, “With these conditions, should a court invalidate the VBA, the town could assign the obligations to property taxpayers within a special taxing district. However, establishing it requires state approval and a separate hearing process during 2009.”

“Our leap of faith is a little shorter since LIPA has held up its end of the deal,” Kabot said. “Now we’re counting on the state to introduce and approve legislation allowing us to set up a special taxing district to ensure coverage of the required indemnification on collections.”

“Essentially our board ratified what had been negotiated as part of a court ordered settlement on the town,” Dumas said, “The combination was unprecedented – it represents the best possible compromise on part of the parties.”

Councilwoman Anna Throne-Holst said, “I’m glad they made the decision, but I am even more glad that they are expecting to see a rate lower than what was originally talked about.”

 She also said that she does, however, have a high level of discomfort for what this is going to mean for the town’s ratepayers, and those not affected by the burial of the lines. “All in all, this is probably the best solution, it was a lose-lose situation; but the lower users will pay a lower rate.”

“I’m thrilled to death that we buried these lines, but the situation has put an undue pressure on an economy that’s already under pressure,” Schepps said, “And pile on another economic burden on the businesses of these communities.”