OSWEGO — The Oswego County Legislature voted Tuesday to hold hearings on a tax agreement that would end litigation dating back to 2011 over assessed property value of the Entergy-owned James A. Fitz-Patrick Nuclear Power Plant in Scriba.
The proposed Payment in Lieu of Taxes (PILOT) agreement would end the litigation between Entergy and the Town of Scriba, Oswego County and the Mexico Academy and Central School District (MACS), with Entergy agreeing to make tax payments until 2020 and waive any refunds from the company's previous claims they were over-assessed.
If the FitzPatrick plant continues with the closure and decommissioning process scheduled to begin in January 2017, Entergy will pay $27.5 million in declining payments to the three jurisdictions over the next five years.
In 2016, Entergy would owe $480,000 to the town of Scriba, $7.8 million to the school district, and $3,660,000 to the county, for a total of $12 million. The payments would gradually decline, with Entergy owing the town $100,000, the school district $1.6 million, and the county $762,500 for a total of $2.5 million in the year 2020.
However, if FitzPatrick were to remain operational and continue to generate and sell electricity, the total split between the three entities would be $12 million per year for the five years.
As an inducement to keep the plant operational, that amount is less than what Entergy would owe if it remained on the tax roll as an operating plant, while still being $2.8 million more per year than the previous PILOT agreement that expired in 2010, according to a press release from the county.
While the agreement allows for Entergy to potentially challenge the 2016 assessment value, they agreed to not challenge assessments for 2017-2020.
Legislature Chairman Kevin Gardner, R-New Haven, said the agreement would need to be renegotiated come 2021 and further into the future, as the decommissioning process for the plant could take around 60 years.
Additionally, if another entity stepped in to take over the plant, a new tax agreement would have to be negotiated, Gardner said.
The public hearing for the adoption of local laws to allow for the agreement is scheduled to be held April 14 at 7 p.m. County administrator Phil Church said all the jurisdictions involved were aiming to hold hearings and have it approved on the same timeline.
Once the public hearings are held, the legislature will then vote on the acceptance of the agreement and it would take effect July 1.
Gardner said the agreement had been reached in recent weeks as the party's met again at the recommendation of the courts to meet before a trial began, and while he was glad to avoid litigation, the ideal outcome would be for the plant to stay operational.
"It's not a win-win, everyone kind of loses something," Gardner said, "We're very hopeful they keep operating." The lawsuit between the parties was over the assessed value of the FitzPatrick facilities, which Entergy argued were far higher than they should be. In 2015, Entergy claimed a value of $10 million, compared to the assessment of $550 million.
Both values had continually decreased since the lawsuit's inception in 2010, when the county claimed a value of $850 million compared to Entergy's claim of $90 million.
Part of the reason for the decrease in value, and one of the reasons Entergy has said is behind the closure, is the competitive energy market making it difficult for nuclear plants to remain profitable.
Now the jurisdictions would have to begin budgeting with the knowledge of a reduced and gradually reducing tax base. Church said Entergy had most recently paid around $17 million to all three jurisdictions, compared to the $12 million and eventually $3 million they'd be paying in the future.
Gardner said the county had already done some planning for the budget and what cuts would have to be made, but weren't able to get far with not knowing the future revenue from Fitz-Patrick, or the possibility of owing tens of millions in refund taxes if the lawsuit ended in Entergy's favor.
"Now we finally have some facts," Gardner said.
Majority Leader Shane Broadwell, R-Oswego, said he was happy with what he'd heard from the negotiating team, and, though they would still work to keep the plant open, thought the agreement at least provided some clarity for the jurisdictions.
"I think this at least gives some clarity over the next five years," Broadwell said. "This will ease a little bit of the anxiety so the jurisdictions can see a little into the future." Scriba town Supervisor Ken Burdick said the PILOT would represent additional reduction in revenue for the town, and while town officials have been taking steps such as a hiring freeze on full-time positions, services would likely suffer as the town must reassess its economic situation.
Scriba's hearing on the proposed settlement is scheduled for April 13.
"Every year it's going to be a situation where we're going to have to keep cutting and the services will not be as they used to be," said Burdick. "It'll have to be a monthly, weekly basis making adjustments with less revenue and we'll have to do less and less."
"I don't think anybody's overly happy that we have to enter into a PILOT and have less revenue, but it's the best we can do," Burdick added. "It'll work out the best that can be expected considering the situation." Entergy spokesperson Tammy Holden said in an email that the company had approved the deal and would wait for the jurisdictions to vote on it.
Consenting to the agreement allowed both sides to avoid costly litigation and kept the jurisdictions from having to refund Entergy for any over-assessments, Holden said.
"We recognize that Fitz-Patrick's planned closure is a significant event for the local economy and for surrounding communities," Holden said. "The PILOT agreement provides certainty to the local taxing authorities and the company and thus avoids continued costly litigation on both sides." The agreement brings some closure to a long period of negotiation. Negotiations began in 2008 as the previous PILOT agreement drew to a close, and became more involved in 2011 when Entergy brought the lawsuit litigation, Church said.
Minority Leader Dan Farfaglia, D-Fulton, and MACS superintendent Sean Bruno could not be reached for comment by press time.