How Greenport’s $108K power plant penalty came to light

01/30/2014 3:30 PM |
CARRIE MILLER PHOTO | Greenport Mayor David Nyce discussing the electric penalty fee and other billing problems at Monday night’s Village Board meeting.

CARRIE MILLER PHOTO | Greenport Mayor David Nyce discussing the electric penalty fee and other billing problems at Monday night’s Village Board meeting.

The village administrator said he had no answer.

The treasurer said she was missing “key information about the electric rates.”

And Greenport Mayor David Nyce told a reporter only that the big spike in many residents’ power bills before the Christmas holiday had to do with “an additional Independent Service Operator charge” that the village was “passing on.”

When asked if there was a reason residents weren’t informed about the charge, he replied: “Nope.”

Now, a month later, a crucial detail has emerged about what caused the sudden jump in Greenport electric customers’ bills.

The one-time charges on December’s bills were imposed on customers so the village could recoup a $108,000 penalty it had incurred for missing a mandatory energy measurement test (known as a dependable maximum net capability test) for one of its power plant generators, according to the New York Power Authority, or NYPA, and village officials.

After learning that Mr. Nyce planned to issue a public statement on the matter during Monday night’s Village Board meeting — and with a Times reporter already working on a story about the $108,000 penalty — the newspaper decided to report its initial findings on Monday afternoon.

Editorial: Secrecy may speak to larger plant problems in Greenport

The test was required by the New York Independent System Operator, or NYISO, the state’s nonprofit energy operator, which imposed the penalty, NYPA and village officials said. NYISO works closely with NYPA, which is a public benefit corporation like the MTA, to deliver power throughout the state. Unlike most of Long Island, Greenport residents do not get their energy through PSEG.

Mr. Nyce said Monday night that Greenport Village “missed a DMNC test because of the ongoing capital program,” referring to the still delayed $5.8 million project at the electric plant, which Mr. Nyce had been pushing for since 2007, his first year in office.

“The switchgear on generator number six didn’t run the day of the test,” the mayor said.

It was not made clear whether the village paid the $108,000 up front or waited to collect the money from the December bills.

Documents forwarded to the Times from an outspoken critic of the administration, William Swiskey — which were verified by a NYPA official — indicate that at least two key village officials were completely unaware of the penalty late last year.

FILE PHOTO  |  Bill Swiskey speaking at a Village Board meeting.

FILE PHOTO | Bill Swiskey speaking at a Village Board meeting.

In an email to NYPA dated Nov. 13, village account clerk Stephen Gaffga questioned the “extraordinarily high” NYISO charge that came in September, noting that the typical charge is about $10,000. This charge was $110,373, he wrote.

“Both I and Robert Brandt, the deputy treasurer, have attempted to contact the billing specialist … but have not been responded to,” Mr. Gaffga wrote. “I have never seen this charge approach that number in four years. I was hoping for some clarification on these charges so that we may better serve our customers when they receive their bills.”

In an emailed response to Mr. Gaffga, NYPA account executive Jerry McLoughin provided some clarification on what caused the jump: “The additional charges were related to the $108,000 … shortfall penalty that the mayor was advised of when he was here in our offices in September.”

After receiving emails and calls complaining about the sudden bill jumps in December, the Times asked several Greenport residents to produce copies of their most recent electric bills. An examination of three monthly statements from three separate customers showed that Purchased Power Adjustment rate per unit of electricity consumed, which is not specified on the bill, had risen from 1.68 cents per unit on bills due in November to 7.89 cents in the December statements.

PPA charges increased even when customer usage declined from the previous month. Although one customer’s usage dropped significantly from November to December, for example, the dollar amount she was charged in PPA fees nearly doubled from $38.96 in the previous billing cycle to $77.92 in December.

Mr. Nyce kicked off Monday’s meeting with a nearly 10-minute talk about not only the penalty, but other ongoing billing issues affecting ratepayers. The one-time December charges related to the $108,000 penalty are not to be confused with other bill increases announced last August , which have to do with a new 28-month transmission agreement the village entered into with NYPA last year.

Click below for Mr. Nyce’s full explanation to electric customers:

The mayor mentioned during his statement that, in trying to determine who was to blame for the penalty, “we went back through email trails trying to ascertain whether or not this was the entire fault of the village, the entire fault of the NYPA, or did the NYISO have some hand in this?

“After further investigation with the New York Power Association, their information was less than forthcoming or helpful,” Mr. Nyce continued. “There is no direct path for us to be able to put the entire blame on the NYPA because the test needs to be run. The fault the test was missed lies with the Village of Greenport.

“As such, that penalty was passed through to the village.”

Mr. Nyce said he had been notified in August that the village would be assessed a penalty.

When later asked by a reporter why the public was not notified of the penalty at any time last year, Mr. Nyce said, “They were. It was discussed at a village meeting last spring [after the test was missed]. We didn’t know what the amount was, but we did know there would be a penalty.”

It was not immediately clear what day or days, exactly, the tests were supposed to run.

When pressed by the reporter on why he wouldn’t disclose the penalty information after the one-time hikes in December, Mr. Nyce said: “If my handling of how that got out was not to everyone’s liking, for that I apologize. I was hopeful to have those charges removed, to be able to prove that we were not at fault, but that did not happen.

“The bottom line is it is a pass-through from the NYISO to us through NYPA and as such it was as described — a one-time service charge.”

Before Monday’s meeting, Village Trustee George Hubbard, who also serves as deputy mayor, said village officials had thought the village would be getting another shot at the test, which is conducted routinely by NYISO to ensure Greenport’s plant is capable of producing sufficient power to meet the village’s needs.

“We thought we had a waiver,” Mr. Hubbard said. “We were told at the time we got a postponement and it wasn’t due to be done until January or February of this year. It turns out we were misinformed. Our director of utilities at the time [Jack Naylor, who has since resigned] said we were all good.”

At Monday’s meeting, Mr. Nyce also laid blame on Mr. Naylor. “I can’t express enough my dismay at having missed the test,” he said. “Nothing would make me happier at this time than to tee off on the former director of utilities but that won’t change anything.”

FILE PHOTO | Former utilities director Jack Naylor.

FILE PHOTO | Former utilities director Jack Naylor.

When asked if the penalty had anything to do with Mr. Naylor’s resignation, Mr. Nyce said, “That I cannot discuss, unfortunately,” due to a legal agreement between Mr. Naylor and the village.

Reached by phone Tuesday, Mr. Naylor said NYPA officials gave the village the impression the village could complete the test again after initial problems — but then NYPA reversed its position on the matter.

“On the day of the test, and I forget the actual date, we did the first two engines and it passed fine, but the third engine was problematic,” Mr. Naylor said. “[NYPA] said that if they got the [rest of the] data from a test performed by a certain date … we’d be OK. So, the test was actually done by that test date and the test data was submitted a few days later. But NYPA then came back to us and said, ‘We needed the data before that test date.’ ”

Two electric customers in attendance at Monday night’s meeting, including Mr. Swiskey, voiced concerns about who was at fault, not only for the penalty incurred, but for the mechanical failure as well.

“It’s the five people who are sitting at that table — that’s whose fault it is,” said Mr. Swiskey, who is also a former Greenport Village utilities director as well as a one-time village trustee. “I have been asking the last 18 months off and on, ‘I hear the power plant don’t run,’ and your reply was, ‘It runs fine.’ Well $108,000 out of the general public’s pocket says that wasn’t a true statement, was it?”

Resident John Saladino asked, “If, in fact, the system had a design flaw, why is it that I’m responsible for the penalty? Why did you choose to pass the penalty on to the ratepayer, rather than the engineer or the contractor in charge of implementing the system?

“I don’t understand why I should be responsible for this mistake,” Mr. Saladino said.

Mr. Nyce, who made no mention of what might have caused the mechanical failure, said, “It was a one-time thing. It will not happen again.”

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Editor’s note: This story borrows from two reports that were published Monday, but also contains updated and additional reporting.