LIPA overhaul needs to emphasize public, not private

A LIPA subcontracted worker works on restoring power

A LIPA subcontracted worker works on restoring power lines as night falls in Merrick. (Nov. 13, 2012) (Credit: Danielle Finkelstein)

Gov. Andrew M. Cuomo's signing of a LIPA overhaul does not have to mark the death of an ideal.

What happens in the next few months will be key in determining how much public control Long Island retains over a utility that under Cuomo's legislation will become a public-private partnership.

Cuomo emphasized the private at a bill-signing ceremony in Uniondale Monday, pulling a Long Island Power Authority sign from a truck and replacing it with one from PSEG, the New Jersey company that will supplant LIPA.


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But the state will have to emphasize the public aspect of the deal when it asks the federal Internal Revenue Service to allow the utility to retain its tax-free status.

"It's a bit of a balancing act," said Neal Lewis, a member of the soon-to-be significantly smaller Long Island Power Authority board.

Lewis did not receive an invitation to the bill-signing ceremony, and neither did several other Long Islanders who, for decades, fought for LIPA to become a true public utility.

"There are a lot of people who climbed the fence at Shoreham and who were successful in shutting it down who are in mourning today," Matthew Cordaro, another LIPA trustee, said of the fight over the nuclear power plant.

"They believe today marked the death of public power," he said.

LIPA was created under Cuomo's father, former Gov. Mario Cuomo, as a mechanism for closing Shoreham.

But activists at the time also pushed a companion goal, one that resonated in a region where local control is king: Creation of a fully public utility, responsive and responsible to Long Islanders.

Instead, LIPA early on decided on a bifurcated approach. The authority would contract with a utility to operate the electrical system, and then manage its work.

When things were going well, LIPA could take credit for work by KeySpan Energy, which became National Grid.

The flip side, however, was LIPA took the blame when things went bad -- as it did during Hurricane Irene and superstorm Sandy.

Cuomo's reform gives PSEG, which assumes management of the utility in January, more responsibility and greater visibility than earlier contractors had.

As a result of work by the current LIPA board, which selected PSEG to manage the system, the current contract for the first time includes a financial incentive for providing customer satisfaction.

But that contract, as a result of the measure signed by Cuomo Monday, is being renegotiated.

Critics believe Cuomo is taking Long Island one step closer to having a private company -- as the much-criticized Long Island Lighting Co. once did -- control the region's electric system.

Lewis, however, believes Cuomo's reform marks another step in LIPA's evolution.

Created in the wake of the success of the Shoreham plant fight, LIPA was supposed to go on and do what the private LILCO never could: Bring down rates, give top-notch service and advocate for Long Island ratepayers.

Instead, LIPA went on to operate without significant oversight -- and like too many state authorities, it became a patronage mill.

One big change under Cuomo's legislation: For the first time ever, the state Public Service Commission will oversee the utility. Two challenges: Minimizing cuts to LIPA's clean energy efforts, and stabilizing rates after Cuomo's three-year rate freeze.

The final proof, however, will be in the contract under negotiation that will specify the duties and relationship between LIPA and PSEG.

Cuomo put PSEG in the spotlight Monday, but a reformed and responsive LIPA remains an essential part of the equation, too.