Cuomo to move 'aggressively' to give PSEG more control over LI grid

Gov. Andrew M. Cuomo wants to greatly shrink

Gov. Andrew M. Cuomo wants to greatly shrink LIPA’s responsibilities and have PSEG of Newark -- which was set already to take over management of the Island's electric grid in January 2014 -- to consider expanding the scope of the contract. (Credit: News 12 Long Island)

ALBANY -- Gov. Andrew M. Cuomo said Wednesday he would "aggressively" move to give a New Jersey utility nearly complete control of Long Island's electric grid, intending to have some major pieces in place by the end of next month.

Long Island lawmakers briefed on the governor's plan said they generally support the idea, but one said the "very, very tight timetable" is a concern. They also are pushing for more public involvement and a temporary rate freeze.

Meanwhile, watchdogs questioned whether the state could increase the responsibilities of -- and payments to -- PSEG of Newark, without having to open bidding to other competitors. And a New Jersey regulator voiced concerns about PSEG being stretched too thin to provide service in both states.

Newsday reported last week that Cuomo had scrapped a plan to dissolve the Long Island Power Authority and privatize the system. Instead, the governor wants to greatly shrink LIPA's responsibilities and have PSEG -- which was already set to take over management of the Island's electric grid in January -- to consider expanding the scope of its $3.3 billion service contract.

Under this scenario, PSEG would be responsible not only for the operation and maintenance of the electric system, but also would control capital and operating budgets, storm preparedness and response, call centers, computer systems and customer service. PSEG would fall under oversight of the state Public Service Commission, unlike LIPA, but like Con Edison and other utilities.

LIPA would remain as essentially a financial holding company, Cuomo said Wednesday. To help reduce the burden of LIPA's $6.9 billion debt, the proposal would still seek to refinance and sell off a portion of that debt.

Cuomo would need lawmakers to pass laws to ensure PSC oversight and refinance LIPA's debt before the legislative session ends June 20. "On the theory of strike while the iron is hot, we're going to be pushing forward very aggressively with a change for LIPA," Cuomo said at a cabinet meeting.

Just before that, Cuomo briefed Long Island Assembly Democrats, who said they were encouraged, on the plan.

"We all know that privatization is wildly unpopular," said Assemb. Charles Lavine (D-Glen Cove), adding that turning LIPA into a full-service, municipalized operation wasn't likely, either. "So this seems to be the most viable of the alternatives."

One LIPA trustee said he believes there could be complications to any proposed larger role for PSEG. Trustee Matthew Cordaro said it's unclear what the added costs would be and whether that would trigger the need for the PSEG contract to be rebid. He also wondered if the Internal Revenue Service would have a problem with PSEG's expanded role, given that LIPA has tax-exempt status for issuing bonds.

A Cuomo official said the PSEG contract was under negotiation, which was echoed by the utility.

"It's still a work in progress and under discussion," PSEG spokeswoman Karen Johnson said in an email. "We look forward to coming up with a solution that enables PSEG to most effectively serve the people of Long Island."

In New Jersey, regulators and politicians have raised concerns about PSEG working double duty.

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