Experts, activists urge fixing LIPA at State Assembly hearing

A "spike" in the cost of natural gas

A "spike" in the cost of natural gas will trigger an average $13 increase in the average electric bill next month, LIPA said at a trustees meeting. (Nov. 12, 2012) (Credit: AP)

Experts and activists testifying Friday at a State Assembly hearing on the future of LIPA argued for moving the embattled utility to an enhanced version of its current public-private structure -- with new measures to ensure improvements.

The hearing, in Hauppauge, was conducted by Assembly Republicans from Long Island, who have not had an audience with Gov. Andrew M. Cuomo's administration since he announced plans to privatize the utility in January. Senate Republicans and Assembly Democrats have been briefed. Since then, Cuomo has said he is open to all options for LIPA, which include making it a fully public utility. LIPA is now managed by National Grid. A study of the options could be months away, state officials have said.

"The governor will only support a plan that best protects ratepayers and keeps rates affordable both short and long term," Cuomo spokesman Matthew Wing said.


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At Friday's hearing, suggestions for fixing LIPA ranged from installing an inspector general within the utility to provide new levels of scrutiny to ending the more than $500 million in property taxes LIPA pays each year for properties, including National Grid-owned power plants.

The latter suggestion, by Fred Gorman, a member of the Suffolk Legislature's LIPA Oversight Committee, drew a restrained rebuke from Assemb. Andrew Raia (R-East Northport), whose district benefits from the $72 million LIPA paid to host the Island's largest plant there last year alone.

When Gorman derided LIPA as "just a giant school district," and suggested the authority stop making payments in lieu of taxes, Raia stepped in, saying, "As a resident of the Northport School District, I like my PILOT payments . . . We can have that discussion on another day."

Several speakers made a case for keeping LIPA on its current path of transitioning to New Jersey utility PSEG to manage the grid in January, with an enhanced contract to keep the new company in line.

Neal Lewis, executive director of the Sustainability Institute of Molloy College, said the new arrangement, called "Servco," offered ratepayers "the best" of a private utility and a public one.

Lewis, who is also a LIPA trustee but was not representing the board, said the new contract has real incentives for improving customer satisfaction, while keeping in place benefits such as tax-exempt debt.

Dave Daly, vice president of PSEG who is leading the company's transition to Long Island, said the company is already at work implementing a laundry list of 80 proposed improvements to LIPA systems. They include a new automated call center, a better outage management computer system to more quickly respond in storms, better communications and better protocols for keeping workers on the job in storms.

During superstorm Sandy, PSEG restored more than 2 million outages, twice as many as LIPA/National Grid, and finished the work two days earlier with around a third the work total workforce and around a third the cost -- $295 million compared with LIPA's $900 million.

Cynthia Kouril, a contract lawyer and former special assistant U.S. attorney, argued that Cuomo's Moreland Commission unfairly dismissed the public-private option by examining only the current structure with National Grid, not the new plan approved by trustees in 2011.

Kouril, citing examples of "fraud, waste and abuse" in LIPA's history, made a case for LIPA to fund its own inspector general to scrutinize expenses and practices. She also suggested that LIPA finally hire a chief executive officer, and create two internal compliance units: "One to ride herd over PSEG," the other to make sure that storm and emergency responses are up to par.

Andrea Vecchio, an activist with East Islip TaxPAC, said property taxes were "at the heart" of any decision faced by a future LIPA, and she warned lawmakers to be cautious about taking the utility down an old familiar road.

Pointing to the rescue of Long Island Lighting Co. stock and bondholders by LIPA, and the high taxes paid to local school districts that house power plants, she said those groups "got a free ride on the backs of ratepayers," whose interests were "left out of the equation."

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