LIPA chief Michael Hervey resigns

State Sen. Dean Skelos (R-Rockville Centre), in Long Beach on Wednesday, discusses news that LIPA chief operating officer Michael Hervey announced he was resigning. Videojournalist: Jim Staubitser (Nov. 14, 2012)

LIPA chief operating officer Michael Hervey has resigned, according to Long Island Power Authority chairman Howard E. Steinberg.

The resignation is effective at the end of the year.

Hervey had become a target for an outpouring of anger at LIPA from a range of critics, including Gov. Andrew M. Cuomo and residents who had been without power for more than two weeks after superstorm Sandy on Oct. 29.

But in an interview, Hervey said he had been considering leaving the authority since August, long before Sandy's arrival. He had been interim chief executive for more than two years after the resignation of Kevin Law, but hadn't been chosen for the permanent slot.

"At the end of day, the company hadn't left me more opportunity," he said. "After being interim CEO for more than 2 years, it appeared there was no opportunity at that point."

Newsday has reported starting this summer that North Hempstead supervisor Jon Kaiman is being considered for the post by Cuomo.

Hervey said he has been "fairly active in the job market since August." He said he does have options for his next job, but would not disclose them.

He submitted his resignation letter to the board Tuesday, saying he would leave Dec. 15, but the board requested that he stay until the end of the year, Hervey said.

Cuomo had not asked for his resignation, Hervey said. "I think they were surprised by it," he said of the governor's office response to his announcement.

Hervey said he had considered preparing to depart by September or October, as many of the projects that he and his team had been working on for years -- including the power supply agreement with National Grid and a request for proposals for new generating sources -- were coming to conclusion. But with Hurricane Sandy approaching, he further delayed his resignation.

Hervey said the storm was unprecedented, and the response to it was "herculean."

"I understand there's a lot of anger," he said. "At end of day I have to do what's right for me." Citing, among other things, a new outage management system that was contracted for last year, he added that he felt "pretty good" about his accomplishments.

Steinberg issued a statement Tuesday night saying: "Mike has provided 12 years of valuable service to LIPA, including taking on the responsibility to perform the functions of CEO of the organization over the past two years. Mike has played a leadership role in connection with the planned structural changes at LIPA going forward, which will result in better service and accountability to LIPA's customers in the years ahead."

National Grid described Hervey as "an electric utility professional of substance who always kept the interests of Long Island and LIPA's customers the top priority in our interactions. We wish him great success in any future endeavors."

Hervey, 54, had been under enormous pressure as public outrage against LIPA mounted after Sandy hit the area. The record flooding and winds had left almost 90 percent of LIPA's customers without power.

Hervey said before the storm that he anticipated outages lasting seven to 10 days. But as the days went on and cold weather set in, weary residents grew impatient and began protesting, complaining that the utility wasn't keeping customers informed and hadn't been prepared. More than 9,000 customers remain without power and 46,000 others won't get power for weeks because their electrical systems were damaged.

Cuomo has been a chief critic of the agency, saying he was going to hold LIPA and other utilities accountable for their performance after Sandy and a nor'easter just days later. Cuomo made it clear that he believed LIPA was not prepared for Sandy and said Tuesday he is forming a commission to investigate all the region's utilities.

Newsday had reported last week that LIPA's response to Sandy came after warnings as far back as 2006 that the utility was unprepared to handle a major storm, failed to upgrade antiquated technology, neglected vital maintenance, and regularly underbudgeted for storm response.

Hervey defended the utility, saying a new outage management system had been contracted for last year.

Responding to criticism over LIPA's storm response, he contended Sandy's size and power was unprecedented and his workforce of 15,000 -- including workers recruited from all over the country -- was working around the clock to restore power. He said 99 percent of those customers who can receive power would have it by Tuesday night.

"We certainly understand the frustration that is out there," he said at one recent news conference. Sandy was "much more damaging than anyone forecast or anticipated." He said, "We have authorized every resource possible," adding, "Power is coming back rapidly compared to the damage that was done."

Matthew Cordaro, co-chairman of the LIPA oversight committee of the Suffolk legislature, said in a News 12 Long Island interview: "I was shocked by the timing of [the resignation] . . . saddened by it too. Mike Hervey was a professional utility person. He was sincere and he worked hard at his job."

Cordaro said he didn't think Hervey alone should take the blame for LIPA's failures and that others up to and including the governor's office should share in the responsibility.

"The service was not restored rapidly enough. . . . The blame has to be placed at the doorstep of LIPA," said Cordaro.

Suffolk County Executive Steve Bellone released a statement saying: "Suffolk County residents pay some of the highest utility rates in the nation and deserve far better service than they have received. While I understand and respect Mr. Hervey's decision, the problems at LIPA go far deeper than one person."

Nassau County Executive Ed Mangano issued a statement saying: "The magnitude of the problem with this utility goes well beyond the COO and I join with Governor Cuomo in supporting a full investigation so this disservice to our residents never occurs again in Nassau County."

Neal Lewis, an unpaid volunteer member of the LIPA board, praised Hervey and defended his performance during the post-storm restoration effort.

"Mike Hervey is a man of great personal integrity, incredibly hardworking and enormously knowledgeable about our electric grid. He's an electrical engineer and as an engineer has been focused on problem-solving and getting the work done," said Lewis.

"When you rate the restoration based on the sheer number of repairs -- 99 percent restored within two weeks of such an horrendous event -- it was an enormous accomplishment that was unfortunately completely overshadowed by a colossal communications failure," said Lewis.

Much of that communications failure was due to old technology beyond Hervey's control and which is in the process of being replaced, said Lewis. The new communications system, including an brand new outage management computer, is scheduled to come on line in 2014.

Monday, Hervey had announced that LIPA will open an information center in Oceanside in response to the public outcry for better communication.

He also conceded at news conferences that there were lessons to be learned from the storm and that the utility would be evaluating its own performance in the future.

Adding to LIPA's woes, a Wall Street credit agency warned Monday that LIPA was on course for a downgrade to its credit rating. Fitch Ratings revised LIPA's credit outlook to negative, citing limited flexibility to deal with the long-term costs of Sandy's devastation.

The agency said LIPA's ability to pay for the repairs needed was hampered by the fact that the firestorm over its performance would make a rate hike unlikely.

LIPA's board of trustees appointed Hervey acting chief operating officer in Aug. 2010. He had served as senior vice president of operations, and served has been with LIPA for 12 years. Before taking LIPA's top job, Hervey had been responsible for storm restoration and was the chief liaison to National Grid, the contractor that manages the electric grid for LIPA.

With Keith Herbert and Timothy Hughes

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