LIPA hikes power bills by 4 percent

LIPA utility lines run along Route 25A in LIPA utility lines run along Route 25A in Setauket. In the background are the stacks of the utility's Port Jefferson power plant loom in the background. LIPA ratepayers will see a roughly 4 percent increase in their bills this month. (Aug. 5, 2013) Photo Credit: Newsday / John Paraskevas

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LIPA ratepayers will see a roughly 4 percent increase in their bills this month -- an average hike of $5.71 -- after the authority increased its power-supply charge effective Aug. 1.

It's the first increase in the charge since March, when that portion of bills was at its highest level this year, at 10.78 cents per kilowatt hour. The charge, which comprises about half of customers' bills, had dropped steadily since then. But this month it increases to 9.257 cents per kilowatt hour, from 8.52 cents in July. Officials blamed a complex series of power and fuel cost transactions for the increase.

The power-supply charge covers LIPA's costs to buy electricity from power markets as well as the cost of natural gas to fuel local power plants. Natural gas prices have generally declined since March, according to the U.S. National Average Natural Gas Price Index.

The LIPA bill increase comes a week after Gov. Andrew M. Cuomo signed legislation to restructure LIPA. While the bill didn't include language to freeze rates, Cuomo set a three-year freeze as a "goal" of the restructuring. In any case, administration officials have said LIPA "rates" constitute the electricity delivery charge only, and do not include the power-supply charge.

The delivery charge, which makes up most of the rest of customer bills, has held steady for most of LIPA's 15-year history, increasing only twice: 1.8 percent in 2011 and 1.9 percent in 2012. It is expected to remain the same through December 2015.

"All of New York's electric utilities pass supply costs directly onto customers and LIPA is no different," said an administration official who asked not to be named. "The rate freeze will apply to the components of the bill that LIPA controls -- the delivery charge."

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East Islip ratepayer Andrea Vecchio, an activist with East Islip TaxPAC and Long Islanders for Education Reform, said, "A freeze to us means our bills stay the same for the same service. Anything else is baloney and is not going to sit well with fed-up ratepayers/taxpayers. The bottom line: It's costing us more in our bills."

Elizabeth Flagler, a LIPA spokeswoman, said the timing of the increase was not related to passage of Cuomo's bill.

"LIPA's power-supply charge is a 100 percent pass-through of costs of the generation [electricity] LIPA purchases on behalf of its customers, and is not influenced by policy decisions," she said.

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Flagler said the power supply charges on the average residential bill dropped $17.55 from March through July, and are still $11.81 lower than in March.

In its most recent financial statement, LIPA reported it was $124 million over budget on fuel and purchased power costs, or 17 percent, compared to projections. Flagler said LIPA has been over budget during the first half of the year because "actual . . . transactions for natural gas and/or purchased power have exceeded the futures market prices that LIPA uses to project its future costs."

LIPA last October changed its billing practices to recoup fuel costs on a monthly basis, after years of doing so annually, which frequently led to over collections.

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