Schumer: Sandy funds to LIPA must have strings

New York Gov. Andrew Cuomo, flanked by U.S.

New York Gov. Andrew Cuomo, flanked by U.S. Sen. Kirsten Gillibrand and U.S. Sen. Chuck Schumer, as he visits Capitol Hill in Washington, DC. (Dec. 3, 2012) (Credit: Getty Images)

Sen. Charles Schumer on Tuesday requested that federal agencies expected to reimburse LIPA for a portion of the estimated $800 million in restoration costs for superstorm Sandy make the payments contingent on the authority keeping rates stable and fortifying the grid against future storms.

The New York Democrat's request, made in letters to the heads of the Federal Emergency Management Agency and the U.S. Department of Energy, take issue with LIPA's much criticized handling of the storm, which knocked out power to more than 1 million LIPA customers.

"Due to the utter lack of operational success [LIPA] has had as a first responder in disaster situations, the federal government cannot in good conscience approve such a large sum of taxpayer funding without tough new strings attached in the form of hazard mitigation and rate stabilization," Schumer wrote.

Schumer's letter comes as LIPA works to juggle an outsize storm-restoration bill with green-energy programs. The trustees' finance committee will meet Thursday to present a proposed 2013 budget.

Gov. Andrew M. Cuomo has requested that the spending plan not include a rate increase. With LIPA facing up to $200 million of non-reimbursed costs for Sandy, some worry the authority may have to cut programs such as solar panel rebates and energy efficiency to cover storm costs.

Solar installers are already planning to rally against any cuts at the Dec. 13 LIPA trustees meeting.

"We're going to come out pretty strong to let them know if they shut the program down it puts a lot of us out of business," said Kevin MacLeod, a board member of the Long Island Solar Energy Industry Association, whose members have installed thousands of systems locally.

In an interview Tuesday about his letter to the Energy Department, Schumer said, "I don't have much faith in LIPA spending the money on its own given past record."

Outgoing LIPA chief Michael Hervey suggested LIPA will hold the line on rates.

"LIPA customers have paid significant federal taxes and are entitled to FEMA reimbursement," he said. "LIPA needs the maximum reimbursement from FEMA so that Sandy costs are not passed along to customers in higher rates. It would be fundamentally unfair to our customers for the federal government to single out LIPA."

Schumer suggested LIPA make use of resources at Brookhaven National Laboratory and Stony Brook University to develop better communications systems and other technologies to improve its storm response.

Schumer said federal law allows LIPA to request more money than it costs simply to repair the system if it uses the money to fortify against future storms.

FEMA spokesman Ed Conley said the agency just received Schumer's letter and "we will be reviewing it."

Schumer's demands come as the LIPA board operates without a chairman and with just eight of 15 trustee positions filled -- the precise number for a quorum. If any aren't present, the board cannot conduct business. Also, all their decisions must be unanimous. "We're all very clear on that," said trustee Neal Lewis, a strong supporter of renewable energy programs who does not want to see them cut. "We have to be unanimous on anything we want to get done."

Lewis said trustees can vote to appoint a vice chairman at the Dec. 13 meeting to conduct business, unless Cuomo appoints a chairman first.

Local leaders, cognizant of the challenges, have been urging Cuomo to act on his plan for reforms and the hiring of trustees and a chairman. The top LIPA chief executive post also has been vacant more than two years. A Cuomo spokesman declined to comment Tuesday.

"This is our power authority, this is an impending crisis," said Long Island Regional Planning Council chairman John D. Cameron at a meeting Tuesday.

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