Assembly Democrats briefed about Gov. Andrew M. Cuomo's legislative proposal for a reformed LIPA say the measure removes key layers of oversight, decision-making and participation from Long Island and the state.
The analysis by Assembly counsel found the legislation would effectively remove the oversight powers of the state attorney general and the office of the state comptroller to review and approve LIPA contracts, while diminishing the new powers of the Public Service Commission and removing local decision-making about programs such as clean energy.
For instance, he said, the "overarching powers of the PSC would not be applied" to LIPA. Instead, a new Long Island-based PSC entity would have "advisory powers only," he said.
"The oversight plan is terrible -- it puts a PSC office on Long Island with no teeth," agreed Assemb. Edward Hennessey (D-East Moriches). " . . . It's a bad bill."
Cuomo administration officials, who have garnered support for the measure from groups such as the Long Island Association and Sustainable Long Island, said the Assembly criticisms were unrealistic.
"What the Assembly Democrats are seeking would cost Long Island ratepayers hundreds of million of dollars and result in double-digit rate hikes," spokesman Matthew Wing said. "Governor Cuomo's legislation seeks to freeze rates not raise them."
Assemb. Amy Paulin (D-Scarsdale), chairwoman of the Assembly energy committee, said her biggest concern was the bill's limiting of the powers of the Public Service Commission over LIPA and contractor PSEG, unlike the newly enhanced powers the agency has over other state utilities. "We're going to be discussing it with the governor's office," she said.
Under the draft legislation, the PSC would review and recommend findings to LIPA's new five-person board, but have no authority to impose penalties or other sanctions, or rule on rate hikes. LIPA's board gets the final say.
Administration officials said giving the PSC full authority over LIPA rates and practices would violate LIPA bond covenants, resulting in hundreds of millions of dollars in new costs.
"In a perfect world that sounds wonderful -- except that it would result in a massive rate increase for Long Island ratepayers," said one official "It's a nonstarter."
Assemb. James Brennan (D-Brooklyn), chair of the Assembly Committee on Corporations and Authorities, said his chief problem with the bill is that it fails to directly address costs LIPA pays for energy from private generators. Brennan said he plans to introduce legislation in coming weeks that would grant the PSC the power to regulate the state energy market in an effort to stem what he said were hundreds of millions of dollars in overcharges paid by New Yorkers each year. LIPA's new 15-year contract for National Grid plants is valued at $5 billion.
Administration officials said the decision to sidestep state comptroller and attorney general review was based on a desire to "cut unnecessary bureaucracy." "It's redundant," one official said.
A spokeswoman for the comptroller didn't respond to a request for comment.
A copy of the Assembly analysis of the bill provided to Newsday presents a list of "observations." Among them:
The new Department of Public Service branch on Long Island (DPS-Long Island) "does not have the power to recommend modifications" to the fee structure between LIPA and PSEG.
DPS-Long Island has "no explicit power" to review or make recommendations on LIPA power contracts.
There is "no language in the bill that would require LIPA to maintain its current renewable energy or solar programs." PSEG contractors would not be subject to inspection of their books by the regulator, unlike LIPA and PSEG.
DPS-Long Island's annual review of PSEG's emergency response plan doesn't give the regulator the power to order a change in the plan or sanction any failure of PSEG's response to an emergency.
The Assembly speaker would appoint a single trustee to the new five-member LIPA board, down from a current three. The governor would appoint three trustees.
An administration official said renewable energy programs remain a "strong priority" for the governor, and will remain so at LIPA under the new legislation.With Yancey Roy