PSEG Long Island's progress observed by state agency

A PSEG Long Island truck on Montauk Highway

A PSEG Long Island truck on Montauk Highway in West Islip on July 10, 2014. Photo Credit: Newsday / John Paraskevas

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In a semi-industrial complex within range of the Long Island Expressway in Plainview, the long-awaited outlines of oversight of the region's electric utility are taking shape.

There, in an office building on East Bethpage Road, staff of the newly opened Department of Public Service Long Island office have been working to make sure PSEG Long Island makes good on its promise to the Long Island Power Authority to transform the local electric utility within five years.

More than a dozen staffers have been on the job officially since Jan. 1, when PSEG took the reins from National Grid to operate the local electric grid, and the office expects to have upward of 40 people working there when fully staffed. The 2014-15 state budget allocated $5.5 million to open, equip and staff the operation.

"There's going to be a big effort to get the people on Long Island access to customer service and a modern utility," said Julia Bovey, who took over as director of the office last month.

She said her aim is to make sure that customers have a voice in how the utility is overseen and operated, and that complaints are addressed. It's long overdue, she said.

"Long Island has the double whammy of high electricity use and high rates, and that's just a bad situation," Bovey said. "There are a lot of things that can be done to address those."

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The department plans to review PSEG's $200 million plan to cut peak energy use, and scour the utility's proposed rate plan for 2016 beginning in February.

The department also will be the ratepayers' advocate in disputes with the utility, such as overbilling, that PSEG can't settle directly with customers. "It all goes back to customer service," said Bovey, who previously worked for the Federal Energy Regulatory Commission and the Natural Resources Defense Council, an environmental nonprofit. "We want there to be a fair and rigorous process."

Defining their missionLast month Bovey was critical of PSEG after a Newsday report said the utility had missed an important deadline to implement a $29 million storm management computer system by mid-July. LIPA and its former contractor had been criticized for an antiquated system that largely failed during superstorm Sandy in 2012.

Bovey said it was "not acceptable" that the system wouldn't be ready until deeper into hurricane season. She also was displeased that PSEG hadn't alerted her to it earlier. "With LIPA and PSEG, we should not be surprising one another," she said.

PSEG spokesman Jeff Weir said, "We look forward to continuing to working with the Department of Public Service and doing everything that we can to make the utility a top-ranked utility for our customers."

Bovey, who commutes to the office from Brooklyn, stressed that the department's role isn't technically regulation, a nod to the LIPA Reform Act's language that the Department of Public Service Long Island will have a "review and recommend" role over LIPA and the PSEG contract. Still, she said, she expects department recommendations to be taken with the full weight of a regulator.

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Gerald Norlander, executive director of the Public Utility Law Project, a watchdog group in Albany, said despite his reservations about the structure of the department's oversight, its presence on Long Island will help.

"It's a good thing -- it should be good for oversight," he said.

"I never thought it was a good idea to give the DPS less jurisdiction over LIPA" than it has over other regulated utilities, Norlander said. But he takes some comfort that the department will conduct a thorough rate review where none otherwise would have taken place.

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Seeking feedbackTo get the word out on their mission, department staffers have been meeting with community groups, residents of senior homes and others to let them know there's a new watchdog, one that will field and resolve complaints if customers feel PSEG hasn't properly addressed them. Customers can walk into the office to file complaints (125 E. Bethpage Rd., Plainview), file a complaint online (www.askpsc.com), or call (800-342-3377).

Ratepayers "haven't had this in a couple of decades," Bovey said of oversight, which was considered lackadaisical in the Long Island Lighting Co. days, and vanished under LIPA. "We want people to know where to find us."

Staffers here will be poring over documents filed by PSEG by next February that will make the case for electric rates beginning in 2016. PSEG is expected to seek an increase to cover expenses that have accumulated after Gov. Andrew M. Cuomo's promised three-year rate freeze.

Plans for Utility 2.0Although many have criticized the department's "review and recommend" role, Bovey said PSEG can expect to be scrutinized the way other utilities in the state are. PSEG isn't subject to penalties for failing to hit a list of 20 performance standards under its contract, but it could lose as much as 15 percent additional compensation, and its contract can be terminated.

"We're mirroring the process with all other investor-owned utilities," she said.

The broad list of responsibilities DPS fulfills at its central Albany office has been re-created on Long Island on a smaller scale, including auditors, rate-case specialists, community outreach staff, and call-center complaint handlers, Bovey said.

The department this month will host hearings on Utility 2.0, PSEG's $200 million plan to reduce consumption by as much as 185 megawatts -- half the output of a large power plant. Bovey said the plan reflects a shift, not just in how the state views energy use, but in how customers do as well.

"Our mindset about electricity has changed," she said. "Electricity is really expensive, and in general, it's a larger portion of consumer expenses than it used to be." In cutting the peak power demand, "it's not just that you don't use the most expensive power, it's that you are not going to build that new power plant."

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