PSEG Long Island should treat "every nickel as its last nickel," a top LIPA official warned the New Jersey utility following a report that PSEG considered using capital budget dollars to "refresh" an employee gym and upgrade a customer walk-in center.
In remarks to LIPA trustees last week, LIPA chief executive John McMahon said he had met with PSEG officials to discuss the capital budget, which is meant primarily for long-term improvement projects. Utility customers fund the $404 million budget through rates.
"Long Island Power Authority staff has been discussing with PSEG LI that capital dollars are to be used wisely -- in effect, treating every nickel as its last nickel," McMahon told trustees.
Newsday reported last month that a top PSEG Long Island official, in a memo to his staff, proposed spending capital money on the gym project and $500,000 to redesign a customer walk-in center, among other items, noting, "We want to spend all of our capital dollars." PSEG said the gym refresh would cost $50,000.
PSEG spokesman Jeff Weir said both projects, along with another that proposed buying new iPads for field workers who already had company-issued cellphones, were "appropriate" to help stabilize rates and improve customer service.
Utility watchdog Peter Schlussler said he'd expected PSEG to find ways to cut costs, not spend more.
But Weir said none of the items mentioned in the Newsday story has been approved or brought before a utility review board that scrutinizes all spending.
The company has a "very structured, disciplined process" to determine the need for proposed budget items, which then are brought before the review board chaired by PSEG Long Island president David Daly.
Weir acknowledged that the board is an "internal" one, whose meetings are not public, and findings not shared with ratepayers.
In total, the items in the PSEG memo amounted to around $1.8 million in spending in a total capital budget of $404 million for 2014. PSEG suggested eliminating the $1.8 million in spending wouldn't lower rates.
McMahon told trustees that PSEG "insists they are approaching the capital budget responsibly and in line with the sense that all capital is a scarce resource to be spent only when necessary and not spent when it can be avoided in whole or in part."
PSEG, he said, "agrees that they need to make the case to the Long Island Power Authority that they are investing wisely and following responsible capital budget practices."
He said LIPA staff will "continue to engage with and closely monitor the PSEG-LI capital program to ensure that the attitude conforms with implementation."