Vote on Cuomo plan for LIPA may come as soon as Thursday

Gov. Andrew Cuomo's yearlong quest to dismantle LIPA Gov. Andrew Cuomo's yearlong quest to dismantle LIPA and give nearly all its responsibilities to New Jersey utility, PSEG, took form late Monday in a bill that sought to appease critics in the assembly. Photo Credit: Charles Eckert

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A legislative deal was reached Wednesday on Gov. Andrew M. Cuomo's bid to dismantle the Long Island Power Authority, and state lawmakers could vote as early as Thursday to reshape a utility that has been harshly criticized since its inception 15 years ago.

"Finally, finally," Cuomo said in an interview Wednesday. "How many years have we been talking about this, complaining about this?"

He and his staff said the deal with legislators will bring a new utility to the region with an economy-stimulating two-year rate freeze, a plan to pay down a big chunk of LIPA's $7 billion debt, and the Public Service Commission in place as the utility's watchdog. "You will have a much better provider bringing the service," Cuomo said.

The deal sets in motion the eventual downsizing of LIPA from 100 employees to around 20, as nearly all major functions will be transferred to PSEG of New Jersey under a 12-year contract. LIPA will function as a holding company with a nine-member board.

The move effectively undoes an agreement brokered by the state in 1998 when LIPA bought the transmission and distribution assets of the former Long Island Lighting Co. in a deal that saddled it with billions of dollars in debt. Since then, LIPA has been both touted as a local economic engine through building new power plants and running green energy programs, and has been loathed for its high rates, patronage hiring and poor storm response, most notably during last fall's superstorm Sandy.

"Sandy exposed the depth of the dysfunction," said Cuomo, recounting tales of being in a warehouse with LIPA and National Grid officials with flashlights and paper maps. "It was actually much worse than people thought it was."

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Cuomo said he saw a "silver lining" to the Sandy clouds.

"We had a window of opportunity, and it was important for us to get it done in this window of opportunity," he said, of the six-month campaign that resulted in the deal reached this week.

Some have called that expedience imprudent, but Cuomo credited the work of Larry Schwartz, secretary to the governor, as "masterful, because there was a lot to get done in this window of opportunity."

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'Sticking points' addressed

Legislators Wednesday confirmed the agreement with Cuomo was done.

"I think the LIPA bill will improve liability, oversight and we move away from LIPA, the way it was," said State Senate co-leader Dean Skelos (R-Rockville Centre) "They proved they couldn't do it during Hurricane Sandy and change is necessary."

Skelos said a resolution to the tax-grievance cases LIPA has filed in districts that host power plants -- a sticking point in the negotiations -- had been resolved. "The governor and LIPA are going to have discussions with the local assessment official as to potentially dropping the past tax certioraris and to phase down" assessments.

"It's a deal as far as we're concerned," said Assemb. Robert Sweeney (D-Lindenhurst), a one-time critic of the bill who became its sponsor.

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He explained, "The bill deals with the big issues that most people wanted to see something done with, including storm response and rate stability."

While there's a deal in both chambers to support the bill, not all are happy.

"Whenever it comes up, trust me, it's going to be debated," said Assemb. Al Graf (R-Holbrook), who plans to vote against it because "it's going to cost people a fortune."

Scrutinizing the details

Critics on Long Island Wednesday were still grumbling about what they saw as the bill's light oversight, its uncertain costs, the lack of guarantees for green energy programs, and its potential impact on property taxes in areas that have power plants.

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"It's mind-boggling how the legislature could even consider Cuomo's LIPA proposal without knowing what it will cost consumers," said Matthew Cordaro, a LIPA trustee. He said he will propose the board commission an independent review of the new PSEG contract before trustees approve that contract in December.

But Cuomo saw the expected passage as a victory, and he downplayed critics as unrealistic. "The perfect [system] doesn't exist -- only in people's minds," he said. "You listen to a lot of these people. They want power whenever they want it in a way that doesn't pollute the environment, and they don't want to pay for it. Yeah. That system I can't find."

Asked whether he would have preferred that LIPA be subject to the full authority of the Public Service Commission, Cuomo said he effectively achieved as much. The bill gives a new Long Island Department of Public Service branch "review and recommend" oversight over rates and other operations.

"It's more of a legal nuance to me," Cuomo said, noting the LIPA board gets the final say on rates. "The LIPA board is appointed by me. The PSC is appointed, plus or minus, by me. So, yeah, they [the PSC] only recommend, but they are all appointees of the same administration."

Meanwhile, in a last-minute arrangement, National Grid and PSEG with Cuomo's brokering reached a tentative deal Wednesday allowing hundreds of National Grid unionized gas-division workers to be available to PSEG to help in storm restoration, a major union request.

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