Why LIPA failed: Utility ignored warnings it wasn't ready for major storm

LIPA workers set up a temporary transformer station

LIPA workers set up a temporary transformer station in the parking lot of what used to be Peninsula Hospital in the Arverne section of the Rockaways. (Credit: Charles Eckert)

The Long Island Power Authority’s agonizingly slow response to Sandy came after warnings as far back as 2006 that the utility was unprepared to handle a major storm, failed to upgrade antiquated technology, neglected vital maintenance and regularly underbudgeted for storm response.

A state report and a review of records show that the regional utility lagged behind industry standards by not using smartphones and digital tablets — and at times even printers or fax machines — in favor of pen-and-paper memos and dial-up Internet access.

The utility’s critically important power outage management system, which helps direct the recovery response, operates on a 25-year-old mainframe computer that was cited as one of the biggest shortcomings in the utility’s response to Tropical Storm Irene in August of last year.


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LIPA chief operating officer Michael Hervey said the new outage management system, which LIPA had contracted last year to replace, had not yet been implemented.

However, he added, “All of the significant items we had already implemented or started to implement,” even before the Public Service Commission report was released.

LIPA neglected basic maintenance to prevent outages, such as replacing rotting poles and trimming trees around power lines, according to a state report released by the Public Service Commission’s Public Service Department in June. The $3.7 billion-a-year government-owned corporation spent $37.5 million less than committed over five years on hardening the grid to protect against major storm damage, according to the report.

Thursday, a Newsday reporter at the Hicksville headquarters of National Grid — the company contracted by LIPA to oversee operations — saw engineers who were using highlighters and paper maps to track thousands of outages, as ratepayers banged in frustration on the building’s locked front doors.

Ten days after the superstorm battered the region, more than 170,000 Long Islanders were still without power. The nor’easter on Wednesday piled on with another 90,000 outages.

From village trustees to Gov. Andrew M. Cuomo to the U.S. Homeland Security Secretary Janet Napolitano, public officials have criticized LIPA for its response to Sandy.

Hervey noted that LIPA, in a 109-page study conducted before the PSC report was released, identified many of the problems that were later noted in the report.

LIPA this year increased its budget for storms to the largest amount it has to date this year — in excess of $50 million. But Hervey noted major hurricanes open up entirely new cost centers of their own. “We don’t budget for hurricanes of this size,” he said.

Last year, LIPA and a company called Efacec Advanced Control Systems announced that the authority would implement a real-time distribution and outage management system. It is not expected to be in place until next year.

The state report calls into question how seriously LIPA and National Grid took the lessons they learned from Irene.

“It was stated that no storm like Irene had been seen since Hurricane Gloria in 1985,” the inspectors wrote in the report. “We frequently heard that Irene may be a once in a career or lifetime event.”

It was not.

Antiquated infrastructure

The utility’s infrastructure has changed little since Gloria, said Matthew Cordaro, who served as vice president of engineering at LIPA’s predecessor, the Long Island Lighting Co., when that hurricane struck.

“I think somewhere along the way they lost sight of what the primary mission of a utility is,” Cordaro said Thursday, “and that is to provide cheap electric power to customers.”

Alexandra von Meier, the co-director of electric grid research at the California Institute for Energy and Environment, said other utilities face similar challenges.

“I don’t think it’s very unusual to have very old and clunky technology in their power distribution context,” she said. “If they were more modern ... restoration could be faster, and we all want that.”

More than a half-million residents lost power for a week after Irene. Cuomo — who said that “at a minimum, LIPA did a terrible job of communicating” following that tropical storm — requested a review of the Uniondale-based utility.

The resulting report concluded that LIPA and National Grid did not meet industry standards in dozens of aspects concerning planning and recovery in major storms.

To survey storm damage, engineers used spotty equipment, including expired Internet aircards for their laptops, the state inspectors found. Their computers used COBOL, a basic decades-old computer programming language, and some lacked electronic mapping for outages and used a “rudimentary damage prediction model.”

Even fax machines and other basic office equipment were unavailable or broken at substations, the facilities that transfer power to thousands of homes, hindering communication. One substation coordinator reported having to run to a local office supply store to purchase a printer.

Year after year, despite warnings, the utility failed to spend money on storm-readiness measures, said Walter Drabinski, president of Vantage Energy Consulting Llc, the company hired by the state to assist with the report. He said they “did not budget what they should have.”

Recognizing that the utility was vulnerable to a big storm, LIPA hired a consultant several years ago to look at ways to harden the system. The report by Navigant Consulting was finished in 2006 and included numerous recommendations such as upgrading the computer system, reconfiguring substations to minimize flood damage, and doing more to trim trees and inspect poles.

Newsday requested a copy of the 2006 report early this week. By Thursday, LIPA officials had not provided it.

In the state report released in June, assessors found LIPA had failed to heed many of the 2006 study’s recommendations. Drabinski said budget issues likely contributed to delays.

LIPA’s customers already pay among the highest rates in the country. The utility is saddled with almost $7 billion in debt. “All of these things were identified but they all cost money,” Drabinski said.

At the time, LIPA committed to spending $20 million a year on so-called “storm hardening” — projects to bolster the system, according to the June report. But from 2006 through 2010, the utility budgeted only an average of $13.2 million a year for such projects, and of that, spent only $12.5 million a year, according to the report.

Even cheap measures were neglected by LIPA, according to the June report. LIPA lacked basic procedures for clearing roads outside of hospitals and schools, locating and repairing downed wires, communicating with customers and keeping call centers working, maintaining poles, and trimming trees around power lines in order to prevent “tree-caused outages associated with major storm events.”

LIPA spends less thinning vegetation around transmission stations than other utilities, clears less — 6 feet around distribution equipment as compared with the industry standard, which is 10 feet — and doesn’t have a consistent cycle for trimming trees. Workers might not hit some trees for seven or eight years, according to the report, which recommended a four-year cycle.

LIPA stopped funding a program to inspect distribution poles in 2006. The program was supposed to restart in 2013 and scheduled to be done by 2022. The utility’s spending on transmission pole replacement dropped from $2.7 million in 2006 to less than $800,000 in 2011, according to the report.

“I guess the good news is they don’t have to do the inspections because all the bad poles broke” in Sandy, Drabinski said.

LIPA does have a good system that is reliable under normal conditions, Drabinski said. But the utility faces unique challenges because of the Island’s geography — exposed to the elements and accessible by outside crews from only one direction. As a result, the utility needs to plan differently than others when it comes to lining up workers to restoration efforts.

But LIPA’s biggest flaw identified by the report was the utility’s inability to communicate well with the public. Clogged call centers are especially problematic since LIPA relies on customers to report their own individual outages.

Since 2006, according to the state report, LIPA has lacked a system to give customers accurate estimates on when their power would be restored. After Sandy, the utility used an online map that showed more outages than there were customers, and featured inaccurate recovery information.

Shortly after a Newsday article pointed out the inaccuracies, LIPA removed the site for a day and posted a pared-down version.

“The whole system is just completely unorganized,” said state Sen. Charles J. Fuschillo (R-Merrick), “and in this day and age with the technology available and the fact that they went through this already with Irene, they should have been better prepared.”

One thing LIPA has continually managed to communicate is statements attesting to Sandy’s strength. Spokesman Mark Gross said that “customers should be prepared to wait a bit longer” for the return of power than the utility estimated. “We did say seven to 10 days originally, but this storm was worse than anyone could have predicted.”

In fact, in the week preceding Sandy, fire chiefs, county executives and meteorologists warned that it would be one of the most powerful storms in Long Island history. Sustained wind gusts of 80 mph and flood surges reaching 20 feet were accurately predicted. As early as Oct. 26, three days before Sandy reached Long Island, the National Weather Service warned that the storm could be stronger than Irene.

In the wake of the devastation, customers and public officials have complained of the breakdown in communication from LIPA. Asked why customers were learning more than a week after Sandy hit that surveyors needed to inspect their flooded homes before reinstating their electricity, Hervey said: “This is where we are in the process. I really don’t want to argue about timing or whether something should have been done earlier in the process.”

Little outside oversight

LIPA is run by a 15-member board of nonutility professionals that includes lawyers, bankers and accountants. There is little outside oversight. That contrasts with other privately owned utilities subject to regulation by the state Public Service Department, which has hundreds of professional energy experts, rate reviewers and other specialists.

As a result, LIPA operates largely free from independent scrutiny of its rates, its spending and its management effectiveness. The LIPA board tends to act in concert. Most of its decisions on spending, strategic directions and contracts are unanimous.

There have been attempts to put LIPA under the Public Service Department’s jurisdiction, if only for rate hikes, but LIPA officials have always invoked the threat of a ratings downgrade. Wall Street likes LIPA to have the ability to raise rates as it needs to recoup costs. A LIPA oversight bill enacted in Albany in January once again left LIPA free from department oversight, although the bill did provide for PSC management audits for LIPA for the first time in its history. One is under way now.

The Suffolk County Legislature has established a committee to exert some oversight over LIPA, but its actions are not legally binding, said Paul Sabatino, who served as counsel to the legislature for 20 years. Sabatino said that the original state statute that created the utility exempted it from the Public Service Commission’s legally binding orders and decisions.

Evidence suggests that greater oversight can improve performance.

Following Hurricane Irene and a powerful winter storm in October of 2011, Connecticut’s utilities regulator criticized Connecticut Light & Power for its “deficient and inadequate” response. There were calls to get tougher with the utility, which already fell under the jurisdiction of the state’s Public Utilities Regulatory Authority.

Though it says the move is unconnected to last year's storms, CL&P increased its spending on tree trimming to $54 million this year, up from $27 million in 2011. The state passed legislation in May that, among other things, subjects utilities like CL&P to a mandatory review by regulators after storms that cause major outages.

After Sandy, CL&P said outages affected 850,000 of their 1.24 million customers. The utility promised to restore power to 98 percent of their customers by Monday or Tuesday of last week. Monday, they reached that goal.

Roy Occhiogrosso, senior adviser to Connecticut Gov. Dannel P. Molloy, said CL&P was prepared for Sandy and had improved communication with the public. The utility, he said, seemed to be shaping up.

“There is going to be a formal review of their performance,” he said. “Preliminarily, it seems that they have done better.”

National Grid started locking the front door to its Hicksville headquarters on the second day of the outage. Thursday, a steady trickle of frustrated and angry customers stood at those doors banging on the glass — pleading for help, demanding answers or just shouting in frustration.

One woman asked through the glass to talk to whoever was running things.

“There’s no one in charge to see,” a security guard told her.

With Mark Harrington, Robert Lewis, Sandra Peddie and Adam Playford


WHAT LIPA DIDN'T DO

At the request of New York State's Department of Public Service, a consulting firm reviewed the Long Island Power Authority and National Grid's 2011 response to Tropical Storm Irene. The review found significant problems with the two entities, including:

-- They ignored a 2006 recommendation to replace an outdated outage management system, which runs on a 25-year-old mainframe computer running COBOL, a computer language considered obsolete. The system had been "patched together over many years" and "lacks the ability to manage large-scale outages" or "take advantage of current advances in technology."

-- The outage management system was "one of the biggest shortcomings in the storm restoration effort." It was set to be replaced in late 2012, but will "likely take several years to be fully functional."

-- Many employees underestimated the likelihood of another major storm hitting Long Island, calling Irene a "once in a career or lifetime event."

-- Instead of smartphones or tablets to input data or receive maps, crews rely on paper maps and pencils.

-- Some substations used dial-up modems to access the Internet, and printers and fax machines didn't work.

-- National Grid used a "rudimentary" damage prediction model.

-- Recommendations from 2006 to harden the system against storms had been "implemented slowly or incompletely," including "many improvements that could be made at a reasonable cost."

-- LIPA stated that it reviewed its storm and emergency response policy annually, but the plan still referred to its relationship with KeySpan, the company it worked with until National Grid acquired it in 2008.


THE LIPA BOARD

In 1995, the State Legislature changed the law to make the Long Island Power Authority board of trustees an appointed body.

Nine members are named by the governor; three are named by the leader of the State Senate; and three are chosen by the Assembly leader. Only 10 positions are currently filled.

The board oversees all major authority decisions, including choosing a manager for the electric grid, purchasing power from generating plants, developing new power-generation projects and hiring a CEO and filling other top positions.

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