Dawidziak: LILCO to LIPA, how we got here
Photo credit: Newsday Photo by V. Richard Haro | August 10, 1988. Gov. Mario Cuomo talks to Paul Lozowsky of the November 6th Coalition, about the LILCO Shoreham nuclear power plant deal on Aug. 10, 1988.
Gov. Cuomo said LILCO had to end. Gov. Cuomo said "LIPA has to end."
It was a sunny day in 1986 when Gov. Mario Cuomo signed the Long Island Power Act at the state office building in Hauppauge. I know. As a volunteer consultant to groups opposed to the Shoreham nuclear power plant, I was there. Surrounded by lawmakers and citizen activists, the governor's signing of the legislation seemed full of hope and promise. Little did we know that, for the most part, that hope and promise would not be realized.
The Long Island Power Authority was originally created with the mandate to affect a public takeover of the Long Island Lighting Co. There was one proviso: Any takeover would have to ensure that electric rates would not go up.
But the original vision for LIPA was far more ambitious than just getting rid of LILCO. Halting the operation of Shoreham was certainly a driving force. But according to key players at the time -- including activist Peter Maniscalco, political operative George Hoffman and journalist Karl Grossman, -- so was the ultimate implementation of renewable energy production such as solar and wind. Key to the creation of this panacea was a LIPA board that would be elected directly by the people of Long Island.
From the start there were grave doubts that LIPA would ever actually accomplish anything, especially when the initial board was picked by Albany's "three men in the room": the governor, the Senate majority leader and Assembly speaker. Intense lobbying by citizen groups led to the naming of strong-willed community activists such as Nora Bredes, Leon Campo, Irving Like and Steven Liss to the board. By 1988, they had put together a takeover offer of $12 per share.
It was to be an "everybody wins" situation: Shoreham would remain shuttered, LILCO's shareholders would get out whole and the ratepayers would get a decrease. Too good to be true? It was.
Instead the state went into private negotiations with LILCO, which many Long Island officials termed "a bailout." Regardless, news of the negotiations drove LILCO's stock higher, effectively killing the LIPA offer. The state's settlement deal, which was eventually put into effect, placed 100 percent of the so-called "prudent" costs of Shoreham -- estimated at the time at $6 billion -- on the ratepayers. Outside of the closing of the plant, this settlement accomplished none of the original goals of LIPA. LILCO simply rebranded itself. and continued to operate as the energy supplier to LIPA. Renewable energy was not made a priority and, as everybody knows, bills stayed high.
This changed in 1998, when another governor, George Pataki, put together a second LIPA deal that would acquire LILCO's transmission and distribution system. Brooklyn Union Gas, which became KeySpan Energy Corp., got the power plants. Again, Long Island ratepayers paid dearly. But, we were told, we now had a truly public utility, owned by the people and responsible to the people.
Perhaps if the LIPA board had ever been elected by the people of Long Island, it might have had a chance. Unfortunately, Pataki also deep-sixed the provision for an elected board.
It was outrage over the response to 1985's Hurricane Gloria that solidified public opinion against LILCO and Shoreham. Now, outrage over the superstorm Sandy response makes LIPA an easy target.
It's obvious that Long Islanders deserve better. But there's a much bigger point here. We have paid dearly, twice, for this public utility, and we were told it's ours. We own it. So before, Gov. Andrew M. Cuomo puts into effect any plan to privatize LIPA, we deserve to ask one simple question. Do we get our money back?
