Editorial: Cuomo moves to take control of LIPA
As the second tropical storm season on the watch of Gov. Andrew M. Cuomo rolls by, the focus in Albany has finally turned to solving the conundrum that is LIPA. And that's none too soon for ratepayers frustrated with the brand.
The open secret of the Long Island Power Authority is that it sprung in 1989 from modest roots, created by former Gov. Mario Cuomo to shut down the Shoreham nuclear plant after purchasing it for $1 from the failing Long Island Lighting Co. But LILCO's Shoreham-induced death spiral never stopped, and by 1998, LIPA was issuing $7 billion in debt to buy out the private utility's shareholders and complete a state takeover. Half of that debt is still on the books.
To the public, LIPA was sold as a way to improve service and reduce the high rates of LILCO. Over time, like a sci-fi radiated monster, it expanded into a politically driven operation that spent millions in consulting fees to monitor KeySpan Corp., which actually ran the transmission and distribution system, and then its successor National Grid, the current operator. Now PSEG of New Jersey will take over in 2014. During this critical transition period, Andrew Cuomo, who had not appointed any new board members since he took office, is seizing the opportunity to exert more control.
Cuomo wants to streamline LIPA by moving oversight of PSEG operations to the New York Power Authority, based in White Plains, which has the expertise to do the job. And he wants to make it clear that PSEG has the responsibility for calling in out-of-state crews before major storms as well as communicating to him, local officials and the public the progress of repairing downed power lines. LIPA's Tropical Storm Irene communications debacle was just a year ago. And of course, when things go wrong, as they did then, the new operator would get the blame. To weaken the LIPA (read "state ownership") brand, don't be surprised to see PSEG logos on the fleet of trucks that have always been owned by the private operators but branded as LIPA. If the service improves, it really doesn't matter.
But Cuomo must be careful about concentrating LIPA's decision-making upstate; an island has unique power generation needs. And LIPA's outstanding track record of partnering on innovative alternative fuel projects, such as the solar battery array at Brookhaven National Laboratory and a program to buy solar power generated by local entrepreneurs, could be at risk if that task is left to the slow-moving state Energy Research and Development Authority.
A strong Long Island voice -- perhaps the next person to chair its board -- is still needed to hear local concerns and relay them to Albany.
And if Cuomo truly wants to take LIPA back to it roots, he should put a spotlight on the outstanding Shoreham debt, which LIPA says is now about half of is total debt of $7 billion. Debt service for the bonds represents about 15 percent of a customer's bill.
Once the outstanding debt attributed to Shoreham is separated from the capital borrowing, LIPA should note it on every bill, as well as the amount of each customer's monthly payment allocated to its repayment. For close to 15 years, the lingering Shoreham debt has been blamed for some of the highest utility bills in the nation. That debt -- and that excuse -- needs to have an expiration date.
Cuomo last week criticized LIPA as a "political institution," which it certainly is, but it's unlikely politics can ever be squeezed out of it. Yet there are signs that lowering operating costs is a higher priority than pleasing local elected officials. A decision has been made by LIPA to close the obsolete generating plant at Glenwood Landing and to challenge the overvalued tax assessments of the Port Jefferson and Northport plants.
Cuomo is taking a bold step, saying he wants to fulfill the promise of LIPA to provide electric service that is less costly and more reliable. Even if that means making LIPA fade away.