Editorial

Editorial: New start for Long Island power, but a long way yet to go

4. LIPA CEDES CONTROL TO PSEG - After

4. LIPA CEDES CONTROL TO PSEG - After questions were raised about LIPA's management, finances and response time after superstorm Sandy, Gov. Andrew M. Cuomo proposed a plan that gave PSEG, a New Jersey utility company, nearly complete control of the Long Island power grid, replacing the LIPA brand with a new entity, PSEG-LI. On Oct. 3, LIPA trustees approved Cuomo's effort to reform the utility. Read the full story (Credit: Steve Pfost)

Ten months after superstorm Sandy made the institutional and operational flaws of the Long Island Power Authority impossible to ignore any longer, Gov. Andrew M. Cuomo on Monday signed a law that begins the process of fixing the dysfunctional public authority. At long last.

Cuomo, who took his pen to Uniondale, marked the event by symbolically rebranding a LIPA truck with the logo of the new operator, PSEG of New Jersey, which takes over in January. The new law -- the best deal he could coerce from a reluctant State Legislature -- stops short of outright privatization. But for the first time, full operational control of LIPA's transmission and distribution system will be in the hands of a private utility.

Undoing decades of bad choices, failed leadership and cronyism that needlessly politicized and hampered the authority, however, will take a lot more work than rebranding. It will require the governor and his energy advisers to keep a resolute focus on every aspect of the transition.


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There is much to be done, starting with the new, slimmer, nine-member LIPA board. These new trustees must have deep knowledge of Long Island along with specific expertise in energy, finance, corporate oversight and emergency preparedness to properly review the decisions of the system's operator.

The board will also be responsible for refinancing up to half of LIPA's $6.7 billion debt to harvest savings for critical improvements to the transmission and distribution system without raising rates. For starters, LIPA needs to know automatically where power outages have occurred.

Neither the refinancing nor the closing on PSEG's 12-year contract will occur until LIPA gets a favorable IRS ruling to keep its bonds tax free. That's a priority for Cuomo's team.

The new board must also take a hard second look at the due diligence performed by the old board in giving tentative approval to a 20-year, $3 billion-plus contract to purchase power from a new gas generating plant to be built by the operators of the existing Caithness plant in Yaphank. Is the extra energy needed and has patronage larded the cost?

All the while, the lights have to be kept on. While the switch from National Grid to PSEG won't formally happen until January, the transition is well underway. It has to be closely monitored. We head into the critical months of the hurricane season with our fingers crossed that any storm response during this period doesn't become a replay of Abbott and Costello's "Who's on First."

Meanwhile, the towns of Huntington and Brookhaven have until October to accept an offer from LIPA to withdraw their tax certoriari lawsuits and agree to a sensible plan to reduce LIPA's inflated tax bill on the devalued Port Jefferson and Northport generating plants. Doing so will recoup savings for all ratepayers while giving those towns and villages that will lose revenue a predictable timetable for managing the change.

LIPA, National Grid, PSEG and Cuomo have enough critics to make the hot air around the utility a renewable source of power. Still, it's possible to be both watchful and optimistic. The new structure reduces LIPA's role, provides some regulatory oversight, funds system upgrades and turns operations over to a private utility that will be held financially accountable for its mistakes.

Granted, it couldn't get much worse, but Cuomo is giving us a credible promise that it can get better.

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