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LIPA: Hospitality and leisure sectors slower to rebound from COVID-19, energy use shows 

PSEG says its electric use data suggests the

PSEG says its electric use data suggests the local economy is regaining its footing, if unevenly. Seen here, Peter Luger Steak House in Great Neck which has reopened after the shutdown in March. Credit: Johnny Simon

Patterns of commercial electric use through the worst of the COVID-19 shutdown and reopenings show the pandemic's deep and sustained impact on businesses across Long Island, most severely in the leisure and hospitality industries, according to new data from PSEG Long Island.

The energy-use data compiled by PSEG, which operates the system under contract to LIPA, indicates a shift in usage from offices to homes, where hundreds of thousands of former office workers continue to operate, while the trends generally mirror the timing of shutdowns and reopenings, and show the deepest impact on those kept in lockdown the longest. 

The use of electricity at hotels, bars, event venues and tourist attractions  dropped by as much as 40% year over year, the figures show. By contrast, nonessential retailers such as clothing shops and furniture stores, while experiencing a less severe decline of around 25% in April and May, saw a steady rebound through June before declining again in July by 9% compared with 2019.

Electricity use for nonessential manufacturing on Long Island fell sharply through the early days of the pandemic lockdown from mid-March through early April. But the sector also has seen steep increases as some of these manufacturers have slowly come back online. Electricity use by nonessential manufacturers dropped by as much as 35% on April 10, but  lessened that deficit by more than half to 19% by early May, according to PSEG figures. By early July, nonessential manufacturing had actually increased  to 6% over 2019, the only commercial sector to show an improvement year-over-year during the pandemic (though it saw another decline over the July Fourth weekend).

In the hospitality and leisure sector, perhaps the biggest impact has been at hotels, which have seen cumulative layoffs of thousands as all types of travel plummet. Rehirings have since begun, but reduced travel continues to impact the sector. 

“Hotels have taken a substantial blow due to the lack of corporate and recreational travel as well as increased  state quarantine requirements on travel,” said Kyle Strober, executive director of the Association for a Better Long Island, a developers’ group. “Theaters and museums, cornerstones of our region's leisure industry, are just opening or not yet permitted to open.”

For restaurants, the curve of activity generally mirrors major milestones dictated by the state’s step-by-step reopenings, which have put the establishments at the far end of the reopening priority list.

Peter Luger Steak House closed in Great Neck when the lockdown started and had to lay off 61 employees on March 26, according to a state filing. Daniel Turtel, vice president, said while the Great Neck location opened in the spring when curbside takeout and delivery was allowed, it wasn’t until the lockdown was lifted for indoor dining in late June that the company began to see a return to anything like normal business, and started rehiring.

“We are starting to see activity pick back up,” Turtel said. “We’re seeing it get pretty full,” to the 50% capacity now allowed under state rules. The restaurant company, which also has a longtime location in Williamsburg, Brooklyn, that was able to offer outdoor dining, is waiting for signals to see when a fuller reopening is allowed.

“We are on the edge of our seats in Great Neck and Brooklyn,” Turtel said. “We obviously are eager to get everyone back. The priority is and has to be safety for customers and employees.”

The data from PSEG is based on nearly 50,000 so-called "smart meters" installed at commercial accounts for more than a year (another 20,000 have since been installed). Rick Walden, PSEG's vice president for customer services, said the data suggests the local economy is regaining its footing, if unevenly. 

"Things are moving in the right direction," Walden said, though the electric-use data doesn't delve into customers' financial health, or their payment status.

Arrears of 30 days or more for commercial customers topped more than $33.4 million during the height of the pandemic in May, before settling to $25.9 million in June, an $8.4 million increase from last year. Residential arrears of more than $100 million in June amounted to a $5.5 million increase from the prior year. PSEG's Walden noted longer-term arrears of over 90 days are up year over year in part because the utility has paused field collections, and the trend is expected to continue through year end. 

From a revenue perspective, LIPA’s collections from large commercial customers are down $13 million from March to June, while the residential sector is up $18 million. The small commercial sector is down $3.4 million.

While commercial electric use has declined overall, residential use has seen steady increases throughout the pandemic, rising as much as 12.9% between the Phase 2 and Phase 3 reopenings in mid- to late June.

Much of the residential activity is actually disguised business activity, experts say, as office workers took work normally done in company headquarters to their home offices and dens.

Long Island Association chief executive Kevin Law, who previously served as CEO of LIPA, said while many LIA members say they plan to shift home workers back to the office after Labor Day, a substantial number who work in Manhattan will continue to work from home.

“At least through 2020, a significant amount of people will continue to work at home, which will likely continue to result in continued lower commercial use and elevated residential,” Law said.

LIPA chief Tom Falcone noted that the spring season, when the deepest pandemic impacts were felt, is typically a lower-use period for Long Island, and a lower sales period for LIPA overall. A hot summer could change the utility’s revenue picture, though he said it’s “too soon to tell” how much or if that will offset the declines. “The numbers will move a lot over the next few months,” Falcone said.

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