Cross-Sound Cable owner says LIPA breached contract, sues utility for $6.4 million

The company that owns and operates the Cross-Sound Cable is suing LIPA for breach of contract charging the authority is withholding millions of dollars in payments following an explosion that took the power line out of service last year.

In a lawsuit filed May 17 in federal court in Central Islip, Cross-Sound Cable Co. accused LIPA of breaching a contract that requires the authority to continue to make payments for the 24-mile, 330-megawatt cable even when it was out of service following the July 2020 explosion. The suit, which names LIPA’s corporate subsidiary, Long Island Lighting Co. as defendant, refers to a special provision, called force majeure, in the contract that requires that LIPA continue payments if an unforeseeable event occurs rendering the cable inoperable.

Cross-Sound is seeking at least $6.4 million in back payments from LIPA, as well as unspecified compensatory damages.

LIPA in a statement to Newsday said, "We disagree with Cross Sound Cable Company’s premise in bringing suit because the cable outage resulted from the failure of Cross Sound Cable’s own equipment. We will vigorously defend our position in court."

Added LIPA, "It wasn’t the explosion that caused the outage but rather the part failure that caused the explosion.".

Jean-Marie L. Atamian, an attorney for Cross-Sound Cable, declined to comment, and company officials didn’t return phone calls seeking comment.

The cable was out of service for six months and restored on Jan. 16.

Cross-Sound in court papers argued the cable went offline following an "unpredictable explosion" at the high-voltage station operated by the company "despite its exceptional maintenance record at the facility" and "diligent restoration efforts" in the face of "daunting obstacles beyond its control." Those obstacles, the lawsuit said, included a pandemic, a Category 1 hurricane and shipping delays that impacted the repair.

The suit says the explosion caused "intense heat, soot and collateral damage" to the cooling and support structures, ultimately causing the cooling system’s collapse.

The cable connects the LIPA system at Shoreham to the New England Grid at New Haven, Connecticut.

The special provision in the contract "excuses performance by a party" if any of a number of events occur, including an explosion," the lawsuit said. Cross-Sound said it gave LIPA notice that the explosion fit the definition of a special circumstance that required LIPA to continue to pay.

LIPA in September wrote to Cross-Sound contesting the premise that the explosion and later events constituted a special event that still required it to pay for a cable out of commission. Cross-Sound asserted that the explosion was "not caused by any negligence or lack of diligence in operating or maintaining the cable."

As of April, the company said, LIPA has failed to make more than $6.4 million in back payments. The company said the amount could top $12.6 million by January. Some payments to the company have continued, the suit says.

"LIPA’s refusal to release the escrowed funds and pay the full amount of invoice as they come due are breaches of its obligations" under the contract, the lawsuit said.

By Mark Harrington

mark.harrington@newsday.comMHarringtonNews

Mark Harrington, a Newsday reporter since 1999, covers energy, wineries, Indian affairs and fisheries.