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LIPA $325M rate hike moves closer to implementation

Members of the LIPA/PSEG board address ratepayers and

Members of the LIPA/PSEG board address ratepayers and trustees on June 26, 2015. Credit: Johnny Milano

A three-year, $325.4-million electric rate hike moved a big step closer to implementation Monday after the LIPA board of trustees took no formal action despite objections by two board members.

Trustees would have had to pass a resolution finding that the total 9 percent hike was "inconsistent" with three specific standards defined by the LIPA Reform Act in order to sideline the rate plan and begin public hearings. While trustees Suzette Smookler and Matthew Cordaro raised objections to the increase, no board member offered a resolution to do so.

"I'm outraged by it," Smookler said of the state-recommended hike. "I not only don't like it, I don't support it. I'm more enraged by how the LIPA Reform Act has been interpreted."

Several board appointees of Gov. Andrew M. Cuomo, whose administration wrote the reform act, challenged Cordaro to raise specific grounds for an inconsistency vote. Cordaro said his concern was that offering a resolution could result in a rate increase, the opposite of his intentions, and so he did not offer one.

The rate hike will be built into the 2016 budget, which trustees have to vote on in December.

Several ratepayers and an elected official did raise objections. Suffolk County Comptroller John M. Kennedy Jr. called on board members not to adopt the rate plan, noting declining sales tax revenue and salary freezes among county employees, even while the utility will increase rates based in part on inflation increases. "There is solid ground to hold hearings on these issues," he said.

Syed Hussain, a real estate agent from Babylon and member of AARP, accused the Long Island Power Authority of relying on "fluffy math" to make its case for the higher rates, and he cited the utility's reliance on grants, higher fees to PSEG LI and higher employee pension payments as grounds for a finding of inconsistency.

But hike supporters were hearing none of it. Pointing to past problems with the system, trustee Mark Fischl noted a utility can "always do things cheaper. We did it cheaper for a number of years. How did that work out for us?"

PSEG Long Island, which manages the grid for LIPA and which had sought $61 million more in rates than the state Department of Service ultimately recommended, expressed reservations about the $325.4 million final number.

"We remain concerned that the recommendation falls short of what's needed to provide our customers with the performance envisioned by the LIPA Reform Act, particularly around tree trimming and pole inspections," spokesman Jeff Weir said. He declined to say whether the company would file for arbitration to push for the higher number but said, "We'll continue to review the recommendation and its impact on the 2016-18 budget."

He said PSEG would work with LIPA on the budget.Julia Bovey, director of the local office of the Department of Public Service, called the board's decision not to block the plan "a victory for ratepayers."

"The process worked," she said. "There are real needs on this system to bring it into the modern era."

Also Monday, LIPA approved a measure that will reduce the amount of money Long Island ratepayers must pay for state electric-transmission projects the utility has argued hold little or no benefit for the Island. Trustees approved a settlement that will obligate ratepayers to cover 8.4 percent of the cost of projects upstate and in New York City, compared with a prior 16.7 percent. The settlement means ratepayers pay $4 million annually compared with $50 million, LIPA said.


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