LIPA proposes 1.5% rate increase for 2012

The Long Island Power Authority, citing a $52 million increase in property taxes, Thursday proposed a 2012 operating budget that would hike ratepayers' bills by 1.5 percent.

The increase would amount to an average $2.24 a month for residential customers whose electricity bills are around $150 a month.

Public hearings on the proposed $3.73 billion budget are planned for later this month, and LIPA trustees will vote on it in mid-December.

The increase comes despite an expected reduction in natural gas costs of $87 million next year compared to 2011. Fuel is the largest component of customer bills.

Other factors increasing bills: a $6 million increase in LIPA's storm budget; a $25 million increase in renewable energy and efficiency programs; and a $24 million rise in operational expenses tied to a 3.76 percent increase in the regional consumer price index.

LIPA also is increasing staff next year, from a currently budgeted 107 to 113 people, including staffers to more closely monitor contractor costs.

It also is spending more on consultants, including $1.8 million to study 45 different proposals for new energy sources.

The increased property taxes include a 12 percent to 14 percent increase in Nassau County, and a slightly lower rise in Suffolk. LIPA's total tax bill next year is expected to hit $573 million.

LIPA is challenging tax bills on many of its properties, as well as for contractor properties, including several large National Grid power plants, and other properties it owns for substations and transmission towers. Chief operating officer Michael Hervey said there was now hundreds of tax challenges filed, but said it take years for LIPA to realize big savings from the moves.

"It's our belief utilities are getting hit with a larger portion of these taxes," Hervey said.

LIPA is proposing a change in the way it charges customers with multiple dwellings on a single meter, a tactic aimed at addressing those who questioned their classification under commercial rates even though they were residences. LIPA would change its rules to make those with less than three dwellings in a home residential.

The rate increase won't take effect until March, when LIPA implements a hike in the delivery charge. January and February bills will go down slightly because LIPA is reducing the power supply portion of bills to reflect in part lower fuel costs.

This year's budget won't include charges related to an ongoing pension dispute with National Grid that Hervey said amounted to $525 million. The future pension costs in dispute will be resolved by year's end, he said, and it's still unclear if, or how much, LIPA will need to pay.