LIPA delays report on future direction as PSEG talks continue

LIPA will delay releasing its much-anticipated report about its future direction, giving PSEG Long Island more time to negotiate a contract that LIPA says must be changed to address storm-response and management shortcomings.

LIPA had planned to release the report to its board about whether to continue with PSEG or pursue other alternatives at a trustee meeting Monday. Instead the set of recommendations will be delivered sometime after mid-April.

LIPA chief Tom Falcone, who previously had indicated negotiations with PSEG had not been progressing well, said Thursday, "We still don’t have something that we would put in front of the board or suggest is a viable alternative" from PSEG.

LIPA is considering four options for its future: getting a new contract with PSEG, becoming a fully public utility, offering the contract to another outside vendor or privatizing. It has said the fully public model, which would put the authority in full control of 2,500 employees and jettison PSEG, could save it hundreds of millions of dollars over the next decade. It hasn’t ruled out offering the contract to other outside entities, but has largely ruled out privatizing — selling LIPA’s assets to a private company — as too expensive.

Meantime, LIPA is demanding a series of contract changes from PSEG, including more locally based computer-system staff and infrastructure, better and more accountable storm preparation, and additional management level staffing specifically devoted to Long Island, as it ponders potentially terminating the contract over management failures stemming from Tropical Storm Isaias, which saw more than 645,000 outages. LIPA has already filed a $70 million breach-of-contract suit against PSEG tied to the response.

Newsday has previously reported that among the potential new terms in a counter proposal by PSEG was a cost increase of between 15% and 20%. That reported request drew the ire of elected officials and Falcone.

Falcone on Thursday didn’t rule out the prospect of finalizing negotiations with PSEG but said the current terms offered by PSEG didn’t measure up. "If we had a viable offer we’d be talking about it," he said.

A PSEG spokeswoman said the company would not discuss confidential negotiations. But in the past the company has said the current public-private model in which PSEG manages the system under contract to LIPA is best to serve Long Island customers, and said it was operating in good faith to reach an agreement. PSEG’s contract with LIPA expires in 2025.

By Mark Harrington

mark.harrington@newsday.comMHarringtonNews

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