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Top PSEG LI officials traveled to Puerto Rico to help win its grid-management contract

Senior PSEG Long Island execs traveled to Puerto

Senior PSEG Long Island execs traveled to Puerto Rico to help win a contract to operate the island's electric grid, officials said. Seen here, storm damage from Hurricane Maria in Humacao, Puerto Rico on Sept. 20, 2017. Credit: AP/Carlos Giusti

Months before their much-criticized response to Tropical Storm Isaias, PSEG Long Island’s top officials were closely involved with their parent company’s attempts to win a contract to operate Puerto Rico’s electric grid, officials from the Long Island Power Authority and PSEG told Newsday.

PSEG executives from Long Island became so enmeshed in the work that LIPA officials attempting to contact the utility, which LIPA pays $77 million a year to operate the island's power grid, had to reach out long distance to resolve issues back home. Specific dates for the trips weren't provided, a top LIPA official said.

"If you wanted to contact the management team you had to call them in San Juan," said LIPA Chief Executive Tom Falcone in an interview Monday.

He said it was "pretty much the entire senior management team" that spent time in Puerto Rico, including Chief Operating Officer Dan Eichhorn.

"It had no benefit for us," Falcone said of the effort. And in the end, PSEG was unsuccessful in its bid for the contract, which was awarded to a Canadian joint venture called LUMA.

Puerto Rico’s Public-Private Partnerships Authority first acknowledged last January that bidders for its grid management contract included PSEG’s sister company, PSEG Services, along with Exelon and Duke Energy, according to online news site, Greentech Media. The final award for the contract to manage the storm- and debt-ravaged authority was announced last June, two months before Isaias.

A PSEG spokeswoman said the executives’ efforts did not compromise their work on LIPA’s behalf during the campaign to win the contract.

"While members of PSEG Long Island management did participate in that endeavor, that had no bearing on PSEG Long Island and its activities," spokeswoman Ashley Chauvin said in a written response Monday.

Rather, she said, "The successful public/private partnership between LIPA and PSEG Long Island was of significant interest to Puerto Rico. LIPA and NYPA (the New York Power Authority) were well aware of our involvement at that time."

But few at LIPA or the state would call the public-private partnership successful at this moment, as LIPA considers terminating the PSEG contract for what it calls "inattentive and unaccountable" management by PSEG.

During and after the storm, more than 535,000 customers saw some 645,000 outages, and many were frustrated for a week or more trying to get restoration times and responses from PSEG. A LIPA task force found PSEG had been experiencing problems with their outage management computer system months before the storm, and saw bottlenecks on the telecommunication system.

Falcone made note of the PSEG campaign to win the contract in Puerto Rico, on the same day he openly criticized the same officials for mismanagement. LIPA on Wednesday will hold a trustee meeting at which it will announce it has delivered to PSEG a new set of contract terms the company must agree to before LIPA considers moving forward with the New Jersey-based company.

PSEG, which has been operating the Long Island grid since 2014, successfully outbid National Grid in 2011 for the LIPA contract, in part based on its promise of delivering better storm response after National Grid’s much publicized difficulties during Superstorm Sandy. Nearly a million customers lost power during and after Sandy in 2012, and it took up to 16 days to restore most back to power.

Falcone this week indicated the problems at PSEG Long Island may be deeper, more structural and longer-term than he originally thought. In its presentation Wednesday, LIPA is expected to discuss issues with more than just the storm-response systems, and to demand new contract terms to hold PSEG accountable for areas such as strategic planning, budgeting and real estate. Falcone said thus far he hasn’t been pleased with PSEG’s responsiveness to LIPA’s demands.

"I don’t think they’ve turned a new leaf yet," Falcone said. "I hope that they will."

Chauvin said PSEG was reviewing LIPA’s new contract terms "with an open mind."

Workers from PSEG Long Island, sister company PSE&G, NYPA and other state entities separately traveled to Puerto Rico after Hurricane Maria ravaged the island and its entire electric grid in September of 2017.

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