Official: LIPA may reduce rates in spring

Continuing reductions in the cost of natural gas could lead the Long Island Power Authority to make a rate reduction this spring, a LIPA official said Thursday.

An abundance of natural gas on the market, and an unusually warm winter, has kept downward pressure on the price of the gas, which is the main fuel used in power plants that supply Long Island's electricity.

"Clearly we're looking at a downward fuel adjustment in the April time frame," Michael Hervey, chief operating officer of LIPA, told authority trustees at a regularly scheduled meeting.

LIPA is scheduled to reduce the power-supply portion of electric bills by 0.5 percent this month, but then increase the delivery charge 1.68 percent in March. The cumulative effect of those changes would be a 1.5 percent rate increase in March.

It's still unclear how much, or even if, the lower fuel costs will offset that 1.5 percent planned increase. LIPA reviews fuel costs, and their impact on the power supply charge, each quarter, so the impact won't be seen until April. LIPA in December already was projecting natural gas prices for 2012 to be $89 million lower than last year's.

In other news, LIPA officials approved the appointment of Michael Taunton as chief financial officer Thursday. The former Arrow Electronics and KeySpan executive will be paid $275,000 annually, LIPA said.

LIPA also released a report on its $500 million, 20-year storm hardening program. So far $125 million has been spent on beefing up substations, installing new underground transmission cables and replacing poles and transmission equipment to withstand stronger wind gusts.