Officials: LIPA bill for Irene over $100M

The Long Island Power Authority this morning will be handed a bill of well over $100 million for the effort to restore power after Tropical Storm Irene, the utility and several officials said Thursday.

LIPA chief Michael Hervey said he was awaiting a final post-storm assessment by contractor National Grid this morning. In an interview Thursday he estimated the price tag would exceed $100 million.

Others close to the utility, however, put the unofficial cost estimate much higher -- between $120 million and $170 million. LIPA declined to comment on those numbers.

LIPA expects 75 percent of the cost to be covered by federal disaster relief funds, after Nassau and Suffolk counties received disaster declarations. LIPA still must apply for those funds, a process expected to take months.

The bill for Irene, which was already expected to be the most expensive in Long Island history, includes the cost to transport, feed, equip and house more than 3,500 out-of-town workers in local hotels for a week or more. That came atop overtime costs for local National Grid workers and contractors.

In all, some 7,500 workers responded to the storm, the largest workforce ever amassed by the utility. The tab also includes the cost of hundreds of utility poles, more than 100 miles of wire and hundreds of transformers, among other equipment.

Irene, likely to be the utility's most expensive storm ever, knocked out power to more than 523,000 LIPA customers -- a record for LIPA. Before Irene, the costliest storm was a 2010 nor'easter that knocked out power to 263,000 customers and had a price tag of $68 million.

The question now: Could the whopping tab lead to a rate increase?

At a hearing Thursday to discuss LIPA's future structure, Hervey, in an interview, didn't rule out a rate increase tied to the storm, saying LIPA number crunchers were still working on next year's budget. National Grid workers, he said, have spent the past week surveying the system to estimate any additional costs to restore it to pre-Irene condition.

LIPA's storm budget for 2011 is $47 million. Last year, the utility spent more than $200 million responding to storms, including $34 million to bring 1,600 workers in advance of Hurricane Earl, which largely missed Long Island.

LIPA actually reduced rates in the aftermath of 2010 storms. It received a federal reimbursement for the March nor'easter of just over $50 million.

In general, every $35 million to $40 million in new costs to LIPA results in a 1 percent bill increase for customers. Reimbursement of three-fourths of the tab could cut a $120 million storm bill down by $90 million, resulting in just $30 million in actual additional costs.

"We'll have to see what the budget tells us," said Hervey. "There are a lot of ifs. This [the cost of Irene] will be a consideration." But he added, "We'd rather not have any effect on rates."

Matthew Cordaro, who was in senior management at LIPA predecessor Long Island Lighting Co. during its two-week effort to restore power to 750,000 people after Hurricane Gloria in 1985, said he wouldn't be surprised to see the total cost hit $150 million, though he didn't have specific information. Cordaro said he suspected it would be difficult for LIPA to avoid a rate increase.

"It's a hard number to swallow, especially after swallowing more than $200 million last year," he said, of LIPA's decision not to raise rates after that.