Panel issues scathing report on LIPA

The Long Island Power Authority "desperately" needs structural changes to address lingering questions about its high rates and debt load, lagging customer satisfaction, costly storm response, and billing problems, a committee of experts and activists told the Suffolk Legislature Tuesday.

The LIPA Oversight Committee, a bipartisan group formed by the legislature in 2010 to examine the utility's practices, issued a 191-page report on its two-year effort, much of it critical of LIPA. A copy of the report can be found at www.lipaoversight.org.

It found that customer overcharges remain a problem, that LIPA and contractor National Grid had "poor coordination," that storm-response costs were sometimes inflated, and that LIPA lacked transparency.

"LIPA's performance in customer satisfaction is extremely poor," said committee co-chairman Matthew Cordaro, a former executive at LIPA's predecessor, the Long Island Lighting Co. "It may seem that high rates are a driving force, but lack of transparency is the more important reason."

LIPA spokesman Mark Gross took issue with the report.

"At first glance this report leads us to believe that the findings of this committee are based heavily on stale opinions, preconceived notions by committee members and media clippings," Gross said.

LIPA chief operating officer Michael Hervey, in a statement, added, "While this report dwells on the past, LIPA continues to focus on our future as we move forward with the most significant across-the-board changes in its entire history which will provide significant benefits to our customers."

Committee co-chairman Sheldon Sackstein said outside prodding of LIPA, including by the committee members, led to the authority's decision last year to allow competitive bidding for a core contract to manage the regional electric grid.

LIPA trustees recently awarded that 10-year contract to PSEG of New Jersey, after National Grid/KeySpan ran the system for more than a decade. "At last, this management contract went out to bid," Sackstein said.

LIPA is also the subject of several state audits and recent legislation that calls for a full management audit of the utility at least every five years, starting last month.

Cordaro, while acknowledging the value of those efforts, said the comprehensive management audit and third-party complaint mediation don't go far enough. "LIPA should be subject to [full] regulatory oversight," he said, noting that findings of a pending Department of Public Service audit were nonbinding, meaning LIPA can reject them.

The committee recommended LIPA institute an elected board of trustees, now appointed by state officials, and suggested that some committee members take several vacancies on the LIPA board that have existed for more than a year.