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Amid LIPA bill decrease, key vote Thursday on handoff to PSEG


4. LIPA CEDES CONTROL TO PSEG - After questions were raised about LIPA's management, finances and response time after superstorm Sandy, Gov. Andrew M. Cuomo proposed a plan that gave PSEG, a New Jersey utility company, nearly complete control of the Long Island power grid, replacing the LIPA brand with a new entity, PSEG-LI. On Oct. 3, LIPA trustees approved Cuomo's effort to reform the utility. Read the full story Photo Credit: Steve Pfost

A critical vote on LIPA's plan to turn over near-total control of the Long Island electric grid to PSEG of New Jersey will be held Thursday, as the authority also announces a sharp drop in October bills.

LIPA trustees are set to meet at their headquarters in Uniondale at 1 p.m. for the vote to approve the contract, which establishes terms of PSEG's 12-year agreement to operate the grid under a plan formulated by Gov. Andrew M. Cuomo.

The vote comes as LIPA reduced its power supply charge for October by 43 percent. An average user of 770 kilowatts will see his or her bill drop by $23.45 this month, according to a Newsday analysis.

The PSEG contract details the greater responsibilities the utility will assume, including budgeting, storm response and capital projects. At least two trustees have expressed concerns with the contract, and one, Matthew Cordaro, said Wednesday he would abstain from the vote. "No thorough and independent study has ever been carried out on the new agreement's impact on the ratepayer, and on that basis I'm not in a position to vote for or against," Cordaro said.

The measure is almost certain to pass, however, after trustee Neal Lewis said Wednesday he would likely vote for it. Lewis had expressed reservations because of the lack of contractual assurances on clean-energy funding.

Thursday's vote on the contract is one of two major hurdles LIPA and PSEG must clear for all elements of Cuomo's LIPA reform plan to begin in January. LIPA also awaits IRS approval on the new arrangement with PSEG so that it can maintain its tax-exempt status. Peter Maniscalco, founder of a LIPA Ratepayers' Coalition, has asked the IRS to reject the request.

A third hurdle was cleared Wednesday after the Federal Energy Regulatory Commission granted a request by PSEG-Long Island and LIPA that FERC declare the new service company immune from federal jurisdiction.

Trustees have a long list of items to cover at the meeting, including a scathing management audit of LIPA by the state Department of Public Service.

LIPA had hiked the power supply charge, which fluctuates monthly with fuel and power bills, twice this summer. Even while LIPA had reduced the charge each month from April to July, it was $191 million over budget for fuel and purchase power costs through July 31, spokesman Mark Gross said.

"Because we revise the power supply charge each month, we keep updating our prices and we expect to have caught up with the unanticipated cost increases from all the prior months, which is why the power supply charge saw such a healthy reduction on Oct. 1," Gross said.


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