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Long IslandColumnistsJoye Brown

State DPS review of LIPA-PSEG rate-hike request much needed

PSEG Long Island crews work to transfer power

PSEG Long Island crews work to transfer power lines to new utility poles along Montauk Highway in West Islip on Thursday, July 10, 2014. Photo Credit: Newsday / John Paraskevas

Su-weet Wizard of Oz!

Is this what things really look like when we peel back the curtain and examine LIPA and PSEG Long Island's request for three years of major electric rate increases?

LIPA and PSEG want to hike rates by $221 million in a region already burdened with some of the highest energy costs in the nation.

But the Long Island office of the state Department of Public Service last week -- after conducting its own analysis of the LIPA-PSEG request -- is recommending the rate increase be cut by a jaw-dropping almost 80 percent.

Nearly 80 percent!

Which would pull the rate-hike down to $47.8 million.

What's going on??

For one, the DPS analysis marks the first time the agency has ever scrutinized a proposal to pass electric costs down to Long Island consumers.

And what an analysis it was, according to a Newsday story by Mark Harrington.

DPS recalculated the costs and savings included in the request, applying -- another first -- standards the state uses for other electric utilities.

In response, LIPA and PSEG issued statements saying they would review the DPS recommendations. PSEG said it would have a formal response by June 4.

The gaping maw between the LIPA-PSEG rate-hike request and the deep recommended cut raise the uncomfortable question of whether there have been other instances when state review might have resulted in lower LIPA spending.

For years, the state declined requests from LIPA critics to review LIPA budgets, saying it had too little staff. And LIPA aggressively resisted suggestions that it submit to oversight.

This time around, there's a DPS recommendation in the mix.

There's no requirement that LIPA's board, which will vote on the rate request, honor the DPS recommendation. But since DPS is a state agency -- reporting, ultimately, to Gov. Andrew M. Cuomo -- and since Cuomo appointed the majority of LIPA's board members, the DPS recommendations can't be shrugged off.

The LIPA board vote won't come until after a lengthy process in which LIPA and PSEG will have the opportunity to explain their rate-hike request, and push back against DPS recommendations, which include cutting advertising, tree-trimming and pole inspection costs.

The DPS says the utilities' rate-hike request may have overstated its inflation allowance, underestimated interest savings from refinancing and under-projected electricity sales.

The department's review also argues that the utilities may have double-counted some expenses, including a onetime employee bonus.

The public, during hearings, will get to hear about all of that. And more.

It's a long, hard look behind the curtain.

And long past time.

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