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Cuomo urged to block PSEG from collecting $32M

A view of the PSEG office building on

A view of the PSEG office building on Park Drive in Melville on Jan. 22, 2014. Credit: Newsday / John Paraskevas

A state senator is calling on Gov. Andrew M. Cuomo to block a LIPA rule change that allows PSEG Long Island to collect from customers more than $32 million previously paid in state taxes and other fees the utility is no longer required to pay.

Labeling the continued payments a "backdoor rate increase," state Sen. Jack Martins (R-Mineola) said the charges go against the spirit of the 2013 LIPA Reform Act. Among other things, the legislation exempted LIPA from a $26 million state revenue tax that LIPA will continue to collect.

Also Friday, Brookhaven Town Supervisor Edward P. Romaine cited the continued collection of the payments in calling for a utility advocate for ratepayers. Newsday reported on the charges Thursday, when LIPA's board voted to approve them. Only one LIPA trustee, former Assemb. Marc Alessi, voted against the measure, saying he thought ratepayers were entitled to the money, which amounts to around 1 percent of LIPA's annual revenue. Giving it back would result in a roughly 1 percent bill decrease.

LIPA trustees on Thursday also allowed the continued collection of another $6.9 million annually that had previously been charged for a back-tax payment, even though the old debt has been paid off.

PSEG said the combined $32.9 million would go to fund needed system enhancements.

"This backdoor rate increase is completely ridiculous and flies in the face of last year's LIPA Reform Act," said Martins, who faces a re-election contest this fall against Democrat Adam Haber. Martins in his letter requested that "every effort be made to reverse these new rules," adding that ratepayers are "entitled to a [rate] decrease."

Martins also questioned why the state Public Service Commission, and a new Long Island branch of its Department of Public Service, didn't weigh in against the continued collection of the fees.

The Department of Public Service, in a letter sent to LIPA, said the agency reviewed the tariff changes and found that they "comport with the spirit and the intent" of Cuomo's LIPA Reform Act.

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