NYS, LIPA say PSEG should get $15M in bonus pay despite missed metrics

New York State and LIPA have generally agreed PSEG Long Island should get just over $15 million in annual bonus pay last year despite it fully meeting only 49% of its performance metrics in running the regional grid in 2024, according to a report released late last month.

As Newsday previously reported, PSEG in May filed a report with the state that showed it missed some key metrics for customer service, average outage frequency and duration, and serious worker injuries, while improving in cybersecurity, power supply and clean energy.

LIPA, which owns the grid and pays New Jersey-based PSEG about $80 million annually to manage it under contract, gets to review PSEG’s self-reported metrics performance, as does the state Department of Public Service.

Neither the state nor LIPA raised substantial objections to the report on bonus compensation, except for a relatively minor dispute over whether PSEG could reallocate funds to pay for tree removal expenses to meet that metric. LIPA took exception to the budget change, and DPS sided with LIPA. Final approval of the bonus amount is expected this summer.

In 2024, PSEG fully met 49% of the 61 metrics, partially met 31% and missed 17% (3% were canceled), with a request to receive $15.74 million of a total $22.97 million in at-risk compensation. LIPA wants to lower the compensation to $15.48 million. 

By comparison, in 2023 PSEG fully met 63% of a larger pool of 91 metrics, partially met 17% and failed to meet 18%. For that year’s work, LIPA recommended PSEG be awarded $15.3 million of a potential $22.28 million.

"We did have some great successes [last] year as far as the metrics," Carolyn Scibelli, LIPA's program manager for performance management, said at a board committee presentation last month. She noted PSEG had the fewest complaints of utilities across the state in a DPS-monitored system, but acknowledged, "We did have some challenges, unfortunately."

Those included lower customer satisfaction scores and an increase in serious injuries to workers — the latter has vastly improved this year, LIPA said.

Drew Biondo, a former LIPA trustee who sat on the board before his resignation earlier this year, called PSEG’s performance of 49% fully met metrics "a complete failure."

"That’s not a passing grade in any context — not in school, not in business and certainly not in delivering for ratepayers," Biondo said. His deeper question: "Where are the watchdogs? Their failure in the face of such a failure is unacceptable."

PSEG spokeswoman Elizabeth Flagler said the company “appreciate[s] the challenge that the metrics provide and are proud to have achieved or exceeded target performance of the many ambitious stretch goals laid out in the contract.”

Rory Christian, chief executive of DPS, in a letter to LIPA’s board noted PSEG "succeeded in meeting the volumetric target" of removing about 14,000 hazard trees without increasing costs to customers, thus "providing a net benefit to customers by increasing the reliability of the system."

Of missed metrics for average outage duration and frequency, Christian noted it resulted in the number of customer minutes of interruption increasing by 22% compared with 2023 because of "nonmajor storms," but allowed the 2024 goal was "more stringent" than 2023’s "to drive PSEG LI to improve performance."

The 2024 report was released last month at a committee meeting of the same LIPA board meeting at which Carrie Meek Gallagher, former director of the Long Island DPS office, was named LIPA's new chief executive. LIPA and a team that includes three of its trustees are now negotiating to extend PSEG's contract for up to five years.

That extension is happening amid a state Inspector General review of the utility begun in the spring, Newsday has reported. It also follows an unusual vote by LIPA trustees to cancel a request for bids for other companies to run the grid after LIPA’s three top officials recommended awarding the contract to Quanta Services, a Houston-based energy infrastructure giant that they said submitted a "stronger" bid.

The board report last month was broken down into "successes" and "challenges." PSEG had "strong performance" in work management, storm hardening, storm outage response and reducing momentary and multiple momentary outages for customers.

Challenges included a "slight decrease" in PSEG’s residential customer satisfaction score, landing it 10th of 17 big eastern utilities, and a lower business satisfaction score; a customer call center that ended 2024 with 41.3% of calls answered within 30 seconds; five serious injuries to workers in 2024, including one that was "very critical in nature;" and under-target scores for average system outage duration and frequency.

PSEG also failed to meet a metric for separating LIPA’s computer systems from PSEG’s in New Jersey, but the plan is now on target to be completed before year's end.

Editor's Note: The state DPS sided with LIPA in lowering PSEG's compensation for a hazardous-tree removal metric. An earlier version of this story incorrectly reported who DPS sided with.

By Mark Harrington

mark.harrington@newsday.comMHarringtonNews

Mark Harrington, a Newsday reporter since 1999, covers energy, wineries, Indian affairs and fisheries.