The LIPA board on Wednesday passed the authority’s $3.37 billion 2016 budget, which included the first of three rate increases over the next three years. But in a rare move, three trustees voted not to approve it, citing issues with Gov. Andrew M. Cuomo’s LIPA Reform Act.
Two trustees, Suzette Smookler and Matthew Cordaro, voted no on the budget, while trustee Jeff Greenfield abstained. All three legislative appointees to the Long Island Power Authority board cited issues with elements of the reform act and the amount of the rate increase, which will raise $287.4 million in new revenue over the next three years.
All five of Cuomo’s appointees to the board voted to approve the budget.
The rate proceeding will result in a cumulative 7.3 percent increase in the delivery charge portion of bills over the next three years, starting with 1 percent in 2016, 3.2 percent in 2017 and 3.1 percent in 2018. For average customers next year, LIPA said that amounts to a monthly increase of around 65 cents, a jump it expects to be more than offset by power supply charges that could decrease if the cost of natural gas continues on a downward trend.
Several speakers at the board meeting at LIPA headquarters in Uniondale also expressed issues with the increase, saying that LIPA and PSEG Long Island should be devoting more resources to green-energy initiatives.
Cordaro took exception to the LIPA act’s provision that allowed trustees to oppose the rate increase only if they could identify an “inconsistency” with one of three narrow parameters, including reliability. He opposed the increase because “in my opinion I don’t think it represents the lowest rates achievable while providing adequate service.” He noted that a $730 million federal grant LIPA received for storm hardening was an opportunity for the authority to lower its own capital spending.
Smookler noted that the role of the Department of Public Service in the process was to provide a “recommendation” on rates, according to the act. “A recommendation is something you can take or leave. I cannot accept the rate increase,” she said.
Greenfield wanted LIPA trustees to have “our own, independent hearing” on the increase, among other things, but the act didn’t provide for it. “My problem is the process,” he said. “The LIPA reform act is too rigid.”
Greenfield, who like Smookler is a State Senate appointee to the board, said the rate increase should have been no higher than the state property tax cap, and added, “I call upon the legislature to amend the LIPA Reform Act to give LIPA trustees more power and decision making on behalf of the ratepayers.”
Suffolk County comptroller John M. Kennedy Jr. also pleaded with trustees to reject the increase, noting varying levels of austerity in Suffolk government. “Please, I’m begging you to take into account what the consequences of a rate increase would be.”
LIPA and the Cuomo-appointed trustees didn’t address the matter during the board meeting, but afterward, trustee Mark Fischl defended approval of the budget and the increase.
“We tried running this thing on the cheap,” he said. “The tide went out with Sandy and we got eviscerated. How did that work out?”
David Daly, president of PSEG Long Island, which had sought a $387.5 million increase, said in a statement, “With the approved rates, we will be able to make further vital improvements to our infrastructure and customer services operation and continue on path to meet our goal of being a best-in-class electric utility, while delivering on our commitment to long-term rate stability.”