LIPA gets earful from handful of customers

Just four customers showed up at public hearings Wednesday to challenge the Long Island Power Authority's plan to raise rates 1.5 percent next year, with one of them actually encouraging higher rates.

The increase, amounting to $2.24 a month for average customers, would show up in the fixed service charge on bills in March, when it jumps to $10.60. LIPA trustees must vote on the budget later this month. The utility has 1.1 million customers.

Most of the increase is the result of $52 million in higher property taxes, along with increases in storm-response costs, a larger renewable energy and efficiency budget, and higher contract costs for National Grid to operate the local system.

In all, four customers gave input about the budget, with one making a case for potentially increasing rates.

Matthew Cordaro, co-chair of the Suffolk legislature's LIPA Oversight Committee, argued that LIPA's proposed increase next year might be artificially low given the utility's costs, including for fuel, and its $7-billion debt.

While he wasn't pushing for a bigger increase, Cordaro urged LIPA to "tighten its belt" by eliminating nonessential programs and reducing programs that may lead to more borrowing.

He said that increased borrowing in the future would compound costs with interest payments.

"It may be more cost-effective to raise rates now rather than push costs down the line, and there's interest payments to be made," Cordaro said.

LIPA chief Michael Hervey pointed to $87 million in lower fuel costs as an example of a reduction in costs, though most of those are simply lower natural gas prices.

As for $500 million in LIPA costs Hervey has said he would attempt to cut over five years, he said opportunities to do so were limited under LIPA's current model because cost savings now largely go back to National Grid. That will change in LIPA's new business model starting in 2014 when "those savings will come back to LIPA customers."

Selzer blasted millions of dollars in storm costs passed along to LIPA from contractor National Grid, and called for greater oversight. "There's no accountability with you people," he said.