LIPA, trustees hiring attorneys for probe by NYS inspector general, sources say

The Long Island Power Authority and its nine trustees are in the process of hiring outside attorneys to represent them as the state inspector general’s probe of the utility advances, according to people familiar with the matter.

Meanwhile, Gov. Kathy Hochul, whose five LIPA trustees have effective control of the utility's board, on Tuesday told the Newsday Editorial Board that she did not play any role in recent turbulent events at LIPA, saying, "I assure you my hands are not in the middle of this."

LIPA has hired the WilmerHale law firm to represent the authority in the probe, according to two people familiar with the matter. The firm also could represent LIPA in any possible internal investigation it may launch and for potential litigation, the sources said.

One source said the WilmerHale attorney representing LIPA is Brendan R. McGuire, a former federal prosecutor who previously served as chief counsel to New York City Mayor Eric Adams. McGuire did not respond to requests for comment.

LIPA declined to comment.

LIPA trustees, according to one person, have been offered guidance in retaining their own individual counsels to respond to any inquiries, including to identify attorneys who do not have conflicts because of past or current representation of LIPA or PSEG Long Island.

Newsday reported Tuesday that sources said the IG’s office had begun an inquiry a month ago as LIPA neared a decision about its future operations as PSEG Long Island’s contract to operate the grid nears expiration at year's end. The probe could be reviewing whether any undue influence was brought to bear during the process, the sources said.

The inspector general's office on Wednesday didn’t return a call seeking comment. Last week, IG spokesman Michael Cook, while declining to comment on any pending investigation, said the office has jurisdiction over LIPA and "would investigate if there were any complaints brought to us" concerning the authority.

In an unprecedented move last month, LIPA trustees rejected a "strong" recommendation by a committee of LIPA executives to award the 10-year contract to run the electric grid to Houston-based Quanta Services. In leading the opposition to Quanta, Chairwoman Tracey Edwards cited the company’s ties to a venture that has operated part of the trouble-plagued Puerto Rico grid.

Rejecting Quanta makes it considerably more likely that LIPA could be forced to exercise an existing option to extend the current contract with PSEG, observers have said, even though PSEG’s bid "fell short of the grade of meeting minimum requirements," according to LIPA’s internal staff review. PSEG did not respond to Newsday questions about the probe.

Quanta, in a statement to Newsday Wednesday, said: "While we are not privy to the details of this investigation, all Long Islanders should question why Quanta, which was deemed the most qualified service provider after an exhaustive selection process by a LIPA team with decades of utility experience, was not selected by the LIPA Board of Trustees."

Hochul, following a speech at Farmingdale State College on Tuesday, declined to discuss any IG probe or the situation at LIPA. "I’m not going to comment on that right now," she told a Newsday reporter, adding that she was "aware of the situation" at LIPA but said, "Those issues will be worked on internally." 

But in a subsequent interview with the editorial board, Hochul said the fact that the LIPA board's conclusion differed from LIPA’s experts was "evidence that we’re not influencing the process, we're not saying what you have to do."

Hochul told the board that her strategy has been to "bring in top people and trust them" in making decisions at LIPA. She denied any knowledge of any "undue lobbying" by LIPA contractor PSEG, as one former LIPA board member recently charged. PSEG has not been accused of any wrongdoing.

The governor also said that while she’s "not pushing" for LIPA to be sold off to a third party, she would consider the idea if her board proposed it. Former state Assemb. Fred Thiele has said that PSEG once communicated a proposal to buy the LIPA system at a time when former Gov. Andrew M. Cuomo had been intent on privatizing the utility — a plan that ultimately was rejected.

More recently, the Long Island Association business group has advocated for conducting a study to determine a fair selling price for the utility and the idea was publicly discussed by former National Grid and KeySpan chief Robert Catell.

By Mark Harrington

mark.harrington@newsday.comMHarringtonNews

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