LIPA proposes monthly bill cuts, residential late fees

Typical LIPA bills will drop in January - but don't get behind on payments.

That's the message from a workshop of Long Island Power Authority trustees Friday, who proposed a 2.2 percent overall bill decrease starting January, along with a new a 1.5 percent late fee for residential customers.

LIPA already imposes a late fee on commercial customers, but it's the first time it's been proposed for residential consumers. Around a fifth of all LIPA customers are typically late paying their bills.

Under LIPA's proposed $3.66-billion budget, the average residential bill would drop $3.31 per month next year.

"We do recognize these are very tough times," chairman Howard Steinberg explained at the workshop in Uniondale, while noting fuel costs continue downward.

But officials said the late fee was necessary because those who pay their bills on time - over 80 percent of LIPA customers - are subsidizing those who don't.

"I think it's human nature that if there is no penalty [for late payments], people will take advantage," trustee X. Cristofer Damianos said.

But one critic was quick to pounce. Suffolk Legis. Edward P. Romaine (R-Center Moriches), who is proposing a citizens oversight committee to scrutinize LIPA, blasted the late fee as "another way to squeeze ratepayers . . . who have just about had it." But he welcomed the overall bill reduction, so long, he added, as it's not "a shell game where they lower one charge only to increase another."

The proposed bill reduction, LIPA's second in six months (it cut the power supply charge 3 percent in June), would bring rates to 2007 levels, and comes despite an increase in both the delivery charge and the renewables and efficiency charges.

Under the proposed budget, LIPA will cut the power supply charge 4.6 percent in January, then implement a 1.9 percent delivery charge increase in March. Most of the power supply charge reduction is based on natural gas prices expected to decline $288 million next year.

By keeping the delivery charge increase under 2.5 percent, LIPA avoids a Public Service Commission review of its rates. LIPA chief operating officer Michael Hervey said the increase was "not built on trying to avoid that" PSC review, though he acknowledged, "we had it in mind." Bill charges are aimed very specifically to pay expenses, he said.

The 1.5 percent late-payment fee was first raised by LIPA in the spring, but the authority scrapped it following a devastating nor'easter storm and sour economy. Hervey said the authority expects to raise "a few million" from late-fee interest on unpaid bills, but said it's primarily aimed at lowering arrears and ending the "subsidizing of customers."

The agency's proposals would take effect Jan. 1 if approved by the trustees next month. Customers will get a chance to comment at four public hearings over the next month.

The utility also proposes resetting the power supply portion of bills on a quarterly basis "to make sure we are not overcollecting," Hervey said. The charge is based largely on the cost of fuel, and some have criticized LIPA for holding overcollections for six months or more. Adjusting quarterly could lower bills more frequently, but bills could go up if fuel does.

LIPA is proposing healthy increases in its efficiency and renewables programs. Spending on efficiency would increase by $13.4 million to $63.5 million. The program includes rebates for Energy Star appliances and home efficiency measures that LIPA funds.

For renewables, like solar and wind, spending would rise by $7.1 million to $25.7 million. The lion's share of next year's budget allocation is for the solar panel rebates - currently suspended because LIPA's budget for it this year ran out.

Average LIPA residential bill, under new proposal

(Based on usage of 775 kilowatt-hours)

Delivery charge: goes from $72.23 this year to $75.15 in 2011.

Power supply charge: drops from $72.11 this year to $65.07 next year.

Energy and renewables charge: jumps to $4.49 from a current $3.70.

NET EFFECT: A typical bill drops to $149.72 from a current $153.03.

SOURCE: Long Island Power Association