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LIPA ratepayers may be on the hook for tens of millions of dollars in off-Island power-line upgrades

Sunrise with electric transmission lines in Melville on

Sunrise with electric transmission lines in Melville on Aug. 16, 2012. Photo Credit: Newsday / Ken Sawchuk

Long Island ratepayers could be on the hook for tens of millions of dollars for off-Island power-line improvement projects.

The potential costs come from LIPA's association with a consortium of transmission owners offering plans for Gov. Andrew M. Cuomo's proposed state Energy Highway.

The public-private consortium, known as the New York Transmission Owners, or Transco, in 2012 offered 18 separate proposals costing $2.9 billion for New York power-line upgrades to help eliminate bottlenecks in moving power throughout the state, chiefly from north to south. Among the projects was one to upgrade components of an undersea cable from East Garden City to Westchester.

But since that time, the project list has been reduced, with only three being actively offered for the short term. The Long Island project, at least for now, is not on the active list.

But that doesn't mean LIPA and its ratepayers are shielded from potential costs.

According to filings with the Federal Energy Regulatory Commission, Transco, which is made up primarily of investor-owned utilities, including Con Edison and National Grid, wants regulators to back its original plan for dispersing costs for the remaining projects, which are in Oneida and Westchester counties, and New York City. The request would leave Long Island ratepayers on the hook for 16.7 percent, or about $80 million, of the costs for those projects, the total value of which is $478 million.

At the same time, sources said New York State Electric & Gas, one of the investor-owned utilities in the group, is preparing to file a case with federal regulators seeking to recoup costs of the first project in Transco's to-do list -- an upstate power-line upgrade. NYSEG, which is owned by international energy conglomerate Iberdrola, operates across the upstate region. A NYSEG spokesman declined to comment.

LIPA NOT A FORMAL MEMBER
The filing, which is expected in coming days, would ask federal regulators for permission to recoup costs of the project from Transco affiliates, including LIPA, even though LIPA is barred under state law from being a formal member of the consortium. (LIPA and the New York Power Authority, while participating in the consortium, can't be members because state law bars them from potential profits Transco would reap, among other things.)

PSEG Long Island, in a statement prepared in response to Newsday questions, said it is evaluating the projects to determine whether any benefit Long Island ratepayers, and if so, how much. It said LIPA is prepared to argue its case before the Federal Energy Regulatory Commission if any of the other transmission owners file cost-recovery cases that would force Long Islanders to pay 16.7 percent of the costs.

"The authority would participate in a cost-sharing arrangement of transmission projects if PSEG Long Island's customers were expected to receive benefits that were commensurate with the costs they would be charged," PSEG said. "Should the other transmission owners seek to have FERC allocate costs to PSEG Long Island's customers absent such benefits, the authority, if necessary, would exercise its right to protest at FERC."

A source close to the process said it's unclear what benefit any of the projects have for Long Islanders. "We're not saying the benefit to Long Island is zero, but we believe it's much smaller than the current group of transmission owners believe it to be," the source said.

'BROAD BENEFITS' TOUTED
Explaining LIPA's potential cost, John Maserjian, a spokesman for Transco, said, "Transmission investments have broad benefits across the state. FERC has a process to determine appropriate cost allocation that would apply to transmission projects, including projects proposed by the NY Transco."

Representatives of the state Department of Public Service, which is reviewing the case, declined to comment. A spokesman for FERC didn't return a call seeking comment.

While PSEG is not listed as affiliated with the group, the company is working on LIPA's behalf in the negotiations.

"Under the current and existing [operating contract with LIPA], PSEG Long Island supports and represents [LIPA] in transmission related issues," PSEG spokesman Jeff Weir said.

LIPA, in a December filing with the state Public Service Commission, sought to clarify its role in Transco. It noted that legislation was required to allow it to become a full-fledged member of the group. And it said that "since none of the [active] projects extend to Long Island or benefit Long Island directly" as originally planned, LIPA would only agree to pay the costs if, among other things, Long Island projects were included.

As a result, LIPA said in the December filing it had "not yet definitely accepted" Transco's cost schedule.

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