LIPA scrutinizing Grid claim for Sandy costs

The Long Island Power Authority is giving intense scrutiny to National Grid’s lingering claims for more than $75 million in old invoices from superstorm Sandy, one of handful of bills that remain since LIPA replaced the British-based energy company with PSEG Long Island in 2014.

People briefed on the matter say the charges are from subcontractors and others that National Grid used during Sandy, including costs to erect a massive tent city at Brookhaven Airport to house and feed thousands of contract workers. LIPA is scrutinizing the charges to make sure they are not duplicate or unjustified. While LIPA has reserves to cover the charges if necessary, it won’t pay them until it’s certain the charges are legitimate, the sources said.

LIPA has already paid more than $600 million of the $677 million in costs related to Sandy, with more than 90 percent of those costs covered by grants from the Federal Emergency Management Agency. One source familiar with the matter said LIPA will dispute all lingering charges for which the proper documentation isn’t provided. LIPA is “making sure the money was spent and questioning whether it was spent wisely,” the source said.

In a separate matter, National Grid is also seeking $3.59 million more from LIPA to pay for pension costs for workers at power plants across Long Island in 2013. The dispute is documented in filings with the Federal Energy Regulatory Commission, where National Grid argued that the $25.8 million it originally billed LIPA to pay plant-worker pension and benefit costs came up short in 2013. LIPA pays around $415.3 million a year to National Grid to lease the plants in a 20-year capacity contract valued at $5 billion.

Documents filed with the FERC said LIPA and National Grid Generation are working to settle the pension matter.

National Grid spokeswoman Wendy Ladd declined to discuss the Sandy and pension claims specifically, saying only the company was working “collaboratively” with LIPA to resolve these “open issues.”

A LIPA spokesman declined to comment.

SEE PHOTOSAerial views of Sandy damage

The additional pension bill is a fraction of the hundreds of millions in pension charges LIPA ratepayers have absorbed since LIPA decided to end National Grid’s contract to manage the electric grid in 2013. LIPA has already settled $263.5 million in pension claims with National Grid electrical workers at the time the contract ended. LIPA also agreed to pay more than $400 million in new pension costs to carry over the accrued years of seniority of newly hired PSEG Long Island workers when they transferred from National Grid in 2014. LIPA over the next three years is paying around $50 million a year to fund that new pension account.

Matthew Cordaro, a former Long Island Lighting Co. executive who is now a LIPA trustee, said the additional pension costs point to the potential pitfalls of the public-private partnership under which LIPA has operated since its 1998 takeover of the electric grid. Cordaro has long advocated that LIPA operate as an independent municipal utility.

“The argument against a municipal utility was that we couldn’t afford the benefits of absorbing the workers into the state system,” he said. “The bottom line is that these benefits were always going to have to be paid for anyway.”

By Mark Harrington

mark.harrington@newsday.comMHarringtonNews

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