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LIPA trustees OK paying off pension debt

Power lines seen at sunrise in Melville on

Power lines seen at sunrise in Melville on Jan. 11, 2013. Credit: Newsday / Karen Wiles Stabile

LIPA trustees Wednesday approved a 10-year plan to collect $216.4 million from ratepayers to pay off a decade-old pension dispute, appointed a new chief after spirited debate, and briefly entertained a resolution to suspend an East Hampton transmission line project.

With little fanfare, the new nine-member board approved a plan to defer for two years the collection of $216.4 million from ratepayers to cover the costs of LIPA's December settlement of an employee pension dispute with its former contractor, National Grid.

Ratepayers will begin to feel the impact of the charge in 2016, after PSEG Long Island lifts Gov. Andrew M. Cuomo's two-year freeze on the delivery charge portion of bills. LIPA has already set aside $32.6 million to pay a portion of the total $263.5 million. Ratepayers will be on the hook for the rest until 2025, or about $1 for the average monthly bill.

LIPA chief financial officer Tom Falcone said there's a $17.4 million discrepancy between the settlement amount and LIPA's funding amount because of changes in the value of a promissory note that LIPA forgave as part of the settlement.

Trustees also voted to name John McMahon, the former Con Edison executive who has served as LIPA's chief operating officer since April, to fill its long-vacant chief executive slot. While all trustees lauded McMahon as a qualified candidate, trustee Matthew Cordaro voted against the appointment to protest the lack of a formal process for naming a LIPA chief. The job pays $275,000 annually.

Cordaro noted trustees last week were considering the prospect of naming McMahon general manager when the surprise move was handed down, and said appointments for top LIPA posts that "suddenly emerge out of the ether" give the impression they are being "dictated to us from Albany."

"We need to put in place a deliberate process so we have a mechanism, a structure for considering top-level posts," Cordaro said.

Trustee Jeff Greenfield and others said McMahon's qualifications obviated the need for formalities.

The appointment was approved 8 to 1.

The meeting saw pleas from half a dozen ratepayers whose East Hampton and Port Washington neighborhoods are being crisscrossed with new high-voltage cables, tall utility poles and crews drastically trimming trees. "PSEG has ruined our scenic vistas," said Helene Forst of East Hampton, demanding officials "immediately stop all work," remove the large poles and reroute the project underground.

Greenfield unexpectedly moved to suspend the East Hampton project for two weeks. But McMahon reminded him that PSEG Long Island was in charge of the work and LIPA did not have the authority to suspend it. The motion wasn't seconded.

David Daly, president of PSEG Long Island, said the utility will meet with town and village officials and residents next week, with options that could include rerouting part of the line, finding other ways to make it more palatable, or putting portions of it underground, if residents were willing to pay for it. Burying the entire line would cost an extra $25 million to $30 million, he said.

Alicia Jori Klat, a resident of Port Washington, where a similar line is being installed, requested public meetings with PSEG on tree-trimming in her neighborhood, which she described as "butchering." PSEG has adopted a more aggressive tree-trimming policy since taking over.

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