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Long Island

LIPA trustees OK tighter operating model

The board of the Long Island Power Authority

The board of the Long Island Power Authority agreed Thursday to help Long Island businesses win contracts with the utility. (Feb. 24, 2011) Photo Credit: Howard Schnapp

Long Island Power Authority trustees Thursday unanimously approved an operating structure that continues to rely on an outside company to operate the local power grid, but gives LIPA more control over budgets, computer systems and service levels, officials said.

The approval came despite requests from most public speakers at the trustees meeting that LIPA delay or change its decision for a full public takeover, or municipalization, of the utility. National Grid operates power distribution for LIPA under a seven-year, $2.3-billion contract.

LIPA trustees at their next meeting in December will vote on awarding a new 10-year operating contract to either Con Edison, National Grid or PSE&G of New Jersey.

Michael Hervey, LIPA's chief operating officer, called the new structure a "huge advance going forward" and a "new day" for LIPA, which has been a frequent target of criticism over rates, service and communications.

At the meeting, trustees went to lengths to make their case.

Trustee David Calone said the structure for the first time gives LIPA the ability to control all budgets so it can dictate spending on operations and systems. It also allows it to jointly run day-to-day operations of the grid, own critical computer systems and approve senior management appointments, he said.

The structure also lets LIPA change incentive programs to boost customer service targets and mandates that all contract employees work for LIPA only, he said. In addition, LIPA can insist that all contract workers be located on Long Island.

Any cost savings under the new structure revert to LIPA. "We believe this is the best path forward on behalf of our fellow ratepayers," Calone said.

Aside from better service, "the customer is not likely to see a whole lot in the beginning," said LIPA chairman Howard Steinberg, who strongly endorsed the new model despite his earlier support for selling LIPA to private company.

Critics of the move said LIPA didn't give enough consideration to the municipalization model. They say it would lower rates by removing the profit incentive, increase customer service, and provide quicker paths to renewable energy.

"I think they've gone about as far as they can with the courage they have," said Peter Gollon, energy chairman of the Sierra Club Long Island.Hervey said he believes LIPA can operate under the new structure by adding only four or five more employees. Because it has more control under the new model, there would be more to manage, including multiple budgets, hiring, service targets, and computer systems.

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