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LIPA trustees approve rate hike and $560M in new borrowing

LIPA power lines along Motor Lane in Bethpage.

LIPA power lines along Motor Lane in Bethpage. The utility's trustees Wednesday approved a rate increase and $560 million in new borrowing. Credit: Newsday/Steve Pfost

LIPA trustees approved a 2.45% delivery charge increase Wednesday and authorized new borrowing of $560 million as part of a plan to upgrade and harden the local grid while expanding green-energy sources. The moves will push LIPA's overall debt to $8.73 billion by next year’s end.

The rate increase will add $1.86 a month to average residential customers’ delivery charge next year, but the hike will be largely offset by anticipated declines in the power supply charge and other charges, LIPA said, resulting in average monthly bills going up by about 13 cents.

The delivery charge hike and the new borrowing will help cover the costs of system upgrades next year that include a new substation in Montauk, a beefed-up grid around the Nassau Hub, and $37 million toward a new $200 million storm-hardening initiative in continuance of a program previously funded by the federal government. The overall 2020 operating budget is $3.75 billion while the capital fiscal plan for system improvements is $820 million. The anticipated 2020 year-end debt will be $8.73 billion, compared with the expected 2019 year-end debt of $8.38 billion.

The budget also includes $148 million in new utility scale renewable energy purchases, a continuing rollout of smart meters ahead of schedule, and $43 million in new technology, including PSEG's introduction next year of a mobile app that has a virtual chat feature and allows customers to report outages and pay bills. 

LIPA will spend $41 million on its rooftop solar program next year, said Chief Financial Officer Kenneth Kane. Funding for the program comes amid a local environmental group's release of a study concluding that while Long Island is a state leader in solar, many local municipalities need to do more to cut installation times and costs. 

The report, by Citizens Campaign for the Environment, found that Long Beach is the Island’s leader in processing needed permits for solar work, doing so in just 6.3 days. The Village of Floral Park took an average 136 days to process the permits, according to data compiled from the five largest Long Island solar companies. Citizens Campaign has said municipalities need to simplify the solar permitting process and keep fees reasonable — they are free in Long Beach and East Hampton, for example, while reaching upward of $900 in Garden City. Those municipalities with long processing times need to do more to speed them up, the group said. 

"Many municipalities were very supportive of solar but several were obstructing it," said Adrienne Esposito, executive director of Citizens Campaign. "They need to change."

LIPA Chief Executive Tom Falcone at Wednesday's board meeting said the utility will work in coming weeks and months to make a community solar program popular with local installers more price-competitive compared with those statewide. Falcone also said LIPA will work with the towns of Brookhaven and Southampton to propose a rule change that lets municipalities purchase their energy supply from third-party companies to help lower costs through the Community Choice Aggregation program.

“We’re happy to do it,” Falcone said of the rule change or other options the towns want. The towns sent a letter to LIPA last week asking them to do so.

“If they can get a better deal somewhere else they can do it,” Falcone said. “But it’s very difficult to get a better deal.”

The board meeting also included a presentation by State Parks Regional Director George Gorman about a controversial energy and nature center under construction at Jones Beach.

“It’s going to be a world-class destination for educators and students,” he said, replacing buildings that were “dilapidated and falling apart."

Newsday reported this week that the cost for the new center at the West End of Jones Beach has risen to $25 million from an original $18 million.

The center is the subject of a lawsuit by naturalists and other regular visitors that remains pending. Opponent Daniel Karpen of Huntington told LIPA trustees the project “should be terminated immediately” because “it’s not something people really want” and the risk to wildlife at the center “is too great.” Gorman said he expects it to be finished sometime next year.

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