Latest LIPA rate hike could be temporary

It may be the shortest-lived rate hike in LIPA history.

Long Island Power Authority trustees Thursday voted to approve a 1.5 percent bill increase starting this month. The hike, which amounts to around $2.25 a month for average residential customers, is largely due to a $51-million hike in LIPA's annual tax bill, LIPA said.

But at the same trustees meeting, LIPA chief operating officer Michael Hervey said falling natural gas prices would, in all likelihood, wipe out the increase, and then some, come April.

"We do expect a drop in rates that will at least wipe out the increase that we're asking for today," Hervey said. If natural gas prices remain low by the end of next month, Hervey said, a rate cut could go even deeper.

Lower natural gas prices resulted in $22 million in savings for LIPA as of the end of February, and warm weather has reduced usage. Most plants that supply power to LIPA have dual fuel capability -- gas or oil -- allowing LIPA to switch to all natural gas when oil price spikes occur.

LIPA's fuel and purchased-power costs were $32 million lower than budgeted thus far this year, with around $22 million of that the result of lower-than-expected natural gas prices, LIPA said.

This month's increase will appear in the fixed service-charge portion of bills and was previously approved by trustees in the 2012 budget. LIPA had additional hearings on it last month.

At the meeting, trustees also approved a change to LIPA rules that would allow it to waive a $5-per-pole fee to attach items such as American flags to utility poles. LIPA last year ignited a firestorm when Newsday reported the agency was charging Shelter Island to attach American flags to poles during its ceremony to honor fallen soldier Joseph Theinert.

Trustees also approved a measure that will allow customers in two- and three-family dwellings with a single electric meter to receive a residential rate rather than a more costly, and taxed, commercial rate. Groups of LIPA customers last year raised the issue following Newsday reports of a Patchogue woman who was billed for a decade as a commercial customer though her house was clearly residential. LIPA credited her for the years of usage, but other customers who say they were similarly improperly billed have been told multiple-family dwellings under LIPA's old rules must be billed commercial. The new measure lets them get the cheaper rate but doesn't address past overbillings, customers have said.

LIPA also said it expects later this month to begin receiving regulatory approvals of its contract with PSEG to take over the management of the local electric grid. PSEG takes over from current contractor National Grid in January 2014. Hervey said the transition is on target.