New PSEG contract outlined at LIPA meeting

Senior Cuomo administration officials presented new details of their plan to restructure LIPA at a public meeting Wednesday, including slicing up to $60 million from the utility's current costs through "efficiency savings." But reaction to the plan was mixed.

The officials outlined terms of an amended contract with PSEG, the New Jersey-based utility scheduled to start operating the Long Island electrical grid in January. Larry Schwartz, secretary to the governor, said the synergies include cutting millions of dollars in LIPA's use of outside consultants and trimming staff of 60 people down to 20.

The amended contract would give PSEG nearly complete control as the Long Island Power Authority is reduced in scope under Cuomo's proposal. State lawmakers will be given copies of the so-called term sheet with PSEG within the next day, an official said.

Some at the meeting at SUNY Old Westbury, the first of two on the Island this week, said the plan could leave ratepayers exposed. Don Daley, business manager for the International Brotherhood of Electrical Workers Local 1049, representing 2,600 unionized National Grid workers, said, "The workforce is in full opposition to the governor's plan as currently written."

He took issue with what he said was the bill's lack of "commitment to maintain jobs on Long Island," including not requiring that PSEG use National Grid workers in storms, and not keeping call center jobs here.

"There is nothing in the governor's legislation that prevents PSEG from moving jobs off Long Island," Daley said.

Cuomo spokesman Matthew Wing said the governor's staff planned to meet with union officials Friday to discuss the issues. Schwartz said the administration "wants to work with IBEW . . . to keep jobs on Long Island."

Others said the bill was heading toward approval too fast.

"We are quite concerned it really puts Long Island at risk," said Long Island Progressive Coalition executive director Lisa Tyson. For example, a negative IRS ruling on LIPA's tax-exempt debt status "could cost us a huge amount of money," she said. She also said she wanted to see state comptroller and attorney general oversight of LIPA contracts continue.

Several people said the bill needs more oversight.

"We're real concerned about accountability and the lack of real teeth in oversight," said Pedro Quintanilla, president of Long Island Congregations, Associations and Neighborhoods, an activist group.

Schwartz responded, "I think we're going to be provided an unprecedented level of accountability and oversight" through the local Department of Public Service office. "I think there's going to be plenty of accountability, plenty of oversight and plenty of transparency."

Suffolk resident George Hoffman asked, "Why the rush?"

"It would seem to me we'd want to spend some more time to really take a look at this; it's a refinancing plan masquerading as a restructuring," he said.

Schwartz responded, "Long Islanders have waited long enough for a system that works."

Some local politicians at the meeting supported Cuomo's plan. Suffolk County Executive Steve Bellone applauded Cuomo for "presenting real solutions to these myriad problems at LIPA."

A statement read for North Hempstead Supervisor Jon Kaiman called Cuomo's proposal "a bold stroke" that is "exactly what we need."

Asked what would stop rates from soaring in 2016, after the planned three-year rate freeze, Schwartz said he didn't anticipate it, but "if there's a need for a potential rate hike in 2016, there will be a full-blown rate proceeding under the PSC, a completely transparent process."

Under terms of the proposed agreement with PSEG, the utility would commit to $50 million to $60 million in "efficiency" savings for the Long Island system.

For expanding its responsibilities with LIPA, including cost management, customer service, storm performance and service reliability, PSEG will receive up to $25 million in compensation beginning in 2016.

The contract would allow LIPA to terminate PSEG for poor performance with no termination fee. It could terminate the contract without cause by paying the equivalent of one year fee of PSEG's contract.Ratepayers who cannot make the meetings on the LIPA legislation have two methods to ask questions and have their voices heard. They can call 855-693-8690, or email the governor's staff at: longislandutility@exec.ny.gov.

The Suffolk meeting is at 6:30 Thursday at the Western Suffolk BOCES Conference Center in Wheatley Heights.