Outrage over $231M in LIPA overcharges

Revelations that the Long Island Power Authority overcharged ratepayers $231 million because of a faulty formula for "lost" power have renewed calls for public oversight of the $3.8-billion utility.

State and local legislators expressed outrage following reports that LIPA staff had discovered two decades of overcharges for power that is lost to system inefficiencies. LIPA must pay for all power it gets from generating companies, even though the lost power never reaches customers' meters. LIPA trustees have worked out a plan to return $129 million through rate reductions over three years.

But the plan didn't satisfy some elected officials.

"You make a $231 million mistake and then say we'll lower your rates? This has been going on for some time," State Sen. Kenneth LaValle (R-Port Jefferson) said.

LaValle reintroduced a bill in the Senate last month calling for Public Service Commission review of any annual LIPA increases exceeding 2.5 percent. The bill was reported out of committee this week and "could potentially come up for a vote in the next couple of weeks," he said.

In the Assembly, Robert Sweeney (D-Lindenhurst) said he will point to the overcharge in making a case for a similar bill he has introduced there.

"How many bad things need to happen before everyone realizes a little oversight and accountability is a good thing?" Sweeney asked.

LIPA asserted that its trustees, all Long Islanders, already provide independent oversight and act in ratepayers' best interests.

"The board acted on behalf of all LIPA customers regarding the adoption of a revised accounting methodology in an effort to preserve rate stability for our customers and minimize impact on cash flow," LIPA chief operating officer Michael Hervey said in a statement.

Suffolk Legis. Wayne Horsley, who chairs a legislative energy committee, called LIPA's plan to pay back customers in "minuscule" amounts "unacceptable."

"LIPA plans on paying the overcharges back with nickels and dimes over years," he said, adding, "LIPA should issue refunds sooner rather than later."LIPA in the past has lobbied against increased regulatory oversight, saying it would lead to higher borrowing costs. Then-Gov. David A. Paterson vetoed bills that would have mandated PSC rate reviews.