Bill aims to increase oversight of LIPA

State lawmakers and Gov. Andrew M. Cuomo have completed the framework of a new law that would provide significant oversight of the Long Island Power Authority, sources said Monday.

Under a proposed bill being finalized this week by Assemb. Robert Sweeney (D-Lindenhurst), Sen. Kenneth LaValle (R-Port Jefferson) and Cuomo, the state Public Service Department would be authorized to conduct or assign regular and comprehensive management and operations audits of LIPA. The first such audit would begin with passage of the law, as soon as January, and the next by 2015. Further audits would be conducted at least every five years.

LIPA customers also would get the ability for the first time to bring complaints about the authority to the state Division of Consumer Protection. Under the current system, disputes are filed through contractor National Grid, and can be elevated to LIPA, but not beyond. Customers of other utilities in the state can elevate complaints to the Public Service Commission.

A Cuomo spokesman didn't return a call seeking comment.

LaValle declined to comment, and Sweeney wouldn't discuss specifics of the bill, but hailed the legislation as "the first time there will be some significant oversight of LIPA."

While the law would not specifically mention regulatory review of LIPA rate increases of more than 2.5 percent over a year, as Sweeney and LaValle initially proposed, the new law would enable audits that could hold LIPA to its mandate to keep rates at their lowest possible level.

The Public Service Department, or an outside auditor with which it would contract, would be authorized to review LIPA's capital and construction programs, fuel and power costs, debt service compliance, annual budgets and efficiency.

LIPA trustee Neal Lewis called the measure, if approved, "meaningful," given the additional consumer measures. Matthew Cordaro, co-chairman of a the Suffolk County Legislature's LIPA Oversight Committee, called it a "reasonable alternative" to the rate review bill, but "only if they carry it out with the same scope, intensity and detail as they do for private utilities."

A mechanism to pass the bill is being finalized this week as LIPA trustees prepare to meet Thursday to announce the awarding of the contract to manage the Long Island electric grid, as well as vote on a 2012 budget with a 1.5 percent bill increase. The $2.3 billion management contract, currently held by National Grid, expires at the end of 2013. Con Edison and PSE&G of New Jersey are vying with National Grid to take over the revised 10-year contract.

The proposed bill increase, meanwhile, faces new resistance. In a letter to LIPA trustees last week, nine Republican Long Island senators, including Majority Leader Dean Skelos (R-Rockville Centre), urged trustees to reject next year's proposed rate increase because ratepayers "can't afford to keep paying more."