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LIPA eyeing delivery charge increase of 2.5% at most

LIPA power lines along Motor Lane in Bethpage,

LIPA power lines along Motor Lane in Bethpage, Friday, March 8, 2019. Credit: Newsday/Steve Pfost

LIPA on Monday was crunching final numbers for its 2020 budget that could include a delivery-charge hike that won't exceed 2.5%, according to documents filed in advance of company budget workshops this week.

The hike could be well under 2.5%, and the final bill impact even less given LIPA's ability to adjust various elements of customer bills each year without a full state rate review. A delivery-rate increase of more than 2.5% would trigger a full rate review by the state Department of Public Service. This time last year, LIPA proposed a delivery rate hike of 2.4% for 2019. The delivery charge makes up around half of customer bills.

LIPA has scheduled the first workshops on its 2020 budget for 2 p.m. Tuesday at the H. Lee Dennison building in Hauppauge, where it will also discuss the elimination of two previously "grandfathered" rate classes that offered discounts for electric water heating.

LIPA is also holding a budget workshop and a board meeting at its Uniondale headquarters on Wednesday, when scores of solar-energy companies, elected officials, business groups and environmentalists are expected to gather nearby to protest LIPA’s plan to alter the payment scheme for its community-solar program.

Scott Maskin, chief executive of SUNation Solar Systems of Ronkonkoma, said the solar groups have had “multiple” contacts with LIPA officials over the community solar program in recent days to “express our concerns over how this will affect not just the industry” but also low- and moderate-income ratepayers and seniors who benefit from it in its existing form. The groups say LIPA’s plan to apply a state formula called Value of Distributed Energy to community solar on Jan. 1 makes it unfeasible and could topple a promising new sector of the solar market. LIPA spokesman Sid Nathan declined to comment.

In LIPA’s preliminary rate documents, the authority said the 2020 rate hike will be an amount “not to exceed 2.5 percent” and will be levied on “all service classifications.”

Nathan said LIPA number crunchers “aren’t finished finalizing numbers.”

LIPA’s state-approved rate plan in 2015 allowed the company to hike rates a combined 5% over three years starting in 2016, or $325 million, but also provided the authority with the ability to recoup costs through a series of new mechanisms outside the formal rate-hearing process.

These include a revenue decoupling charge that lets LIPA recoup revenue due to renewable energy-related sales declines, and a delivery service adjustment that allows it to recoup storm, debt and labor costs, if they increase. Decoupling charges can also result in a reduction in prior year charges, returning overcollections to ratepayers.

One LIPA trustee said he couldn’t comment specifically on any 2020 increase because he hadn’t been informed of one by Monday night. But, said trustee Matthew Cordaro, “I’m always very reluctant to support rate increases in a general sense.”

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