After tumultuous year, LIPA promises lower bills, faces ethics probes in 2026

With days winding down on one of its most turbulent years, the Long Island Power Authority is moving into 2026 with the promise of lower bills, a reorganized staff and a fully implemented new variable rate structure — all while under the cloud of state and internal probes.

After a 2025 that saw the appointment of a new chief executive in Carrie Meek Gallagher and the departure of some of its most experienced senior officials, LIPA will end the year with at least three high-level jobs expected to be vacant, including two director-level posts — for power supply and wholesale market policy — and a senior vice president overseeing transmission and distribution functions, according to its website. Last month, it filled another key post by naming Gary Martens, formerly of the Metropolitan Transportation Authority, as its director of human resources and administration.

"Since I joined LIPA, we’ve navigated a period of change while staying focused on careful planning, financial discipline, and protecting affordability for our customers," Gallagher said in a statement. 

Meanwhile, LIPA was served earlier this month with a notice of claim by a former senior vice president, Billy Raley, expressing his intent to file a lawsuit over his firing in September, according to two people with knowledge of the document. LIPA officials declined to comment on it, saying they don't comment on “potential or pending litigation.”

Raley was one of three top officials who served on a committee that recommended Quanta Services replace PSEG Long Island as the region’s grid manager this spring. LIPA’s board voted 6-1 to reject the Quanta bid, and ultimately awarded a $493 million contract extension to PSEG over five years.

As Newsday previously reported, LIPA last month moved to eliminate the acting chief operating officer post that Werner Schweiger holds until Dec. 31. Schweiger’s decades of experience include stints as an executive at the former LILCO and executive vice president for New England utility Eversource. Schweiger was also on the committee that recommended Quanta.

Contract in limbo

As of Dec. 18, LIPA’s renegotiated contract with PSEG remains on the desk of state Comptroller Thomas DiNapoli, who must approve it (state Attorney General Letitia James has already done so) for it to take effect Jan. 1.

“The contract is still under review,” DiNapoli spokeswoman Jennifer Freeman said.

Unclear is whether DiNapoli’s team of auditors is reviewing the contract purely as an extension of the existing contract or as part of the larger bidding process. Freeman declined to discuss the comptroller’s review parameters.

Meantime, the authority’s board on Dec. 17 voted to approve a $4.3 billion 2026 budget and offers potential bill reductions of $6.53 a month for average residential customers next year, depending on their usage and other factors. LIPA said lower power supply costs in 2026 are due to “less on-Island generation,” among other factors.

LIPA's budget for 2026 lists an $84.3 million management fee for PSEG, including assumptions in the new contract. Newsday has previously reported the new contract has a five-year value of $493 million, or $98.6 million a year. But ratepayers won't see the full impact of the increase for two years.

Quanta in a statement said, "We remain confident that [our] proposal offered LIPA’s 1.2 million customers a more reliable and cost-effective solution, especially at a time when energy affordability is a growing concern across the country."

Quanta offered a three-year discount of its management fee, Newsday has reported. 

PSEG at the Dec. 17 meeting also announced it had largely completed a migration of LIPA computer systems from New Jersey to Long Island, at a cost of $73.1 million, and a long-planned transition to a new time-of-day rate that gives customers flexibility in reducing bills if they can drive more usage to off-peak times.

In an interview prior to the board meeting, Mike Voltz, director of renewable energy and energy efficiency at PSEG, said just under 900,000 of LIPA’s 1.2 million customers have been switched to the new rate, which offers discounts for those who shift away from the weekday peak of 3 to 7 p.m.

“We are seeing that customers are making some behavioral changes and are able to save a bit,” Voltz said.

He said around two-thirds of customers of the first group that was switched to time-of-day did save money. But around a third saw an increase and will receive a “bill protection” refund offered by PSEG as part of the program rollout. Refunds will average around $25 for the year, or $2 a month, Voltz said. Around 96% of customers are staying on the new rate, Voltz said. 

Utility probes

Heading into 2026, one large unknown for LIPA is the outcome of at least three investigations into the utility’s practices sparked by the yearlong bidding process as it sought a new service provider to manage the grid, and after a plan to make LIPA a fully public utility failed in the State Legislature.

As Newsday has reported, the state inspector general launched an investigation in the spring after then-trustee Drew Biondo released a resignation letter calling into question outside pressures brought to bear on LIPA during a state legislative push to transition LIPA to a fully public utility. The effort failed last year, and LIPA went ahead with a bidding process using its traditional public-private model. A spokesman for the inspector general, Michael Cook, this month confirmed the agency’s nearly yearlong probe but declined to comment on it.

That investigation coincided with a decision by LIPA’s board in April to reject the expertise of its most senior officials in endorsing a bid by Quanta Services, of Houston, to operate the grid.

In June, Newsday reported, LIPA received an internal ethics complaint charging that two senior officials on the bidding selection committee were pressured to lower scores for Quanta during the bidding process. The officials, Raley and Schweiger, resisted the pressure, Newsday reported.

Newsday has interviewed at least three people formerly associated with LIPA who have spoken with federal prosecutors about alleged irregularities at the utility, including in the bidding process. John Marzulli, a spokesman for the U.S. Attorney’s Office in Brooklyn, in September said, “I can’t confirm or deny the existence of any investigation.”

LIPA’s board voted in July to appoint Gallagher as chief executive, a move that had been expected for months, Newsday reported. Gallagher in September fired Raley, he told Newsday, after he declined to sign off on easier metrics for PSEG in its new contract. LIPA declined to comment on the claim, but a second ethics complaint was filed alleging retaliation. LIPA hired law firm Holland & Knight to investigate the claim, but later replaced that firm with a new outside attorney.

Gov. Kathy Hochul's administration controls LIPA through five board seats, including the chair. Three of Hochul’s five appointed trustees to LIPA’s board have terms that expire at the end of this year, and one has a term that expired a year ago.

A spokesman for Hochul didn’t immediately provide a comment, but previously has said, "LIPA’s responsibility is to focus on delivering affordable and reliable energy to Long Island. Gov. Hochul expects everyone at the authority to follow all legal and ethical standards, and if anyone is found to have violated laws she will ensure they are referred to the appropriate law enforcement authorities.”

Shelly Sackstein, chief executive of business group Action Long Island and a former LIPA trustee, said the tumult is partly the result of a business model that hasn’t worked — a public authority managed by an investor-owned utility company.

"It's a Jersey company reporting to shareholders and they’ve got to make a profit,”  Sackstein said. “If we can save money by running it ourselves, I can’t imagine why the governor is opposed to it.”

He said he remains hopeful LIPA will eventually return to its intended format. “I think a fully public LIPA is still the way to go,” he added.

By Mark Harrington

mark.harrington@newsday.comMHarringtonNews

Mark Harrington, a Newsday reporter since 1999, covers energy, wineries, Indian affairs and fisheries.