2nd ethics complaint filed against LIPA, focusing on alleged pressure to lower PSEG performance scores

A second ethics complaint tied to LIPA’s process of hiring an outside grid-management company was filed last week, alleging LIPA pressured senior staffers to lower PSEG’s new performance metrics, according to three people familiar with the matter. 

The complaint was filed by the same two people who brought an ethics complaint against LIPA in June. That internal complaint alleged pressure was brought to bear in the bidding process, seeking to force senior LIPA officers to lower scores for competing bidder, Quanta Services, which sought to replace PSEG Long Island as grid manager.

LIPA’s internal review committee, after a yearlong process begun in May 2024, recommended awarding the contract to Quanta, but LIPA’s board voted 6-1 to reject their recommendation. The board later voted to extend PSEG’s existing contract. It awaits a final review by the state comptroller’s office.

The new ethics complaint alleges there was "pressure to reach lower standards" in the new contract "so PSEG could hit its bonuses with lower performance," according to a person familiar with the complaint who asked not to be identified. LIPA over the past several years has lowered the number of performance metrics for PSEG from more than 90 to just over 50. Last year, PSEG fully met 49% of the metrics, and was able to receive $15.3 million of a potential $22.8 million bonus. PSEG’s total management fee for managing the LIPA grid is about $80 million a year.

The latest ethics complaint follows by several weeks the firing of LIPA senior vice president Billy Raley, one day before LIPA trustees voted to extend PSEG’s existing contract. Raley told Newsday he was fired by newly named LIPA chief Carrie Meek Gallagher after he refused to sign off on easier performance metrics in PSEG’s new contract. Raley is one of the people who filed the ethics complaints.

In response, LIPA in a statement, said, "It’s troubling and disappointing that a former senior leader at LIPA has chosen to disparage LIPA publicly and litigate their claims in the press rather than through the appropriate legal channels. We will have no further comment."

The new ethics complaint comes amid a state inspector general’s investigation into the Long Island electric utility begun in the spring, probing matters from lobbying to the now-canceled procurement, Newsday has reported.

Earlier this month, Gov. Kathy Hochul's spokesman Ken Lovett said in an email the governor "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."

The new ethics complaint also comes as LIPA's recently approved $493 million contract extension with PSEG moves toward final approval. Last week, Newsday reported, the state attorney  general's office gave its stamp of approval for the contract.

The contract now sits with the state comptroller’s office for a final review. Mark Johnson, a spokesman for the comptroller, asked if the office had ever launched an audit or probe of the charges at LIPA, said, "An investigation is being conducted by the state inspector general."

The Long Island Power Authority is one of just two large utilities whose grid is managed by an outside company; most are operated directly by investor-owned utilities such as Con Edison, or public utilities. PSEG and a staff of about 20 senior staffers have managed the grid for the last decade, after taking over from National Grid in 2014. 

Quanta in September filed a lawsuit in state court against LIPA and the trustees who voted against it in the procurement, calling into question the fairness and legality of the bidding process and asking for a temporary order to forestall the contract award to PSEG. An acting Nassau County Supreme Court judge, Phillipe Solages, declined to issue that order, and LIPA has since filed a motion to dismiss Quanta’s suit.

A Quanta spokesman said the company is expected this month to file a motion in opposition to LIPA’s papers seeking to dismiss the suit.

Fred Harrison, a Merrick ratepayer and volunteer leader at Food and Water Watch LI, an activist group, in a letter to State Comptroller Thomas DiNapoli last week wrote, "The firing of a highly experienced public servant for truth telling is deeply disturbing and should result in a full investigation."

Harrison wrote that Raley's "truth telling was about ensuring the public competent and safe service from PSEG," and the "rejection by LIPA of Mr. Raley’s seasoned judgment raises questions about the terms of the new agreement and only compounds ratepayer fears about questionable board decision-making."

By Mark Harrington

mark.harrington@newsday.comMHarringtonNews

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