Past deadline, LIPA and PSEG continue to negotiate new pact

LIPA and PSEG on Monday continued to work to hammer out a new contract for the New Jersey company to continue to manage the Long Island electric grid after its failures last year during Tropical Storm Isaias.

A LIPA-imposed deadline passed this past Friday, and LIPA said an agreement is expected "early this week."

A LIPA spokesman said a pact could have been completed as soon as Monday, and LIPA hasn't yet put the contract out to bid.

LIPA and PSEG have been working on a final contract since former Gov. Andrew M. Cuomo reached an agreement in principle with top PSEG brass in late June.

Since then, LIPA officials have rebuked PSEG for failing to finalize the pact, while PSEG argued it was negotiating in good faith.

Late last month, LIPA imposed a Nov. 5 deadline on negotiations, saying it would issue bids for a new service provider if an agreement hadn’t been reached by then.

PSEG Long Island president Dan Eichhorn said PSEG was working to meet the deadline.

Even after officials on both sides worked through the weekend, a pact still wasn’t finalized.

LIPA is suing PSEG for breach of contract relating to PSEG failures during Isaias.

PSEG has admitted failures but said it has been working ever since to fix the problems.

Most issues were related to a faulty storm-outage management computer system that hobbled the company’s response to the storm.

In a statement Monday, LIPA said it expected to reach an agreement on a, "reformed management contract that includes reforms designed to drive PSEG Long Island performance and accountability, while providing an unprecedented level of oversight of operations by LIPA and the Department of Public Service."

The statement said the, "revised contract will be put out for a 30-day public comment period before the LIPA Board takes action."

The parties "worked through the weekend and have tentative language on all contract provisions," LIPA said.

Also, a "tentative agreement has been reached on new performance metrics and budgets for 2022," LIPA said.

"We will continue to meet through the day to complete the final review and expect a contract to be available for public review early this week," the statement said.

LIPA and PSEG have been working since the summer to come up with a new set of performance targets for PSEG to meet in order to receive upward of half its annual fee of around $80 million.

LIPA had criticized as too easy a shortlist of just 25 targets for reliability, customer satisfaction and budgeting.

PSEG spokeswoman Ashley Chauvin said, "PSEG Long Island expects to come to an agreement with LIPA retaining us as service provider. We are eager to bring this collaborative agreement to closure following review by the State of New York."

Under tentative terms announced this summer, PSEG would also compensate LIPA for part of the more than $42 million in ratepayer money the company is expected to spend to fix the computer system.

PSEG temporarily is using an older, outdated version as it works on a more recent version.

As Newsday has reported, the new contract would settle LIPA’s $70 million lawsuit against PSEG; eliminate PSEG’s ability to automatically extend its contract beyond its end date of 2025; trigger automatic reductions in PSEG’s pay if it failed to meet expectations for storm response, customer satisfaction and reliability measures; and give New York State the right to institute a new investigative process that could cut PSEG’s pay further.

PSEG would be required to demonstrate greater autonomy of the Long Island utility from its New Jersey parent, and provide greater transparency into its performance and operations.

By Mark Harrington

mark.harrington@newsday.comMHarringtonNews

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