Power connections: LIPA, PSEG officials have extensive political ties

When the Assembly in 2023 advanced a bill to transition LIPA to a fully public utility, a top PSEG Long Island official issued a stark warning.

"Mismanagement by an unaccountable, patronage-fueled [fully public LIPA] bureaucracy will not meet [state climate goals] on time and will likely raise customer rates dramatically," PSEG LI vice president of external affairs Christopher Hahn, a vocal opponent of the bill, predicted at a public hearing.

Two years later, with the vision of a fully public Long Island Power Authority long vanquished, there are new worries that an evolving LIPA could fall prey to some of the same political practices that characterized its patronage-saddled past. With a new leader, Carrie Meek Gallagher, steeped in Suffolk County and state politics, and a board of mostly political appointees more deeply enmeshed in utility affairs than ever before, some say LIPA is in danger of becoming a bastion of patronage for Democrats in Long Island’s swelling sea of GOP red. Both county governments, most Long Island towns and many of their authorities are run by Republicans.

Gallagher, who is paid $363,250 a year in her new LIPA role, declined repeated requests for an interview with Newsday. In a written statement, LIPA said with the "steady guidance" of Gallagher, the authority "remains firmly focused on performance, accountability, and affordability, ensuring our customers receive the electric utility they deserve."

The prospect of a politically driven LIPA was visible earlier this summer when PSEG returned to the negotiating table with LIPA officials over a contract extension for PSEG to manage the electric grid. Among the PSEG negotiating team were Hahn, a former aide to Democratic Sen. Chuck Schumer, and Tom Garry, a partner at the law firm Harris Beach, according to people briefed on the negotiations. Garry is also a first vice chair of the Nassau Democratic Party and counsel and law chair of the state Democratic Party. He is also a Long Island adviser to Gov. Kathy Hochul.

On the LIPA team, in addition to four LIPA officials, were LIPA trustees Anthony LaPinta, former vice chair and counsel to the Suffolk Democratic Committee, LIPA chairwoman Tracey Edwards, a former Democratic Huntington Town councilwoman and now senior vice president of Sands Las Vegas, and Valerie Anderson Campbell, an appointee of the Democratic-controlled Assembly.

Returning to the table with PSEG became the sole option left to the authority after it abruptly canceled the procurement for a new grid operator in the spring. That action followed a decision by six LIPA trustees in April to reject a selection committee's recommendation to award the contract to Quanta Services, a Houston-based energy infrastructure giant. Quanta, according to LIPA officials, offered a "strong" bid that was materially superior to that offered by PSEG.

PSEG and Hahn didn’t respond to messages seeking comment.

"I don’t think you can divorce the politics from the operational aspect of running LIPA," said Dorian Dale, a longtime Suffolk Democrat who in 2012 replaced Gallagher as sustainability chief in Suffolk County under Democrat Steve Bellone, specializing in energy and environmental issues. "It’s about survival for Democrats. ... Where can we put our people to get to their 25- to 30-year pension levels? ... Because they have nowhere else to go. ... The Democratic Party looks to be on life support in both counties."

LIPA is the "one remaining oasis for Democrats" looking to place party loyalists with jobs on Long Island, Dale said. "All the rest is controlled by Republicans," including places such as Suffolk County OTB and the Suffolk County Water Authority. Former Democratic Suffolk Legis. Sarah Anker, after an unsuccessful bid for the State Senate last year, now works for the Suffolk Board of Elections, but she acknowledged earlier this year that she could be up for a job at LIPA. 

"Democrats have lost everything locally, and they lost all of the jobs they used to have with Nassau, with North Hempstead, with Long Beach," said former Assemb. Dave Denenberg. Other than state authorities such as LIPA, "the only place they can put anyone these days is the Village of Hempstead. The Democrats aspire to be as good as the GOP in placing people and building up patronage. I still think the Nassau GOP has everyone beat."

The problem, said Denenberg and others, is the electric utility has a higher, more critical mission that should be immune from patronage.

"You don’t want to put politics before ratepayers," Denenberg said. "The danger there is that instead of giving the best service to ratepayers with the best plan for future service, instead of that you’re assisting people in getting elected in return for jobs."

Hahn’s stark prediction for LIPA as a public authority was never tested, and many credit PSEG’s unrelenting lobbying campaign for killing the legislation. The fully public LIPA law died after failing to gain a single Democratic State Senate sponsor. Former Sen. Kevin Thomas (D-Levittown), a Democrat who co-chaired the State Legislature’s public LIPA committee, declined to introduce a Senate version of the bill. He has since left office and now works as co-chair for Long Island at Mercury, a lobbying firm hired by PSEG to oppose the LIPA bill. Thomas does not lobby for PSEG, according to state records.

Meanwhile, many of LIPA’s top leaders and board members who had publicly sparred with PSEG are out, and LIPA has appointed a new chief executive in Gallagher, who was previously LIPA and PSEG’s "review and recommend" state watchdog at the Department of Public Service in the Hochul administration. She also had been acting secretary to Democratic Gov. Andrew M. Cuomo for energy and the environment and DEC regional director for Long Island.

One longtime LIPA watcher said the signals of change at LIPA are apparent.

"This is a shift to the political," said former state Legis. Fred Thiele Jr. (D-Sag Harbor), who championed the fully public LIPA bill specifically to inject utility expertise after Tropical Storm Isaias. "The people on the board and the staff changes are people who are talented and well-meaning, but their skill set is more in politics and government than it is in the world of utilities."

Thiele said he’s convinced the shift is deliberate, and that the strategy will ultimately cede more control formerly wielded by LIPA to the contractor PSEG.

"I don’t think there will be people at LIPA who can perform the needed oversight of the utility," he said. "What I worry about is that there are people who are steeped in politics who can be extremely good managers, but the focus is different."

Hahn, who also was a former chief deputy to Democrat Tom Suozzi when he was Nassau County executive, is now among PSEG Long Island’s highest-paid executives, with total compensation last year of $466,762. He joined PSEG a decade ago after a stint at the politically connected Tonio Burgos and Associates lobbying firm, which has long ties to former Govs. Mario and Andrew Cuomo. PSEG has employed the Burgos firm to lobby for it. Hahn’s wife, Kara Hahn, is a former Democratic Suffolk County legislator who took a job in the Hochul administration in 2023 as deputy regional director for New York State Office of Parks, Recreation & Historic Preservation on Long Island.

Inside PSEG, according to online profiles, Hahn's government affairs team includes Kim Kaiman, government affairs manager and the wife of former Suffolk Deputy County Executive Jon Kaiman, the former Democratic North Hempstead supervisor. The team also includes Kevin Clemency, a state government affairs manager who is a registered lobbyist for PSEG and also was a one-time chief of staff to former Democratic State Sen. Jim Gaughran, once an outspoken critic of PSEG and LIPA. (Clemency's wife, Gina Sillitti, is a former Democratic  assemblywoman who now is on the state Workers' Compensation Board.)

And the department last year hired Mike Iannelli, a former Schumer Long Island regional director, as senior public affairs manager. Lisette Altmann, a former Democratic Nassau County legislator and LIPA director, has been a major accounts executive for PSEG.

The ties to political insiders extend into lobbying circles. One registered lobbyist for PSEG is Kristen Walsh, a one-time aide to Democratic Sens. Hillary Rodham Clinton, Schumer and Kirsten Gillibrand, who is New York president of Tonio Burgos and Associates.

"It’s a powerful entity," George Hoffman, an energy activist and 35-year political veteran on Long Island who has served as chief of staff for three Suffolk towns, said of LIPA. "There’s a tremendous amount of money that runs through controlling the utility. There are big active political people, they’ve got unions, they negotiate with unions all the time, there’s always that symbiotic relationship."

At the same time, Hoffman said, Democrats "need to have places to put people. That’s how the political system works: You have to find well-paying jobs for the people who are also activists within your party. If you’re not getting any jobs at the county because Bellone is not there anymore, and they’re all going to the Republican Party ... if you didn’t have the governor, you wouldn’t have LIPA."

Hoffman said it’s up to Gallagher to resist pressure to become a patronage shop. He said he’s cautiously optimistic she can, given her history of work in Suffolk and state government.

"You have to accommodate the pressures but not capitulate," Hoffman said. "That’s really the goal. It really comes from the key person. Let’s see if she has those kinds of skills. It’s certainly in her background."

At LIPA, others with political ties and ties to PSEG have moved up since Hochul appointed Edwards as chair in late 2023. Tom Locascio previously worked for PSEG in government affairs and has advanced at LIPA to chief of staff and vice president of corporate affairs. Locascio had been an aide to former Republican State Sen. Dean Skelos, who was convicted in 2018 on bribery, extortion and conspiracy charges.

Jennifer Hayen, also a former State Senate aide, is LIPA's director of communications. Jeanine Dillon, a former research assistant and chief of staff for the Town of North Hempstead, was hired last year as a LIPA external affairs manager. LIPA’s external affairs department is managed by Gaspare Tumminello, a former deputy chief of staff at Nassau County and one-time clerk at the City of Glen Cove. Barbara Dillon, LIPA’s senior adviser for human resources, was hired by former LIPA chief Richard Kessel — she’s the daughter of the late Denis E. Dillon, a Republican former Nassau district attorney.

In announcing Gallagher’s appointment, Edwards asserted Gallagher was a candidate with "the most experience that we have ever hired at LIPA," noting her 20 years in state and local government, including 12 years in utility regulation, energy policy and public power oversight, adding, "She understands politics." 

Some have questioned DPS' watchdog role under Gallagher, but that role is somewhat prescribed given the agency's unusual regulator-lite status as "review and recommend" overseer of LIPA.

"I always thought [DPS Long Island] was a complete waste of ratepayer money," former LIPA vice chairman Mark Fischl said of the tens of millions of dollars Long Island ratepayers have shelled out to fund the agency through rates. "What has DPS done during her term?"

But Dale said Gallagher’s strong political connections and her administrative skills sharpened in running the regional DEC office will prove helpful at LIPA.

"What Carrie brings is a considerable amount of administrative experience," Dale said. She "has always been one of those people who goes about building their empire, through influence and connections. That is how they rise up the ladder and that certainly is how Carrie has operated."

When LIPA announced her appointment, after a monthslong CEO search, it released statements by top labor, government and energy activists endorsing her. 

"Carrie Meek Gallagher brings the kind of experience and steady leadership LIPA needs at this critical time," Kessel, the former LIPA CEO and now chairman of the Nassau Interim Finance Authority, was quoted as saying. Long Island Association president Matt Cohen, himself a former LIPA general counsel, praised her "deep understanding of state energy policy, regulatory matters, and the needs of Long Island’s residents and businesses," saying they will "serve the region well."

Ben Zwirn, a longtime Suffolk Democrat who worked with Gallagher under Bellone and former Suffolk Executive Steve Levy, agreed LIPA is "one of the few areas where Democrats have any patronage. It’s one of the reasons it’s going the way it is."

Zwirn said it was his understanding that there were people who sought the chief executive role who were "recommended for the job and were ignored. It’s just wrong." Newsday spoke with one former KeySpan and National Grid executive, Arthur Abbate, who said he'd applied and never received a call from the search firm. 

As for the utility returning to its patronage roots, Zwirn said, "All I can say is I would hope not. A utility should be run by people who are experts and should not be clouded by their political support. This is something that should be neutral and run by people with experience to run a utility."

He said Gallagher is an expert on environmental matters. "I think Carrie is very talented but I wouldn’t say this is her forte. ... I worked with Carrie in environmental programs with Levy; she was very, very good. But this is a very different expertise. I wish her well."

Newsday last month reported that LIPA has hired an outside law firm to conduct an internal ethics probe following a complaint by at least two people close to a procurement for a new contractor to run the electric grid. 

The utility also faces a state inspector general’s investigation launched amid allegations of undue influence, and a potential lawsuit by Texas-based Quanta Services, whose strong bid to take over from PSEG was nixed by LIPA board members.

Even if LIPA’s board approves a contract extension with PSEG by its September board meeting, as expected, the contract still faces scrutiny by the state comptroller and attorney general, before any final vote by trustees by year’s end.

Thiele suggested questions about the procurement could raise further red flags.

"I certainly have faith in [comptroller] Tom DiNapoli and the attorney general," Letitia James, he said, noting both are independently elected. (James' office told Newsday the probe is properly under the inspector general, and the Nassau District Attorney's Office said it has not received a referral in the case.) "There are people out there who are willing to testify about this. Only time will tell."