LIPA trustees grill PSEG on contract; Hochul reviewing issue

Skeptical LIPA board members grilled a top PSEG Long Island official during a trustees meeting Wednesday, seeking assurances the grid manager was negotiating in "good faith" as LIPA awaited PSEG’s comments on a new contract.

The trustees had initially planned to vote on the contract at their August meeting. Delays mean that will have to wait until at least Sept. 22.

Separately, Assemb. Fred Thiele (I-Sag Harbor) said he was requesting that Lt. Gov. Kathy Hochul, who is expected to be sworn in as governor on Aug. 24, "put the brakes" on the LIPA contract process, "so that her team can take a fresh look."

Spokeswoman Haley Vaccaro said Hochul was reviewing the LIPA-PSEG contract.

"The Lieutenant Governor wants what is best for Long Island's utility customers," Vaccaro said in a statement to Newsday.

Hochul is "focused on the transition period and continues to review specific issues and policies, like the pending LIPA-PSEG LI contract," Vaccaro said. "She will have more to share about her vision and plans in the days and weeks ahead when she officially becomes governor."

Thiele is among a dozen legislators, some of whom met at an Assembly hearing in Brookhaven Monday, who have called for the Long Island Power Authority to terminate its pact with PSEG and become a fully public utility.

Thiele said he was drafting legislation to push LIPA toward the public model.

LIPA had been exploring the prospect of awarding the contract to other providers, or even taking over management of the system itself, when Gov. Andrew M. Cuomo interceded.

Cuomo called a top PSEG official after reading about a LIPA board meeting where a PSEG official said the company would fight to keep its $80 million a year contract, despite LIPA's issues with PSEG performance, LIPA chief executive Tom Falcone has said.

Cuomo's call led PSEG to acquiesce to LIPA’s demands in talks in late June on a contract that would keep the New Jersey company as grid manager, with considerly better terms than under the current contract, Falcone said.

Cuomo this week announced his resignation, as he faced sexual harassment accusations.

Late Thursday, LIPA confirmed PSEG had returned the contract, but said LIPA officials had not had a chance to review PSEG's comments.

PSEG spokeswoman Ashley Chauvin said late Thursday the company provided "our feedback" on the contract proposal. She said PSEG was "eager to reach an agreement and have offered to dedicate the necessary time and resources to accomplish this objective."

During a LIPA board committee meeting Wednesday, trustees expressed frustration that the contract hadn’t been returned in time for their scheduled vote that day.

"I understand that LIPA sent PSEG a draft of the contract based on the term sheet we agreed to three weeks ago and still haven’t heard back," LIPA trustee Sheldon Cohen said to PSEG Long Island president Dan Eichhorn.

"We all find that a little concerning after the months of negotiation that went nowhere," Cohen said, noting LIPA’s unsuccessful efforts to negotiate an acceptable new contract.

"Can you represent to us that we’re operating in good faith here, that this is not going to devolve into a back-and-forth again that’s just going to waste time, because the board has no patience for that," Cohen said.

Eichhorn replied that PSEG was, "definitely operating in good faith," and disagreed that the company wasn’t acting with urgency.

Eichhorn said the contract proposal had been undergoing a series of reviews, including by outside experts.

He said "a lot of people are involved," but were working on it "diligently."

LIPA trustee Al Cockfield pressed Eichhorn for a timeline because, he said, "we don’t feel that [urgency] on our side."

Trustee Drew Biondo remarked, "Perhaps we need insurance."

Eichhorn assured them, "it’s a fairly detailed document and you should see our comments back this week."

If LIPA and PSEG were to come to terms on a final contract, it wouldn’t take effect until January.

An agreement would require a 30-day public review period requested by Assembly members, along with reviews by the state attorney general, the state comptroller, the state Department of Public Service and LIPA trustees.

By Mark Harrington

mark.harrington@newsday.comMHarringtonNews

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