LIPA board greenlights $200M contract for largest LI solar farm
LIPA trustees on Wednesday approved a $200 million contract to construct the largest solar farm on Long Island, in an area of Calverton that is already home to solar projects.
Riverhead Solar 2, owned by AES Corp. and Alberta Investment Management Co, would increase average customer bills around 24 cents a month when it’s in operation by June, 2023, officials said.
The Riverhead Solar 2 farm, at a planned 36 megawatts, will be slightly larger than the 32-megawatt installation built at the Brookhaven National Laboratory a decade ago. The new project will have a 20-year contract during which LIPA is expected to pay the owners $200 million, according to LIPA board resolution.
A megawatt of solar can power around 125 homes. Solar now comprises around 800 megawatts of LIPA’s more than 5,800 megawatts of capacity. The board's vote Wednesday authorizes LIPA chief executive Tom Falcone to finalize a contract for the project, for which LIPA will only pay for energy delivered to the LIPA grid.
Falcone called the project "a great milestone" for LIPA, one that's been in the works since 2015. "It will deliver thousands of megawatts of new clean energy" to the grid over its 20-year contract, he said, noting it can be extended by another 10 years.
During a trustee oversight committee meeting, board members pressed PSEG Long Island president Dan Eichhorn about the utility’s customer satisfaction scores and its perceived slowness in finalizing its new contract with LIPA.
Trustee Elkan Abramowitz expressed frustration that PSEG's JD Power scores were "not moving fast enough" in a positive direction, and worry that future storms could reduce the score. Eichhorn, after noting that the score increased to 697 out of a potential 1,000 compared with a post-Isaias low of 652, acknowledged the company’s still ranks 16th of 17 large eastern utilities.
"I wish I could hear some sense of urgency that I don’t hear," Abramowitz said.
Eichhorn said while JD Power score "didn’t increase as much as we wanted it to," he added that he didn’t agree with Abramowitz’s characterization of a lack of urgency. He said PSEG had "cured" storm response issues and added, "I am not afraid of a storm. I think a major storm will benefit us greatly" in showing how prepared the company was for it.
Falcone, who noted that credit ratings firm Fitch recently increased its outlook for LIPA to positive from stable, replied, "I want to go on the record as saying I don’t welcome a major storm."
Trustees Sheldon Cohen and Laureen Harris pressed Eichhorn on the timeline for completing negotiations for the LIPA-PSEG contract and on task-force recommendations for PSEG in the aftermath of the storm. "We want to put this on a strict timeline," Harris said.
Cohen decried the "plodding behavior and a culture" at PSEG in advancing the contract, adding that "we need to address this one way or another."
Eichhorn replied, "We will continue to negotiate in good faith. It is our preferred option to have a negotiated settlement. We’ll continue to meet and discuss and try and close the gaps."
Among the points being reviewed, according to a PSEG briefing, are the new performance metrics PSEG will have to meet to receive as much as $40 million of its annual fee of about $80 million. LIPA expects the contract, set to take effect in January, to be finalized and approved by year’s end.
Also on Wednesday, PSEG Long Island reported that it has completed around 95% of its planned deployment of smart meters in the service territory of 1.1 million customers — a $300 million project that Eichhorn said is ahead of schedule and under budget.
The meters use wireless technology to give the utility real-time information on customer usage, eliminating the need for meter readers. It can also give PSEG real-time information about outages, but that won't be maximized until PSEG rolls out an updated version of its outage management system later this year.
Officials during the LIPA board committee meeting Wednesday morning noted the utility has spent $117.1 million responding to storms this year, more than double the budget plan of $46.7 million. PSEG cited storm costs for an increase of $73.8 million in the delivery service adjustment, a portion of which could show up in customer bills in January.
LIPA said it was currently reviewing the 2022 budget and couldn't yet say how the increased storm costs would impact bills come January.
PSEG said it has spent around $30 million working to fix computer systems that failed during Tropical Storm Isaias, including around $3.5 million spent in August.