LIPA reorganization eliminates job of official who filed ethics complaint, sources say

LIPA plans to eliminate its acting chief operating officer position by year's end in a move that would terminate the tenure of a second high-level official who filed an ethics complaint tied to bidding practices at the utility, according to people familiar with the planned reorganization.

LIPA last week internally disclosed that acting chief operating officer Werner Schweiger, one of LIPA’s most experienced officials and highest level executives, would see his position eliminated on Dec. 31, the sources said.

Schweiger was one of two officials at LIPA who filed an ethics complaint in June that raised questions about pressures brought to bear to alter scores in LIPA's yearlong process to find a new grid operator, the sources said. LIPA has since hired an outside law firm to conduct an internal probe, Newsday has reported.

LIPA, in a statement Tuesday in response to Newsday questions, said it had begun a "comprehensive" management review last year following recommendations from a Department of Public Service management audit of the utility in 2022. Newly named LIPA chief executive Carrie Meek Gallagher previously had been Long Island director of DPS.

LIPA did not comment specifically on Schweiger’s status or say who would be next in line in any executive management succession plan.

Schweiger and two other LIPA officials, former senior vice president Billy Raley, and former interim chief executive John Rhodes, for more than a year comprised an internal LIPA committee that reviewed new potential candidates to take over grid management as PSEG’s contract expires at year's end.

Raley in September told Newsday he’d been pressured to lower bidding scores on five separate occasions during the procurement process. He also told Newsday he’d  been told by a top LIPA official that he was "in the crosshairs" to be fired because he resisted the pressure to change bidding scores. LIPA has said it does not comment on personnel issues.

Raley and Schweiger earlier this year met at length with investigators of the state Inspector General's Office as part of the agency's ongoing probe of the utility, according to Raley and other sources familiar with the interviews. The Inspector General's Office did not respond to a Newsday request for comment. Raley also filed an ethics claim alleging LIPA pressured senior staffers to lower PSEG’s new performance metrics, Newsday reported.

After their yearlong review of bids, the three men on the procurement committee "strongly" recommended Houston-based Quanta Services to replace PSEG to operate the LIPA system, according to LIPA board documents.
But LIPA’s board voted in April to reject the committee’s recommendation and, one month later, canceled the bidding process entirely. LIPA’s board of mostly appointees of Gov. Kathy Hochul then voted to extend PSEG’s contract for five years. It awaits approval of the state comptroller after the state attorney general gave it the green light in October. Mark Johnson, a spokesman for comptroller Thomas DiNapoli, in an email said, "Our only comment is the contract is still under review."

Ken Lovett, a spokesman for Hochul, declined to comment on LIPA's reorganization or the termination of Schweiger’s position. In the past he has said Hochul "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."

LIPA in its statement to Newsday said its "extensive process" of reviewing management roles included a "comprehensive assessment of every department at the authority, reflecting LIPA leadership’s vision for a high-performing, accountable organization that can meet the demands of today’s energy landscape."

The assessments "clarify responsibilities, strengthen performance management, and improve internal alignment. The goal is to ensure that LIPA is structured for long-term success while continuing to deliver reliable and affordable power to Long Island and the Rockaways," LIPA said.

DPS audits of LIPA in the past have advised the authority to deepen the level of utility experience in management. Schweiger and Raley between them had 75 years of experience. 

"For a utility operating within this business model, the need for strong management skills and a deep understanding of the nuances of utility operations [are] critical," the state audit said.

Before joining LIPA under former CEO Tom Falcone as executive adviser for operations in 2023, Schweiger had been executive vice president and chief operating officer of Eversource Energy, the New England utility. He had also been vice president of electric operations for the Long Island Lighting Co., LIPA's predecessor, and at KeySpan. 

Rhodes, a former Public Service Commission chairman who once served as an energy adviser to the White House, left LIPA this summer, after Gallagher, a long-rumored front-runner to replace him, was installed as CEO after a unanimous board vote in July.

At one point, a LIPA resolution cited an official's ownership of Quanta shares during an early part of the procurement as LIPA's board voted to cancel the procurement altogether. Rhodes at a board meeting noted he sold Quanta shares, in a fund managed by an outside adviser, as soon as he learned about the position in December, well in advance of any Quanta recommendation.

Quanta in October filed a lawsuit against LIPA in state Supreme Court in Mineola seeking to forestall the PSEG contract extension, charging the procurement process was "unlawful." LIPA has denied the claims and noted Quanta filed the suit beyond the statute of limitations. 

By Mark Harrington

mark.harrington@newsday.comMHarringtonNews

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