A state legislative commission on the future of LIPA faced a crowd decidedly polarized on the prospect of shifting to a fully public utility, with labor leaders expressing continuing concerns about the new structure’s ability to guarantee their existing pay and benefits.
The first of four public hearings this month took place at the Suffolk Legislature in Smithtown Tuesday, where more than 100 people gathered to express a mix of optimism and worry about the prospect of LIPA operating the grid without the helping hand of PSEG Long Island.
The prospect of up to $75 million in annual savings from a more accountable public utility was countered by what some feared would be the LIPA where patronage, high rates and poor service became the norm. “We don’t trust government on Long Island,” said Luis Mendez of the business group, Empowering Young Professionals.
LIPA, a state authority, was originally envisioned as a fully municipal utility but has never operated as one, instead turning to a rarely used public-private model that relies on an outside corporation to manage the grid under long-term contracts.
“We finally have an opportunity to go back and fix it,” former LIPA trustee Shelly Sackstein, chairman of business group Action Long Island, told legislators on the commission. “It should have been a fully municipal utility in the first place.”
Most vocal among the contingent of voices in opposition to a fully public LIPA was PSEG, an entity that has the most to lose should LIPA shift models (its contract with LIPA expires at the end of 2025). The New Jersey-based company has been lobbying for more than a year to convince lawmakers to keep the system the way it is.
Sitting among a contingent of PSEG staffers at the hearing was Kristen Walsh, president of lobbying firm Tonio Burgos & Associates, which last PSEG paid more than $82,000, Newsday has reported.
“Our future is at risk,” said PSEG senior director/vice president Christopher Hahn, himself a former Tonio Burgos vice president, who suggested the anticipated monthly savings of $3 per customer from the shift wasn’t worth the risk. “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.”
But two commission reports and testimony by LIPA chief executive Tom Falcone indicated a fully public utility without PSEG could be accomplished with quick and significant savings.
“You could replace the 19 people PSEG provides by hiring about six,” for the new utility, and save more than $70 million a year, he said, noting those top PSEG officials cost ratepayers around $4.5 million each.
Asked how a new LIPA board would keep him and his team accountable, Falcone said, “The board can fire me,” or adjust his pay.
Falcone told legislators there wasn’t a lot of time to waste, and that LIPA was already preparing to put the contract out to bid for other contractors to operate the grid as a contingency in case the effort doesn’t result in legislative action early next year.
“Time is of the essence, and we are at a fork in the road,” he said.
One major item on the commission’s to-do list is coming up with legislation that includes the list of protections union members have been demanding since the effort began over a year ago.
“Full municipalization endangers the livelihood of our entire” membership, said Patrick Guidice, business manager of Local 1049 of the International Brotherhood of Electrical Workers, which represents some 2,000 PSEG workers. He urged disapproval of elected board members, something the commission has already decided against in favor of an appointed board.
Assemb. Fred Thiele, (D-Sag Harbor), co-chairman of the committee, reiterated repeated assurances to labor leaders that their concerns would be addressed.
“If we are not able to find a solution that protects labor this isn’t going to happen,” he said of the committee’s effort.
Thiele noted that the municipalization effort was about more than a potential $2 to $3 monthly savings for customers. Under the new structure, he said, “The public would be more involved in their utility, and that would lead to better decisions” from a more transparent, accountable LIPA.
Tuesday’s Suffolk meeting will be followed by a second Thursday at the Nassau Legislature at 10 a.m., followed by two more next week, one in the Rockaways and another in Southampton. The commission will complete its report by the end of November, and lawmakers are expected to use it to draft enabling legislation early next year, possibly as part of the state budget.
Gov. Kathy Hochul’s office has yet to weigh in. “We will review the final report from the commission,” Hochul spokesman Avi Small said.