PSEG Long Island spent $9 million more than previously reported responding to a March storm that didn’t deliver the expected wallop the utility had planned for, driving LIPA’s annual storm costs over budget by 164 percent, the utility reported Wednesday.
The total bill for the blizzard named Stella has come in closer to $28 million, LIPA officials reported at a trustees meeting Wednesday. LIPA previously said the bill was $19 million, but more invoices have been tallied since.
LIPA chief executive Tom Falcone on Wednesday said the utility expects to receive federal reimbursement for up to 75 percent of the storm costs in Suffolk County, and is still awaiting word on whether Nassau costs will be eligible.
The storm budget for 2017 was $34 million but PSEG has far exceeded it, spending $44.5 million so far this year. The storm season began in June and continues through the fall.
One LIPA trustee suggested the utility address the overcharges by laying out more funding for those costs in its annual budget, rather than after storms.
“I think we need to address the budget, because [the budgeted amount] wasn’t realistic and I’m concerned with hurricane season just getting started,” said LIPA trustee Jeff Greenfield. “I don’t think our budget number was realistic.”
Falcone has strongly defended the plan to pre-hire outside workers in advance of storms.
“It will always be the case that in some cases you pre-position resources because you’re expecting a very bad storm and it doesn’t happen,” he said earlier this year. He described the practices as equivalent to buying an insurance policy and said quick storm restoration of outages was “the number-one thing our customers want from us. They want reliable service including when there’s a storm.”
PSEG also Wednesday reported at the trustees meeting that it has met or exceeded 22 of the 24 service metrics thus far this year to receive more than $9 million in extra incentive pay at year’s end, but that two critical measures of system reliability—outage duration and outage frequency—are currently below target. Further, the PSEG said there’s a chance it may miss the target for outage frequency for the year.
“While we are working hard every day to improve all facets of our reliability metrics, we acknowledge that achieving the [outage frequency] metric is not assured,” PSEG spokesman Jeffrey Weir said. PSEG missed the outage frequency and duration metrics last year, though it exceeded target scores in other metrics, and was awarded $9.23 million. Had it hit the other measures it could have earned $9.32 million.
Falcone said the large amount of construction on the LIPA system is one of the major factors in PSEG’s missing the two metrics year to date. But as the New Jersey-based company concludes most of that work over the next year, outages will decline markedly, he said, noting that PSEG is still outperforming other utilities.
“I suspect on reliability when we get past this historic level of construction we’ll improve,” he said, adding that customer satisfaction surveys show customers perceive overall reliability is vastly better than several years ago.
In addition, PSEG officials said they are taking directed steps to cut outages to those customers who experience multiple power losses during the year, sending crews to those so-called circuits to prioritize enhancements. The utility hired an outside consultant to look at reliability issues.
Newsday last year reported that a newly implemented safety procedure by PSEG could allow managers to manipulate the duration of outages during repair work to meet performance metrics and earn bonuses. PSEG, while acknowledging the practice increased overall outages, investigated the claim but said it found the charge without merit.