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PSEG disappointed by executive pay disclosure requirement

Two months after passage of a bill that requires PSEG Long Island to disclose the pay of its management team when requesting a rate hike, a utility official expressed disappointment that it passed and said the company is “considering its options.”

Among the concerns about that law and 34 other new pieces of legislation introduced in the state Legislature this year is that they may alter the terms of the 12-year contract PSEG signed in 2013 with the Long Island Power Authority to manage the electric grid.

“I think we’ve removed a lot of politics from how the utility is run and really focused on it as a business, and focused it from a customer satisfaction standpoint,” said PSEG Long Island president and chief operating officer, Daniel Eichhorn, in an interview last week. “We want to make sure what we signed up for to run the utility stays that way. And it doesn’t migrate back to being influenced greatly from the outside. We think we can run a great utility.”

The law, which was introduced by Assemb. Fred Thiele (I-Sag Harbor) and Sen. Kenneth LaValle (R-Port Jefferson) and signed into law by Gov. Andrew M. Cuomo in December, amended the LIPA Reform Act of 2013 to require disclosure of pay, bonuses and contract costs. Its introduction followed a report in Newsday in which a PSEG lawyer in 2015 said the LIPA Reform Act explicitly provided for the company to keep salaries and contract costs secret.

Thiele rebuffed the notion that the compensation law was about politics. Rather, he said, it’s “about transparency and accountability. Ratepayers have a right to know how their money is being spent.”

LIPA officials must file annual financial disclosure statements with the state that list savings, stock and retirement accounts, real estate and other holdings, even the salaries of their spouses. Annual salaries of state employees are available on publicly available databases. PSEG had been under no such requirement.

Eichhorn said PSEG had been aware the legislation had passed the Assembly last June, but hadn’t expected the governor, whose office helped negotiate the PSEG contract, would agree to it. “We were disappointed when it got signed,” Eichhorn said.

He noted the bill requires more than just revealing executive pay amounts, including management bonuses.

“The bill itself was more than just disclosure,” Eichhorn said. “It gave the Department of Public Service the ability to look at our management fee and evaluate it. I would say we’re still trying to get full handle on the impacts and we’re evaluating our next steps.”

The law would require the disclosures only as part of a rate-hike proceeding, which Eichhorn said could take place in 2019, with a possible increase in 2020 to 2022.

Eichhorn declined to say if the “next steps” included legal action, as some have suggested, because the law may be viewed as a breach of PSEG’s 12-year contract with LIPA.

But it’s not just the disclosure bill that has raised alarms, he said, noting, “There’s other stuff in the legislature this year that we’re concerned over. We’re looking at our options on that” as well.

One bill would allow LIPA trustees to veer from a narrow set of three criteria when voting on a rate hike and include the impact of an increase on customers. It also would prevent “LIPA from increasing rates to offset revenue losses due to ratepayer energy-conservation efforts.”

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