PSEG-Long Island's plan to take control of the LIPA grid on Jan. 1 includes a revamped strategy to respond to storm-related outages through better management of the workforce, new computer and communications systems, and a pledge to hit the ground running by trimming more trees.
Given that LIPA's much-criticized response to superstorm Sandy was often cited by Gov. Andrew M. Cuomo as the reason for dismantling the agency, no single measure of PSEG-Long Island's performance will be as closely watched as its ability to respond quickly to storm-related outages.
PSEG officials have been reassuring in interviews, public presentations and LIPA board meetings over the past several months. They point to a plan to trim more trees, to install a new storm-tested leadership team with a best-in-class logistics plan, installation of a better automated phone system to respond to a deluge of calls, and the rollout of a $30 million storm-outage management computer system as underpinnings of that confidence.
"There's a very clear history of a change that's needed immediately," said PSEG-Long Island president David Daly. "We are replicating PSE&G's storm response process. We [the Newark-based utility] think we've been recognized by customers and peers in industry as having one of the best storm response processes in the industry."
During superstorm Sandy, LIPA had more than 10,000 line workers in the field, repairing record damage to the system. That giant increase from contractor National Grid's usual force of 375 line workers overwhelmed the system for keeping field workers busy, fed and housed, LIPA officials have said.
"The whole trick to effective and timely storm response is keeping people productive," Daly said. "You're never going to get it done with your own people. The trick is how do I keep what is a 10-time increase in resources from out of state productive?"
From PSEG's perspective, the answer is logistics: making sure every person imported to work for LIPA has a place to sleep, meals, transportation, vehicles that are fueled, work materials and a manager assigned to keep him or her busy at all times.
"The ability to do that is absolutely critical," Daly said. "We have what has been recognized in the industry as one of the industry's best logistics practices, and we're going to be replicating that here," he said.
PSEG track record
The performance in New Jersey of PSE&G, an older sibling to PSEG-Long Island, during Sandy suggests Daly's claims are not far-fetched.
Through November 2012, PSE&G restored twice the number of outages -- 2.1 million in all -- as did LIPA, with about half of LIPA's workforce and at around a third of the price. PSE&G also restored power four days faster, according to a Newsday analysis.
Observers agree the promises to do better have been reassuring, but say the proof will be the first storm. Already there are complications. The company is still waiting on a ruling from the IRS that would guarantee LIPA's tax-exempt status before rolling out the PSEG-Long Island brand. It could come soon, but may not happen until next year, leaving the LIPA brand as the face of the new utility until it does.
If the IRS denies it, PSEG will revert to its more limited contract, and LIPA will assume a front-and-center role in managing the utility -- and storm response.
"That becomes a huge issue," said Nassau Legis. David Denenberg (D-Merrick), who has been encouraged by PSEG's plans. "If this scaled-back version [occurs] . . . where so much more of the management control of our electrical service moves back to LIPA, the changes PSEG wants can't go through."
Concern: Workforce split
Denenberg said he's also concerned about the split-up of LIPA and National Grid workforces, particularly during storms, where gas workers won't automatically go to work helping with electric restoration, as is now the case with National Grid operating both systems.
"We could have a lack of cooperation between PSEG and National Grid, and finger-pointing," as a result, he said.
It's not just a logistics system that will differentiate PSEG from its predecessor.
LIPA's decision (on PSEG's recommendation) to spend $30 million on a new outage management system to automate storm response and reporting was a major one that required board approval and will add to the $5.1 billion PSEG contract over the next 12 years. The new system promises to bring 21st-century technology to what had been an outdated system that relied on paper maps and required the collation of paperwork tickets at day's end to tally the progress.
PSEG aims to have the system fully operable by next July. Indeed, it can earn $1.2 million in additional compensation if the project goes live "no later than mid-July 2014."
The payment shows how critical LIPA considered the need for a more modern outage system. Incorrect or missing information about outages on its website during Sandy led customers to quickly lose faith in the system -- and fill the streets in protest.
According to a proposal approved by LIPA's board, the new system, called the CGI Outage Management Solution, is a "mature, proven and comprehensive system, which will utilize tested PSEG storm management processes, and will significantly reduce risk."
The new system manages a storm restoration centrally, "significantly improv[ing] the ability to identify and manage outage conditions and level of information" for customers."
PSEG says the system provides more accurate outage data and more timely restoration information for customers. It promises to reduce customer complaints by having better data, lower costs to operate and maintain, and improved accuracy in the identification of outage locations.
The PSEG system led LIPA to scrap one that had been partway through development by Atlanta-based Efacec ACS Inc., one that LIPA said had been hampered by "numerous delays, setbacks and other concerns about the viability of the project." LIPA had spent around $11 million on the scrapped project.
Even as it spends more on a new computer system, PSEG has reduced LIPA's overall budget for storm restoration next year. According to the recently approved budget, the outlay for storm restoration in 2014 is $47.8 million next year, down from this year's projected $66 million, an 8 percent drop. Asked why, PSEG spokeswoman Karen Johnson said, "Our ability to reduce this part of the budget was a result of the improved storm process we are bringing to Long Island."
In addition to technological upgrades in how the utility responds to storms, PSEG said customers will see differences when they try to contact LIPA to report an outage or request a repair. There won't be any additional call-center operators, but the intuitive phone system will more quickly get people to the department they want, and it will allow them the option to be called back at a more convenient time.
PSEG will upgrade the LIPA website to reflect those improvements in reaching out to the utility. It will allow customers to get text messages, emails or calls with responses. PSEG is also leasing many existing National Grid-owned LIPA call centers so customers can visit an office to lodge a complaint.
Thomas Bjurlof, an energy expert at Bruguel Advisors and a resident of Port Jefferson, said PSEG will surely benefit from the fact that the old ways are changing. "When you make a change of any kind, performance improves radically," he said. "My prediction is that PSEG is going to do quite a lot better, at least initially."
The problem, he said, is that PSEG will still have to deal with a distribution system strung through yards and trees limbs that requires constant upgrading and maintenance, and requires capital investment for fixes.
"The problem longer term is the politics and the burden of the contracts," he said, referring to the billions of dollars in capacity agreements LIPA is tied to for decades. "It is just going to make it so expensive [to fix the grid] that it's going to crash again."
Daly pledged that PSEG will vastly improve the quality of information customers get when a storm and outage hits. Communication, he said, includes "accurate information about where we stand" in making repairs, and precise details "upfront during a storm around what the damage is and what we're looking at" to fix it.