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PSEG to miss two incentive performance measures this year

PSEG Long Island confirmed it will miss two critical measures of performance and reliability for LIPA customers in 2016, reducing the amount of extra pay it can receive by up to $700,000, officials said.

PSEG Long Island president and chief operating officer David Daly on Tuesday said the company will fall short of the target for the duration of outages and their overall frequency. The company expects to meet 19 other measures, including customer satisfaction and billing.

“We’ll miss the targets for the year,” said Daly. He said the company has an action plan in place to improve reliability, which includes upgrading parts of the grid that are the poorest performing and automating worker safety equipment.

PSEG had a year-end target of 0.92 average system outages per customer during the year, excluding major storm. It ended the year with 1.04 average outages per LIPA’s 1.1 million customers. The duration of average system outages was 72.5 minutes, above the target 68.5 minutes.

Daly cited an increased incidence of storms (there were 21) in 2016, as well as worker safety procedures that add to the total number of outages (while reducing their duration), and issues related to the company’s outage management computer system. While the system was found to have double counted some outages, around 70,000 of which were removed from the total count, the new computer system is also more accurately counting outages that the previous National Grid-operated system missed, Daly said.

One utility watcher expressed concern about the shortfall.

“It’s always concerning when you don’t meet those targets because that’s really the fundamental measure of how good you’re doing as a utility,” said utility expert Matthew Cordaro, who also sits on the LIPA board. “I’m interested to see how they straighten that out and how well they fix things . . . Anytime you improve reliability it takes a while.”

PSEG can earn up to $8.7 million for meeting all 21 service metrics, atop its $58 million annual management fee.

Last year, PSEG missed performance targets for worker safety. And while LIPA allowed the company to reset the base for the measurement this year, Daly said the number of accidents and their severity have been reduced by double-digit percentages this year.

PSEG has previously said it might miss the two performance measures, which are averages for the entire year.

In other news this week, PSEG has completed work for a broad review of LIPA’s power sources, a project known as the integrated resource plan. Daly said the company is now “pulling the data together” to present it to LIPA, which will hold hearings next year to make decisions about future power sources. The review had been expected early last year, but it has continually been pushed back, including this summer after New York state requested that PSEG include offshore wind-energy scenarios and elements of the state Clean Energy Standard into the calculations.

The resource plan is working on the assumption that LIPA has plenty of excess power to get it through at least the next decade without adding additional resources. Still, LIPA next month is expected to add a 75-megawatt wind-farm off the Rhode Island coast to help power the South Fork, along with battery storage and a $500 million transmission system upgrade in Southampton and East Hampton.

The plan could be approved at a LIPA trustees meeting in January.


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