Questions surround LIPA hurricane prep price tag

When her husband, Richard, called from the Throgs Neck Bridge to report that a convoy of Michigan utility trucks was on its way to Long Island in advance of Hurricane Earl, Amy Nyhus, of Nesconset, said she felt confident that the region was prepared - to the point of pride.

But in Earl's anticlimactic aftermath, those feelings of pride have been replaced by sticker shock.

Ratepayers like Nyhus, and a roster of public officials, are questioning LIPA's spending in light of the overblown storm's $32.7-million price tag.

Most of the money went to hire the outside crews and pay their travel, food and lodging costs. No restoration work was needed. "So, basically we hosted a 30-million-dollar pajama party," Nyhus said.

In an interview Friday, though, newly named LIPA Chief Operating Officer Michael Hervey defended the utility's actions, saying the staffing levels were directly in line with the forecast of a Category 2 hurricane with sustained 30- to 40-mph winds passing near the Long Island coast. "And we still had a 15 percent chance it would be worse than we were planning for," he said. Hurricane Bob in 1991, which led to 470,000 outages, was the closest storm to Earl in terms of potential impact, he said.

Some political leaders aren't convinced.

At the urging of Sen. Charles Fuschillo (R-Merrick), state Comptroller Thomas DiNapoli agreed last week to review costs to see whether a full audit is warranted.

"I want to see what really went wrong here and why we're stuck with a nearly $40-million bill," Fuschillo said Thursday.

Suffolk Legis. Wayne Horsley (D-Babylon) has called Hervey before his energy committee next month to explain the spending and the decision-making.

Ratepayers responsible

Lawmakers and watchdogs say that whether or not LIPA resorts to a bill increase to pay for storm expenses, ratepayers still will foot the bill - as they do for all LIPA activities.

Even as LIPA tries to get federal reimbursement, it faces long odds because Long Island didn't experience damage from the storm - or receive an advance emergency declaration from President Barack Obama.

Critics are using the costs to remind people that LIPA has no outside oversight.

Assemb. Robert Sweeney (D-Lindenhurst), who has sponsored legislation for Public Service Commission oversight of LIPA rate hikes, said the spending focuses a glaring light on the need for an independent review of LIPA so that customers know how money is being spent.

"As it is right now, the ratepayer has no way of knowing," Sweeney said. "That lack of accountability is never a good thing."

Acknowledging the 1,600 staffing level before the storm was unprecedented for LIPA, Hervey said cost is considered every step of the way, but there are other considerations.

"We understood what the daily commitment would be and that we were committing to crews two, three days away in some cases," he said. "We try to do it at the least cost we can, but the primary consideration is reducing the number of days of outages. We balance that."

Gerald Norlander, executive director of the Public Utility Law Project, an Albany watchdog group, said unlike LIPA, private utilities in the state must justify the "prudency"of storm spending tied to any rate increase in hearings before the Public Service Commission. If rejected, the costs are ultimately borne by shareholders, a factor that weighs heavily in private utility spending. For LIPA, an appointed board of trustees oversees spending.

Utility went all in

"It does seem as though LIPA took a deep plunge that was irrevocable," Norlander said of the anticipated Earl costs. "It may have been a reasonable decision under prudency standards, but there's no independent overseer to determine that."

While LIPA wins an honor badge for being prepared, lawmakers wonder why LIPA decided to bring in so large a force before the storm had come within range of U.S. shores.

"Every one of the reports that I saw indicated the storm would miss Long Island by 150 miles," said Suffolk Legis. Ed Romaine (R-Center Moriches), who said he now plans to reintroduce LIPA oversight legislation in October. "I think this goes back to the problem that, when there is no oversight, you don't learn from your mistakes."

Some said the Tuesday commitment to 1,600 far-flung contractors should have been cut in half, with contingencies made to hire more as more about Earl became known. "They had the ability to put the crews on standby for deployment instead of having them on Long Island, but they pulled the trigger" too soon, Horsley said.

Hervey dismissed the idea. "There is no standby for off-Island crews," he said, adding Long Island would have been left vulnerable if the storm had worsened, as competing utilities might have hired the crews.

LIPA filed paperwork with the Federal Emergency Management Agency after Suffolk County issued a pre-hurricane-strike declaration. Hervey said it's "very uncertain" whether FEMA would reimburse storm preparation costs.

March storm different

The March nor'easter led to a federal disaster declaration, so LIPA was able to qualify for disaster relief. It is still working with FEMA to complete the agency's review of its $51-million storm claim.

That nor'easter was the biggest storm the power company has faced in 20 years, but such declarations are rare.

Through all the outcry over Earl, new storms continue to brew in southern waters.

Nyhus, the Nesconset ratepayer, acknowledged storms "must be frustrating to predict."

Hervey said his main concern about Earl's aftermath is that Long Island will let its guard down.

"From the standpoint of staffing, my fear is that with all the attention this puts on preparedness, people and agencies who are expected to respond will put too much thought into the attention and then underestimate the next one," he said.