LIPA officials jumped the gun by a day in hiring 1,600 distant crews to travel to Long Island the Tuesday before Hurricane Earl at a cost to ratepayers of millions, according to a committee of authority trustees reporting Thursday.
At the same time, the committee said bringing crews early was justified given the competition for the crews from other utilities and the threat of a potentially devastating storm.
The trustees presented the report examining the Long Island Power Authority's response to the Friday, Sept. 3 storm that ultimately missed Long Island, after questions were raised about the $33.7-million cost to respond, including an estimated $21.6 million to bring the 1,600 people to Long Island, according to the trustees' analysis. In the end, the crews were not needed because the storm caused no outages.
Trustee David Calone, who headed the committee, said LIPA officials followed a policy established in 2006 of getting outside crews to Long Island in advance of the storm to help cut anticipated outage times in half.
Since crews are paid once they agree to come to Long Island, the clock started for most of them Tuesday, three days before the storm arrived. LIPA paid an estimated $2.1 million for crews on that day. From Wednesday to the following Sunday, LIPA paid an estimated $3.9 million a day for those crews, plus around $189,000 in hotel costs per day to house them. Hotel costs continued through the next week even though workers had left, because LIPA requested seven-day rates. It is seeking to reduce some of those costs by negotiating with hotels and other businesses.
"We would have liked to have held out a little longer in bringing in outside crews, but our fear was that they would be committed elsewhere," said Calone, explaining why LIPA committed to the outside crew so early.
Among the committee's recommendations was to refine a set of procedures LIPA uses in determining when to activate outside crews, including when to hire them as a storm approaches. Calone, who chaired the committee and presented the report at the LIPA trustees meeting Thursday, called the set of procedures a "sort of blunt instrument" that he suggested LIPA refine.
"Our actions were appropriate under the circumstances," said LIPA chairman Howard Steinberg.
A LIPA watchdog told trustees LIPA customers are stretched.
"You can't afford to waste money by prematurely bringing outside help based on questionable projections and a lack of intelligence," energy expert Matthew Cordaro, interviewed by the committee for the report, told trustees.
Calone and the committee recommended LIPA work toward a "just-in-time" policy for hiring outside crews closer to impact, examine contracts to see if LIPA can retain crews in advance of bringing them here, consult with local building trades to see if local workers can be trained to help in outages, and speak with other utilities to better coordinate outside crew hiring.
LIPA has been $170 million over budget in storm costs this year and will likely increase its reserves for 2011.