The Long Island Power Authority Thursday reported a $164 million loss for 2012 as costs from superstorm Sandy, declining usage and slow-paying customers weighed on its finances.
The agency reiterated that it would use cash on hand and anticipated borrowings rather than a rate increase to fund the storm expenses as it awaits federal reimbursement.
LIPA has been under a microscope since Sandy hit Oct. 29, knocking out power to around 1 million customers and drawing the ire of Gov. Andrew M. Cuomo, who empaneled a Moreland Commission to investigate. Earlier this month, the commission recommended selling LIPA assets to a private company to fix its problems. LIPA trustees were briefed on Moreland Commission findings Thursday.
In its preliminary year-end financial statement, LIPA pegged restoration costs for Sandy at $933 million, but said it expects the federal government to reimburse at least 75 percent of that, or $699 million. The 75 percent federal reimbursement would leave LIPA ratepayers on the hook for $234 million in storm costs. LIPA says it expects the federal government might ultimately fund 90 percent or more of the total restoration costs.
Awaiting Irene funds
It's unclear how soon that funding could come -- LIPA is still awaiting some $60 million in federal reimbursements from 2011's Tropical Storm Irene, officials said Thursday. A spokeswoman for the Federal Emergency Management Agency, which processes the payments, didn't immediately have a comment.
It's not just the hefty storm bill -- by far the largest in LIPA's history -- that's weighing on the authority's finances. Total revenue for the year was $185 million under budget, tied in part to a sharp drop in bill collections from Sandy and lower usage.
LIPA collections in the aftermath of the storm were affected by reassigned meter readers and other workers, and delays in payments, officials said at the trustees meeting.
A total of 236,191 ratepayers were behind in paying their bills at November's end, and arrears totaled $159.2 million -- both the highest levels for the year. Most customers were 90 days late, representing some $65 million.
"We have seen a decline in our ability to collect money," LIPA controller Kenneth Kane told trustees. Some of the losses were offset by savings in other areas, such as lower fuel costs.
Ready to borrow
To help fund operations, LIPA has received board approval to seek a $500 million line of credit, and another $500 million in medium-term debt, among other borrowings.
LIPA ended the year with $350 million in cash, and Kane said with the anticipated borrowings and other funds, LIPA has around $1 billion to cover storm costs and fund operations in the interim. "I think that should be enough," he said.
As the board began to receive the first briefings on the commission's examination of LIPA's storm performance, trustees have begun to ponder the implications of a privatized LIPA.
Board member Jeffrey Greenfield took note of the hundreds of millions in anticipated federal storm reimbursements and asked Kane, "If we were a private utility, would we be entitled to FEMA reimbursement?"
Kane said no, adding, "I think you would be asking to raise rates now to recover those costs."
After the meeting, trustee Gemma de Leon said it was uncertain whether the LIPA board ultimately would get to weigh in on privatization, but observed, "It's pretty apparent Long Islanders are split" on the concept.
Newsday on Monday reported Long Island lawmakers want to explore the option of making LIPA a fully public power company, and expressed reservations about the numbers behind privatization.
Larry Schwartz, secretary to the governor, said all options would be explored, but said taking LIPA private would freeze rates for at least three years, and address storm response, debt repayment and customer confidence.