LIPA chairman defends Earl storm response but OKs probe

Long Island Power Authority chairman Howard Steinberg, at a meeting of trustees Thursday, defended the authority's estimated $32.7-million response to fizzled-out Hurricane Earl even as he initiated a board probe of LIPA's storm response measures.

"We don't just put a finger in the air and wait for the wind to blow," Steinberg said, defending the utility's decision to bring in 1,600 workers days in advance of the storm. That response, which ultimately proved unnecessary, was designed to quickly restore power after the storm, saving hundreds of millions of dollars businesses might have lost to an outage, he said.

The $32.7-million cost drew outrage from some public officials, who note LIPA operates without independent oversight. State Comptroller Thomas DiNapoli agreed to review LIPA's storm costs to determine if an audit is needed, at the urging of state Sen. Charles Fuschillo (R-Merrick). Suffolk Legis. Wayne Horsley (D-Lindenhurst) has asked LIPA chief operating officer Michael Hervey to appear before his energy committee next month to review the expenses.

Steinberg said he welcomed DiNapoli's probe. "If the comptroller wants to do a review, he's entitled to and that's fine with us," he said. "We're going to do our own review."

Trustee David Calone will head the storm review committee, which Steinberg said will look at LIPA policies for storm response and report back to the board next month.

LIPA officials who are drawing up the authority's 2011 budget say they will budget much more for storm restoration next year. This year's budget of $27 million barely lasted to the start of hurricane season - LIPA is $132 million over budget on storm costs this year. Some $58 million could be reimbursed by federal emergency funds, LIPA said.

At the board meeting, trustees also approved a measure to secure $490 million in new debt. LIPA said up to $240 million will be used to retire old debt at lower rates, a savings for ratepayers, while another $250 million will fund LIPA's capital budget for system upgrades and repairs.

The new debt would push the total amount of LIPA's debt to over $7 billion. Officials said by seizing on current low rates, LIPA would save an estimated $28 million, but Steinberg acknowledged rising debt is an issue at LIPA. "We are looking hard at steps to bring debt levels down," he said.