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LIPA to double its reserve for storms for next year

LIPA crews work on Chester Avenue in Massapequa

LIPA crews work on Chester Avenue in Massapequa Park after a storm caused trees and power lines to topple over. (March 16, 2010) Credit: Newsday / Karen Wiles Stabile

After overspending its storm budget this year by $153 million, the Long Island Power Authority said it will nearly double the amount it reserves to tackle storms in its 2011 budget. And customers will have to foot the bill.

LIPA officials said they will set aside as much as $50 million to respond to storms next year, a $23 million increase over this year's reserve. That increase could result in a rate increase of just under 1 percent, LIPA officials said. For a consumer with a typical bill, the increase could amount to under $1.50 a month.

Storm costs have ballooned for LIPA as the past two storm seasons have been unusually severe.

LIPA's chief operating officer Michael Hervey has said LIPA's preparations for Hurricane Earl - which threatened to wallop Long Island last month but left without causing any outages - were in part based on the financial impact of long-term outages. "I'd rather be having a discussion about being overprepared rather than being underprepared," he told a hearing held by the Suffolk County Legislature's energy committee. LIPA had hired 1,600 crews from across the country to travel to Long Island in advance of the storm, with the expectation of restoring large numbers of outages.

LIPA spokeswoman Vanessa Baird-Streeter said authority officials were reviewing the 2011 budget to find ways to avoid tacking the bulk of this year's $180 million in unexpected storm costs onto next year's rates as well.

In any case, she said, next year's reserve increase "will have to come from our customers."

At the recent legislative hearing, Hervey said the authority will set aside $40 million to $50 million in its proposed 2011 budget. This year's storm reserve budget was $27 million.

Some $54 million of the $180 million spent to date on storms is expected to be reimbursed by the Federal Emergency Management Agency.

Meanwhile, state Comptroller Thomas DiNapoli is reviewing LIPA's storm costs to see if a full audit is warranted. A spokeswoman for DiNapoli said the comptroller is awaiting documents from LIPA to make that determination.

Hervey, at the hearing, said the decision to bring in outside workers ahead of the storm was part of a "new way of looking at storms," with the idea of cutting outage restoration times in half.

By contrast, Progress Energy, a utility that services coastal areas of the Carolinas, which was forecast to receive the brunt of Earl, decided not to call in extra crews.

Jeff Brooks, a spokesman for Progress, said the utility had the option to call in crews from neighboring utilities in advance of Earl, but decided to rely instead on its own regional crews, which numbered in the hundreds. Federal authorities declared North Carolina a disaster area before Earl hit.

"We were able to function in that storm without bringing in other additional resources," Brooks said. In the end, Progress Energy's 1.4 million coastal customers were largely unaffected by the storm.

Suffolk Legis. Wayne Horsley, who chairs the energy committee, took aim at what he called LIPA's "D-Day response" to Earl, which he viewed as "an overreaction." Referring to a March nor'easter that caught LIPA largely flat-footed, with outages lasting a week, Horsley said, "I think the March storm seemed to have really thrown them - they didn't want to be caught off-guard again."

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