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Cuomo challenger Zephyr Teachout criticizes LIPA Reform Act

Democratic gubernatorial candidate Zephyr Teachout speaks to supporters

Democratic gubernatorial candidate Zephyr Teachout speaks to supporters in Brooklyn on Aug. 7, 2014. Credit: AP / Peter Morgan

The LIPA Reform Act was an unconstitutional giveaway of vital public power to private company profit interests and should be challenged in court, said Democratic gubernatorial candidate Zephyr Teachout.

Beginning a Long Island campaign tour Friday, Teachout, a Fordham University law professor who is challenging Gov. Andrew M. Cuomo in a Sept. 9 Democratic primary, said in an interview that the governor's handling of LIPA reform demonstrates that he is "not a true Democrat."

"His plan was to privatize instead of taking responsibility for improving public services," Teachout said.

She criticized Cuomo's handling of the Moreland Commission on public utilities, which laid the foundation for the LIPA law, saying he "strong-armed" the commission to "come to the conclusion he wanted," which initially was to sell LIPA to a private company. In the end, the commission concluded that LIPA's operations should be managed through a long-term contract with PSEG, while LIPA retained ownership of the electric grid.

"What we saw with the Moreland Commission was a disrespect for the role of public commissions," Teachout said. The result: "The commission ended up taking accountability away from LIPA."

The Cuomo administration referred comment to its campaign, which did not respond.

One element of the law removed review of PSEG contracts by the state attorney general and comptroller. "Rate increases and lack of accountability is what the people experienced here," Teachout said.

Higher debt has also resulted: LIPA expects to end the year with a record $7.8 billion in debt, and much of last year's $358 million debt increase was tied to debt securitization in the reform act. Teachout said the act was a bigger gift to Wall Street than to Main Street.

"The profits were privatized and the risks were publicized," she said. "We have a governor who has served Wall Street interests repeatedly. I can tell you this isn't in the public interest."

As governor, Teachout said she would reconvene a Moreland Commission to review the LIPA Reform Act and the prior commission's conclusions.

She said she would work with the attorney general and comptroller to "look at whether the legislation is unconstitutional" and perhaps "go to court and say, 'Is this shift against the state constitution?' "

The LIPA legislation created a new role for the Department of Public Service to scrutinize LIPA and its contract with PSEG, but the agency doesn't have full jurisdiction over either company. It has a "review and recommend" role, and can't levy fines for nonperformance, as it can at all other state utilities.

"Review and recommend is not power. It's not accountability," Teachout said. "We need to move immediately to restore the oversight."

Teachout said she would appoint people to the LIPA board of trustees who "would be advocates for the people and for renewable green energy."

She said she supports a decentralized grid that distributes power sources throughout the service territory, while relying less on large, centralized fossil fuel-burning power plants.

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