From the archives: LIPA boss drops expenses by $8M but may still hike '08 rates

The annual summer outing for LIPA employees is toast, as are the catered holiday party, greeting cards, a couple of high-level management positions, $5 million in outside legal and consulting fees and a chunk of the travel budget.

But will that be enough to stave off a rate increase next year? Don't bet on it, one source said.

In all, LIPA chief executive Kevin Law said yesterday, just over $8 million in expenses will be dropped from the 2008 budget, as the authority grapples with higher costs for fuel oil in determining whether or not a rate hike is needed for next year. The authority will release its proposed operating budget at a gathering at its Uniondale headquarters today.

Law declined to comment on the contention by one source that oil pricing pressures may force LIPA to propose a 2 percent increase next year. Noting yesterday that the budget was still being finalized, Law would only say that the "cost of oil looms heavy over us."

"I'm going to focus on things I can control and treat ratepayer money as if it were my own," Law said yesterday. "If I don't think the [spending] activity is appropriate for ratepayers, I'm going to cut it."

Law has already cut charitable donations and outside lobbyists from the LIPA budget, and has said he will sharply reduce sponsorships not tied to the authority's energy mission. This year's budget also will not contain annual incentive "bonus" payments for employees, though LIPA trustees will vote on any compensation packages. Law has said he would tie any sort of incentives to the authority's ability to lower rates.

LIPA in the past has sponsored two annual recreational gatherings for its 100 employees - a summer outing that Law said included a "cruise to nowhere," and a catered holiday party. "We shouldn't be using ratepayer funds for staff parties," he said.

Same for greeting cards. "It's a nice gesture," he said, but he's going to require that any such mailings come from employees' own pockets.

And while cutting at least two positions, LIPA is adding select new positions, including a new director of regulatory rates, to work with state agencies on a way to initiate a review of LIPA's books. "It shows my commitment to not being afraid to share our books," Law said.

Observers say the gestures are appropriate, and probably largely symbolic given LIPA's nearly $4 billion budget. Some past recipients of sponsorships say LIPA must be sparing with funds it doles out to belong to business groups such as the Long Island Association, one of the largest recipients of LIPA's sponsorship largesse.

The cuts are "largely symbolic but that's not a bad thing," said Neal Lewis, executive director of the Neighborhood Network, and environmental watchdog group that has received some sponsorship funding from LIPA in the past. More important is the message that LIPA is "doing its best to reduce expenses."

Environmental activist Richard Schary said he wants LIPA to stop all giveaways tied to programs and projects, including sponsorships of groups that support its power projects, such as the recently terminated offshore windmills. "In the past, our ratepayer money went to T-shirts and lapel pins to support the windmills," he said. "It's not what I want my money to go to."

POWER AUTHORITY'S CUTS

What the 2008 budget will exclude

$5 million in outside legal and consulting fees

The annual summer outing for employees

The catered holiday party

Greeting cards

Some travel expenses

Two positions, including a top-level operational role

Outside lobbyists

Charitable donations

Some event and organization sponsorships

Source: The Long Island Power Authority