Gov. David A. Paterson on Friday vetoed a bill that would
have required the Long Island Power Authority undergo regulatory review for
rate increases above 2.5 percent, dashing hopes for greater oversight of the
In vetoing the bill, Paterson said it would cost the Public Service
Commission more than $5 million annually to implement it, and the PSC "lacks
the resources." He also expressed concerns it would "impair and diminish" the
value of financial agreements LIPA made with its bondholders, among other
The veto follows unusual bipartisan support for the legislation after it
languished for years in Albany.
Critics point to increases in homeowners' LIPA bills created by "fuel
surcharges" exceeding 30 percent over the past five years, with virtually no
scrutiny of the utility.
State Sen. Kenneth LaValle (R-Port Jefferson) on Friday said he'll revive
it. "We're not going to go away on this issue," said LaValle, the bill's Senate
sponsor, adding he hopes to resubmit it before year end. "It's too important."
LIPA lobbied hard against the bill, saying it would have increased
borrowing costs and forced it to hire more staff to document increases for
Two rating agencies, Fitch and Standard & Poor's, issued negative outlooks
for LIPA debt after news of the legislation came to light, though neither
lowered their rating.
Assemb. Robert Sweeney (D-Lindenhurst) said LIPA elicited the concern from
the credit agencies by alerting them to the legislation. LIPA "went to the
rating agencies and campaigned against the bill," he said, arguing that
management's efforts to defeat it follows a pattern at LIPA.
"My experience with LIPA is they've talked a good game in terms of wanting
accountability and transparency, but when push comes to shove they always find
reasons not to do it," Sweeney said.
LIPA chief Kevin Law said Paterson "did the right thing" in vetoing the
bill, "and I support his decision." Calling the bill "well intentioned," Law
said it had the "unintended consequence of increasing costs for ratepayers." He
said he'd work with the legislators to find "other ways" to address their
Sweeney said rate increases such as the two LIPA has implemented this year,
including a 3 percent hike this summer, necessitate scrutiny.
"There's a desperate need for oversight at LIPA, especially considering the
high rates we have," he said. "You'd think that LIPA would want that oversight
to demonstrate to the public they're not playing games."