LIPA rate hike's appropriately gauged

Matthew Cordaro's Opinion piece "LIPA's 2011 rate cut is shortsighted" [Nov. 24], contains incorrect and misleading information related to LIPA's 2011 budget and rates, and demonstrates a lack of familiarity with the Long Island Power Authority's governing tariff.

Cordaro accuses LIPA of "manipulating an increase in delivery charges and a decrease in the power supply charge," when in fact LIPA is merely applying its tariff as required. LIPA's tariff requires the power supply charge to be set at a rate that reflects the anticipated actual cost for fuel and purchased power each year. To the extent that those actual costs are higher or lower than expected, LIPA must adjust that rate accordingly.

However, LIPA, like other utilities, cannot use money collected for fuel and purchased power costs to offset the delivery charge portion of customers' bills. LIPA must adjust the power supply charge downward if it projects the cost of fuel and purchased power to be lower in the next budget cycle. Thus, it is not a "strategic mistake" for LIPA to reduce the power supply portion of its customers' bills, as Cordaro suggests, but rather a fundamental requirement that is consistent with industry standards.

The proposed budget does not affect the existing plan to retire the acquisition debt associated with the Shoreham nuclear power plant by 2013. This debt reduction will allow LIPA to reduce future borrowing because more cash will be available to fund capital investments.

While Cordaro continues to criticize LIPA's high debt, nowhere in the discussion is it disclosed that he was part of the Long Island Lighting Co.'s executive team, which is partly responsible for saddling LIPA's customers with this high debt burden that is associated with the now-defunct Shoreham plant.

LIPA's 2011 budget is not "an attempt to sway public opinion with a small rate reduction," as suggested by Cordaro. Rather, the 2011 budget reflects a carefully managed and fiscally responsible plan for providing quality service to customers in the upcoming year.

Dave Feldman

Uniondale

Editor's note: The writer is LIPA finance budget director.