LIPA reviews of businesses credit under fire

The Long Island Power Authority is conducting a comprehensive credit review of all its 200,000 commercial customers, and demanding higher security deposits for those it deems a risk.

In a Feb. 17 letter to some of its business customers, LIPA said the review is "an effort to protect the interests of all ratepayers." LIPA spokeswoman Vanessa Baird-Streeter said Tuesday that such reviews are done "periodically."

"LIPA engages in credit reviews of our commercial customers as a normal course of business to ascertain their financial solvency, which is common practice among NYS PSC regulated utilities," she said.

"LIPA engages in this analysis to protect all LIPA ratepayers from having to potentially subsidize businesses that are seen as a credit risk. LIPA uses Dun and Bradstreet as well as Experian to provide credit worthiness of our customers.

"LIPA is more than willing to work with our commercial customers and will review additional documentation provided by the commercial customer to see if it meets the financial criteria required."Baird-Streeter said the reviews "could be done monthly," and that in the latest cycle of reviews, 35 letters went out.

But one commercial customer who received the letter, who asked not to be identified because he feared retribution from LIPA, said his company had never gotten one before in more than 20 years in business. The letter said he owed LIPA a security deposit or a little more than $5,000.

A copy of the letter, sent to one commercial customer and obtained by Newsday, said the review "is based on many factors and includes financial-related information provided to us by agencies such as Dun & Bradstreet and Experian."

Based on the review, the letter to the customer said, "LIPA has determined that your current security deposit is less than allowed by our tariff and state regulations" and thus LIPA said the customer must pay a security deposit for a little more than $5,000.

"Failure to pay the deposit amount required by the date specified on your bill may result in the issuance of a disconnect notice," the letter said.

Citing privacy concerns, Baird-Streeter said she could not discuss any individual customer. Only those commercial customers whose security deposits were determined to be "less than allowed" by "tariff and state regulations" received letters, Baird-Streeter said.

She said also customers can challenge the D&B/Experian findings, and if they prove they do not fall below certain standards they do not have to pay higher security deposits.

"We encourage our customers to reach out to us," Baird-Streeter said. "LIPA is more than willing to work with them. They can reach out to us. They don't [need] to go to Newsday first."

Assemb. Robert Sweeney (D-Lindenhurst) said it was unfair "to blindside businesses in an economy like this based on some sort of Wall Street formula. This has the potential to be a job-killing" idea.

Suffolk Legis. Edward Romaine (R-Center Moriches), who is behind a new LIPA oversight committee for the county, argued the LIPA policy could have a "chilling effect" on business.

"In a time of deep recession on Long Island, this is an action that is going to have a chilling effect on business expansion," Romaine said. "I question if this action is necessary at this time. Obviously, it's not taking into consideration the need of trying to maintain a viable business community."

He said he's going to ask the new committee to examine the rules that LIPA said allow such credit scrutiny.

LIPA trustee Neal Lewis, who heads the Sustainability Institute at Molloy College, said that in the year he has been on the utility's board, the matter of security deposits has not come up, and that perhaps it should. Lewis said he would be talking to other trustees about the matter in coming days.