Officials: Expect hike in your LIPA bill

Long Islanders can expect an average $3 monthly hike in their LIPA bills starting next month as the utility moves to recoup a projected $18 million budget gap in its fuel bill before year's end, officials said Tuesday.

LIPA chief Michael Hervey said the bill increase was unrelated to the record-smashing $176 million tab for power restoration after Tropical Storm Irene.

Instead, he said, the hike follows LIPA's new policy of reviewing and adjusting bills quarterly rather than biannually to reflect changes in fuel prices and other costs.

Either way, it's not sitting well with storm-ravaged ratepayers. "They have got to be kidding," said Estrea Janoson of Searingtown, who lost power for seven days during Irene.

Rather than pay an increase, she said she intends to deduct $700 from her next few LIPA bills to cover food spoiled during the outage. "The timing of the increase is just so absurd it's not even funny," she said.

The rate increase will show up as a roughly 4 percent rise in the power supply charge portion of customers' bills. Power supply charges are the cost to produce electricity and make up about half of a bill; the other half, the delivery charge, which went up in the spring, won't be increased now.

Hervey, noting the increase still leaves LIPA rates below January 2008 levels, said the utility is reviewing its 2012 budget to calculate whether to increase rates to recoup the anticipated $44 million in Irene-related costs that may not be reimbursed through federal disaster relief funds. LIPA expects 75 percent of the costs to be reimbursed.

Meanwhile, Hervey said he expects LIPA to have enough cash on hand to pay the tab for Irene from contractor National Grid in the next few weeks. It takes four to six months for federal disaster funds to be processed and approved. Hervey noted LIPA has cash from a rate stabilization fund and a recent bond offering, each about $250 million, to fund operations after paying the storm bills.

Although fuel costs -- including those for natural gas that powers 99 percent of LIPA-contracted plants -- have largely stabilized, the utility saw a $44 million jump in its bills from May through July, Hervey said.

LIPA hopes to find cost savings to stave off a January rate increase related to Irene, he said. LIPA has filed tax grievance cases to dispute assessments for several of the largest power plants on Long Island, including National Grid units at Northport and Port Jefferson. Rulings in LIPA's favor could cut costs by tens of millions of dollars a year.

Hervey said LIPA will consider monthly reviews and bill adjustments, although for now quarterly adjustments appear to best address the authority's desire to keep bills stable. Most privately owned utilities adjust bills for items like fuel on a monthly basis.

The new quarterly bill adjustments, begun in January, were in part a response to criticism of LIPA's past practice of overcollecting hundreds of millions of dollars to pay for projected fuel costs.