A smarter LIPA adjustment
LIPA electrical poles and wires in Yaphank Credit: Photo by James Carbone
The usual brawls over why the Long Island Power Authority overcollected for fuel costs and how that money should be refunded to ratepayers should be a thing of the past.
The utility needs $18 million more in the last three months of 2011 to cover an unbudgeted jump this summer in the cost of natural gas to generate power. While any extra dollar seems like a lot right now, the resulting $3 increase in the average monthly bill is how the system should work.
LIPA used to adjust rates too infrequently, which sometimes resulted in an overcollection of hundreds of millions. What would follow then was a controversy over how to make amends. At one point, public relations took precedence and there were silly, and costly- to-process, refund checks in small amounts.
Although it didn't involve the cost of fuel, the most recent uproar was in February, when LIPA revealed it had a $231-million surplus in the energy delivery charge because it miscalculated how much power was lost in transmission and distribution. When LIPA decided to pay it back over three years, there was withering criticism that it wasn't refunding quickly enough.
So the new quarterly adjustments initiated this year should result in smaller swings, either up or down, for the customer. For the first three quarters, the utility's projections held and there were no adjustments.
LIPA's costs are sometimes unpredictable -- consider the costs for Irene -- but moderating their fluctuation is a policy that's working. hN
