Legislation to reform the 2013 reforms of the Long Island Power Authority were introduced this week by state Sen. Ken LaValle and Assemb. Fred Thiele. They’re fine election-year fodder, but utterly unworkable.
Take, for instance, these three demands in the bill: Give the state Department of Public Service the full ability to accept or reject proposed rate increases, rather than merely make recommendations. Give LIPA trustees discretion to consider and reject rate hikes based on their financial impact on customers. And let voters elect eight of the nine (currently appointed) trustees.
Who has the final say over rates, LIPA or the Department of Public Service? How many voters would opt for the trustee who says, “We need higher rates to harden the system against devastating storms,” over a candidate who says, “We need lower rates because so many customers are on fixed incomes”? And what should be done about the terms of many of the bonds the authority has issued to borrow money, which ban the Department of Public Service from setting rates?
The bill also would remove the prohibition against LIPA buying cheap hydroelectricity generated upstate from the New York Power Authority. But that prohibition was included as a concession to upstate lawmakers to win their support for the creation of LIPA. And it was included in the 2013 LIPA reform legislation for the same reason. LaValle has said in past years that bills allowing LIPA to buy that upstate hydroelectricity are nonstarters because that would mean taking the cheap power from current users, a political impossibility.
The proposed bill would allow Long Island municipalities to create their own power companies, and that sounds reasonable. Competition could help lower prices, right? But LIPA makes multi-decade deals to buy power from the plants that generate it, which in turn creates funding to build and maintain the plants. So if a municipality creates its own power company and reduces the demand on LIPA for electricity, LIPA’s obligation to pay for all that power still remains. Rates for everyone outside any new municipal-owned power company would increase.
The easiest and fairest way to stop LIPA rate increases is to stop fighting to maintain the painfully inflated property tax assessments on aged power plants. They cost ratepayers hundreds of millions of dollars a year. But LaValle, who represents voters in Port Jefferson whose property-tax bills are kept artificially low by the overpayments for a power plant in his district, won’t support that.
One thing keeping LIPA bills under control is a provision in the 2013 law that caps annual increases in LIPA’s property tax bills at 2 percent, but Thiele has actually introduced legislation to end that cap, which would drive up power bills.
The LIPA reforms after superstorm Sandy seem to work. Service has improved, and the rate-increase process worked. After three years of no rate increases, PSEG Long Island asked for a $387.5 million hike over three years. LIPA and the Department of Public Service examined PSEG’s case and reduced that by $100 million.
That’s the reality, regardless of the political theater.
— The editorial board