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Stop power plays on LIPA rate case

A request by LIPA and PSEG to hike

A request by LIPA and PSEG to hike electric rates will further stress a core of Long Island's aging population, AARP said in a study released Monday, June 29, 2015. Photo Credit: Newsday / Thomas A. Ferrara

In the coming weeks and months, Long Islanders will see something that hasn't happened in two decades. It will be a spectacle illuminating one of our deepest reaches: how much we pay for power.

The Long Island Power Authority rate case unfolding before state regulators with expertise in utility management is one of the better outcomes from the horror that was superstorm Sandy. What the post-Sandy changes didn't accomplish, however, was wringing the self-interest and politics from the task of providing electricity to 1.1 million customers on Long Island and in the Rockways.

LIPA remains a fetching piñata.

And that risks a return to the disastrous days when bad decisions were made simply to avoid a public flaying, such as when LIPA borrowed $1.2 billion rather than issue a modest rate hike. And it was done again after Sandy to freeze rates as part of the deal to get the larger reform in place. Now our children will be paying for fuel costs plus interest.

The LIPA Reform Act of 2013 set out to make the crippled authority and its mysterious ways more accountable. Performance is a priority. The new system operator, PSEG Long Island, is paid a fee but earns further incentives only if it meets strict metrics. The law is taking hold but hasn't yet achieved all of its goals. That's why state Comptroller Thomas DiNapoli's report last month rehashing his old arguments against the reforms provided heat but no light.

There is a determination to use data analytics to decide where and when to build new power generation.

And before ratepayers are asked to pay more in the next three years, the Department of Public Service, a newly created version of the Public Service Commission (because LIPA is itself a state authority), will scrutinize the request to decide how much revenue is needed to cover costs. This the first regulatory oversight of a rate increase since 1993, when the Long Island Lighting Co., an investor-owned utility, ran the system.

PSEG's initial ask of $441 million was reduced to $387 after the Department of Public Service challenged the utility's numbers. PSEG says the revised proposal would hike total bills a little less than 2 percent a year. Because this is an adversarial process, the DPS staff has countered with a lowball increase of $290 million. By Sept. 28, Audrey Zibelman, the head of both the PSC and DPS, will recommend new rates to the LIPA board, which has the final authority.

No one wants higher rates, but if they are needed, they should be in the smallest increments possible, and the money should be spent wisely to improve the system.

But beware of public officials who say not a penny more should be charged. State Sen. Kenneth LaValle of Port Jefferson and Brookhaven Town Supervisor Ed Romaine are the most vocal critics against any increase. Yet these are the same people who want to keep an aging and costly power plant operating in their community to keep local property taxes low while all of the Island pays the plant's sky-high overassessment.

If LIPA were to win its challenge to have old generating plants assessed at their current value, the $387 million rate hike would be wiped out -- no increase in the power supply part of power bills for three years. And if the assessment challenges had been settled for the sensible offer LIPA made in 2013, PSEG's proposed increase could be sliced by 30 percent.

Certainly, some policy issues are inherently political, such as whether Long Islanders should pay more to have their power generated by wind or solar sources. And the State Legislature must find ways to backstop the significant financial losses to local communities when and if inefficient fossil fuel plants are shut. But let's get real. The reliability of the electrical system has improved, and PSEG so far has competently handled weather-related outages. There is momentum and a process in place to slow the rate of future increases.

If we want to attract business development and jobs and keep future generations here, we should recognize that. This tradition of baseless bashing isn't helping Long Island.


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