Power switch needed at LIPA

The Long Island Power Authority is powerless.

The debacle surrounding its attempt to award a new long-term operating contract for the delivery of electricity demands a strong response from Gov. Kathy Hochul.

Most customers pay little attention to LIPA as long as the lights are on, the bills are affordable, and the wires get reconnected quickly after an outage. While the weather gods haven’t challenged the grid recently, LIPA itself is beset by storms that are undermining its governance and that can put at risk the system’s reliability and affordability.

After last year’s bruising effort to make LIPA a municipal entity went bust, LIPA remains a hybrid. The state-controlled public authority oversees and awards an operating contract to a private utility, currently PSEG-LI, that expires at year’s end. LIPA’s structure has been in place for 27 years and has yet to prove itself as adequate. And there seems to be no plan for what comes next after the LIPA board rejected a unanimous and “strong” recommendation from a selection committee — which included interim chief executive and former Public Service Commission chair John Rhodes and two industry veterans — to award a long-term contract to Quanta Services. The only other bidder was PSEG which was considered to have the inside track. Unfortunately, the selection committee’s 150-page “scoring” report that gave Quanta higher ratings than PSEG has not been made public.

With the process now in a shambles, the state Inspector General is investigating whether the decision-making was on the up and up. LIPA officials and its board members are lawyering up, all on the ratepayer dime. There is no clear legal path to awarding a new contract that won’t be beset by litigation.

Hochul needs to flex her growing muscle as a deal maker and contact PSEG president Ralph LaRossa directly to negotiate a short, perhaps two-year contract extension. Any effort at Thursday’s scheduled LIPA board meeting to push through a five or 10-year extension for PSEG would be a terrible mistake at this juncture. LIPA must release the scoring report, with needed redactions for sensitive financial data. Does the staff’s unanimous choice or the board’s rejection hold up to scrutiny?

While Hochul’s predecessor might have micromanaged LIPA, Hochul might have gone too far in the other direction. Her office needs to be involved in the search for a new CEO with deep operational experience to guide the board through a new bidding process. Hochul must also take a critical look at her current board choices to see whether they have the necessary range of management expertise and top-level utility experience to guide LIPA.

Finally, a new bidding process should solicit proposals from investor-operated utilities for both a long-term operating contract and purchase of the transmission and distribution system — essentially, renting with an option to buy. Awarding another contract, without fully analyzing the Island’s future need to invest in the system’s aging infrastructure, would compound the foolishness that has already taken place.