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Letters: Confusion on catch-up LIPA charge

PSEG and LIPA towers along a power line

PSEG and LIPA towers along a power line in Commack on Dec. 2, 2014. Credit: Newsday / J. Conrad Williams Jr.

The public misunderstanding continues that the monthly change in the "fuel and purchased power" supply charge is anything other than a pass-through expense of only the actual fuel and purchased power costs ["Power bills up again," News, Dec. 2].

Each of the major electric utilities in New York calculates a comparable charge on a monthly basis. The Long Island Power Authority uses the most current forecast of fuel and power costs to calculate the charge for the coming month, allowing for the collection of the majority of costs as close to the month of use as possible.

This component of the bill has, and continues to be, a pure pass-through of costs. Higher or lower commodity costs, higher or lower energy consumption, and weather patterns are factors that can be different than were forecast, and, as such, may lead to an under- or overcollection in a particular month. These affect the time at which the actual fuel and power costs are recovered from customers, but not the amount.

Over the past year, Long Island's customer bills have had the least volatile fuel and purchased power charge and the most stable rate among all New York utilities. Two key factors contribute to this stability: LIPA pays only for the fuel that powers the generating plants under long-term contracts instead of relying on the often more volatile New York Independent System Operator-determined electricity-market clearing prices. Also, LIPA achieves economic benefits from its commodity hedging programs.

Newsday's editorial, "LIPA monthly ups, downs reflect energy markets" [Sept. 5, 2013], was accurate:

"LIPA bashers have short memories. The current outrage at the Long Island Power Authority over a monthly fluctuation in the power-supply rates is misplaced. These adjustments routinely occur at every utility in the nation to reflect global and regional fluctuations in the energy markets. Under LIPA's contracts with its generating companies, the cost of fuel -- up or down -- is passed on to the utility, which, in turn, passes it through to consumers . . . They just take some getting used to."

Tom Falcone, Uniondale

Editor's note: The writer is LIPA's chief financial officer.

Let me understand this ["Average power bill to rise $15 in November," Oct. 31]. On Long Island, the electric bill is going up $15, a jump of 27 percent following a 24 percent increase in the power supply last month.

Is this the deal Gov. Andrew M. Cuomo made with PSEG Long Island? Another rate hike without going to the Public Service Commission?

Any way you want to look at it, a change in the power supply charge is a rate increase. What really it comes down to is PSEG didn't make enough money because of lower fuel prices and a cool summer.

Alan Zederbaum, Holbrook