Is LIPA ready for winter?
The Long Island Power Authority, still twisting in the political winds because of its dismal performance after Sandy, enters the real season of blizzards and ice storms without the leadership it needs, and with no precise measure of how and where it remains vulnerable to the elements.
The explosive frustration over the utility's failure to prepare for the October superstorm and its inability to communicate basic information about restoration has driven the review of LIPA in two directions: looking back at what went wrong and ahead at what structural changes are needed.
But this is no time to forget the here and now.
Michael Hervey, who has been the acting CEO since Gov. Andrew M. Cuomo took office, has taken the brunt of the criticism for LIPA's failure. He is leaving at the end of the year, as are some top deputies. Those who remain must be responsive to the public and the two state investigations, and they must oversee the work of National Grid, which has operational control of the system. They are exhausted, demoralized and rudderless.
Until last week, LIPA's 15-member board of trustees had seven vacancies and enough internal turmoil to create uncertainty over whether it could find a quorum to perform routine business. So on Tuesday night, Cuomo, in a rush to stabilize the authority, elevated Lawrence Waldman, an accountant whose term had officially expired more than a year ago, to be chair, and appointed Michael Maturo of RXR Realty to be a trustee. The patch provides some continuity, and probably enough votes to pass LIPA's budget on Monday.
The board's disarray got an urgent response from Albany, because Cuomo had to placate nervous financial rating agencies. With $7 billion in outstanding bonds, any downgrade -- and that is still a risk -- would be costly for ratepayers. Although bondholders couldn't find a better bet for a secure cash flow than a monopolistic utility, investors are routinely warned in the prospectuses offering LIPA bonds that it is subject to political interference.
Or, sometimes, a surprising lack of it.
Cuomo still has to find a few more board members with the skills most needed now. In the past, we have said a 15-member board was too unwieldy. An 11-seat board seems more workable, but even at that reduced number, there would be two more seats to fill. They should be filled with trustees who will bring to the table a fresh perspective on LIPA and considerable expertise in finance, business or engineering.
And the governor should make it a priority to find a chief executive who can provide stability and functionality. This is akin to asking someone to enter a leper colony -- and for much less pay than at a private utility.
Besides the day-to-day operations, this new CEO must oversee the intricacies of switching the management of the electrical system from National Grid to PSEG of New Jersey, which won the contract to begin operating the system in 2014. As part of that process, the LIPA chief will have to determine who from Grid should stay on, what equipment and other property belongs to LIPA and who will keep track of that inventory.
And, throughout this process, is PSEG getting all the data and briefings it needs to take over?
Here are a few of the reasons why we need a sense of urgency:
With no automated outage notification system likely to be in place anytime soon, how will LIPA know who has lost power in another major storm?
When LIPA establishes a timeline for restoration, who will communicate it? And how? There isn't anyone there capable of doing more than writing a simple press release.
Does LIPA know how many of the restorations made after Sandy are not permanent ones? In many cases, it will only be able to calculate what was done and who performed the work when it gets detailed bills from the out-of-state utilities. That's many months away.
LIPA doesn't deny that some parts of the system were especially vulnerable because temporary repairs made after Tropical Storm Irene in 2011 were never upgraded. Emergency fixes are necessary to quickly restore power, but will they withstand a weather event like the crippling ice storm of 1978 that left 300,000 without power for four days?
Some homeowners are reporting that post-Sandy replacement wires are thinner than the downed ones still lying to the sides of the roads in many communities. Are these replacement wires strong enough?
None of these questions will be answered by Cuomo's commissions. Those investigations are designed to publicly build a case for replacing LIPA. That bar isn't too high.
In his Jan. 9 State of the State speech, the governor is expected to address how some entity will improve the delivery of power on Long Island. LIPA is now a public authority that owns its transmission and distribution system but contracts its operation to a private utility, currently National Grid. The other options are finding an incredibly creative way to deal with LIPA's debt and sell the system to a private operator -- or devising yet another public-private hybrid that can be more effective than a public authority to provide reliable power and stable rates.
For this project, Cuomo would need to find a skilled quarterback to oversee what could be two years of complex financial, legal and legislative transactions. The 1998 sale of the Long Island Lighting Company to LIPA was one of the biggest deals in the nation. Reversing it will be just as monumental. But that person is probably not the same one who should be charged with keeping the lights on.
What angry and worried LIPA ratepayers will hear in January from Cuomo are plans for what may happen down the road. But he must also devise a good plan to keep post-Sandy costs stable and service reliable -- after failing to pay proper attention to LIPA during his first two years in office.
For now, between the subpoenas and the firing squads, LIPA needs to be put back together again. We know LIPA failed and we know it needs to fixed. What we don't know is who's in charge and who will lead us into and through the next big storm.