Seat new board before deciding LIPA's future
August 30, 2011-A Long Island Power Authority (LIPA) lineman identified only as "Mike" goes up in a bucket ladder to restore power to a section of Melville Road in South Huntington. More than 100,000 LIPA customers are still without power more than 2 days after Hurricane Irene struck Long Island. (photo by Kevin P. Coughlin) Credit: Photo by Kevin P Coughlin
After months of ignoring the obvious, the trustees of the Long Island Power Authority finally realized there was little choice but to postpone decisions on the structure of the public utility and the awarding of a new long-term contract to manage its transmission and distribution system.
During this three-week delay to Oct. 27, Gov. Andrew M. Cuomo should make his three appointments to the board, including the chairman, and instruct them to take a sharper look at the options for LIPA's future. Sen. Majority Leader Dean Skelos of Rockville Centre, who also has a trustee slot to fill, should choose someone with a fresh perspective and strong business and transaction expertise.
These new members should push National Grid, the private utility that actually operates LIPA's system -- and one of the bidders for the new contract -- for a one-year extension. With that breathing room, a newly strengthened board might cast a skeptical eye on a report by the Brattle Group, a consulting firm, whose main recommendation is to tweak the status quo by creating a new operating entity. That might actually make things worse, supposedly giving LIPA more accountability but probably even less control over how things get done.
At the very least, the new board chair should take another look at selling LIPA. With interest rates so low and so much investment money on the sidelines, how many billions would LIPA fetch? Proceeds from a sale could be used to reduce LIPA's debt, a significant factor in its high rates. A private utility would also be subject to regulation by the state Public Service Commission, which has long been at the top of the wish list for the elected officials who use the utility as a publicity piñata. In the year the consultants have had to determine that privatization would raise rates, there could have been a solicitation of bids, which would have provided some real numbers.
Another option, complete municipalization, would put most of the National Grid workers servicing LIPA on the state payroll -- making it a political live wire no one will touch. But that scenario really provides some insight into the problem -- the cost and the workforce that runs the system will remain the same. If Grid were to lose the contract to either of the other competitive bidders, Consolidated Edison and Public Service Electric and Gas of New Jersey, almost all of those workers would join the winner to service LIPA, driving the same fleet of trucks, but with different uniforms and logos. As ratepayers may already have figured out, that won't change their high electric bills.
Another top priority for the new chair is to put in place a specific storm-response plan, not only to improve recovery after the high winds pass, but to spare us the hot wind politicians emit after each storm. Those who blistered LIPA for spending too much money last year to prepare for Hurricane Earl, which didn't hit, are now criticizing LIPA for not being armed to the teeth with out-of-state crews in advance of Irene. The typical bill for the Earl nonevent was $30 a customer. Ask anyone whether $30 was a fair price for an insurance policy to get their power back soon.
Determining a new direction for LIPA will require the power of bold leadership and big ideas. The opportunity shouldn't be lost.
