The Scoop

Thiele: LIPA Reform Act—One Year Later, Where’s the Reform?

During the 2013 State Legislative Session, the “LIPA Reform Act” was passed with much fanfare. It was supposed to rescue Long Island from the decades long nightmare of LILCO and LIPA. I voted against the bill, not because LIPA didn’t need real reform, but because this legislation did nothing to help Long Island ratepayers. Instead, it transferred our energy future to a New Jersey based company and eliminated any regulatory checks and balances. We deserved better.

It has now been a year since PSEG-LI took over the reins and began to manage Long Island’s electric utility for LIPA. For those who were skeptical and thought nothing would change. You were wrong. It’s gotten worse. Let’s look at the record.

Rates- Remember the promise that electric rates would not increase for three (3) years? Read the fine print. They were only talking about the delivery charge portion of the electric bill. We have seen substantial increases in the power supply charge which makes up about 50% of the electric bill. The power supply charge spiked 81% between September and December, in no way reflecting the actual market price of natural gas. Ratepayers saw increases in the power supply charge in 7 of the last 12 months. LIPA’s management of the power supply charge has made electric bills not only higher, but unpredictable for consumers.

Debt- We had always been told that our rates for electricity on Long Island were high because of the Shoreham debt that ratepayers had to assume to close the plant. That happened in 1986 nearly 30 years ago. Since that time debt levels have not gone down as LIPA refinanced and increased debt again and again to keep rates stable. LIPA still has an excess of $7 billion in debt, most of which is no longer related to Shoreham. In the year since the LIPA Reform Act, debt has actually increased. LIPA issued $799 million in new debt this year. Increased debt ultimately means increased rates.

Renewable Energy- On the South Fork of Long Island, we have been told for years that residential growth had increased the demand for power. It was this demand for power that resulted in the need for increased transmission lines that were controversial first in Southampton, and now in East Hampton. The answer to these transmission lines was clear. We needed to generate additional renewable power to be self-sufficient on the South Fork. We were also told that under the LIPA Reform Act we would maintain the commitment to renewable energy sources such as solar and wind. So what happened in 2014, LIPA extended a contract for upstate nuclear power costing $159 million. At the same time, it reduced its plan to build 280 megawatts of green energy to 122.1 megawatts. It also rejected a wind energy project off-shore of the East End that would have reduced reliance on fossil fuel and made the south Fork more energy reliant. Another commitment disregarded.

Consumer Satisfaction- A year later, Long Island still gives its electric utility the lowest ratings of consumer satisfaction in the nation. PSEG-LI apparently has no interest in improving this rating, judging by the way they handled the transmission pole controversy in East Hampton. First, they refused to apply the same policy that had been established by LIPA for the burial of transmission lines in Southampton. Then, they simply refused to talk to the community and elected officials. Now they are defending lawsuits from both town government and community residents. They have demonstrated a level of arrogance that is reminiscent of the LILCO/Shoreham days. I can assure PSEG-LI that increases in rates, increased LIPA debt, abandonment of renewable energy promises, and utter disdain for long established community interests like rural character and the environment is not the formula for increased consumer satisfaction.

The one element that is common to all of these continuing problems is the same one that plagued LILCO and then LIPA for decades: the lack of real and meaningful checks and balances on the electric utility, whoever manages it. Long Island’s electric utility should be operated for the benefit of Long Island, not Albany politicians, Wall Street, or New Jersey stockholders. A shell public authority at LIPA, a State Public Service Department office on Long Island with no teeth, and a New Jersey parent utility company with no New York oversight is not how the interests of Long Island are going to be protected.

Instead, we need to (1) create a State Consumer Utility Advocate to protect consumers, (2) restore the oversight that was removed from the State Comptroller and State Attorney General under the LIPA Reform Act, and (3) give the PSC real power to oversee Long Island’s energy future instead of granting an unregulated monopoly to an out of state company. These should be top priorities for the 2015 Session.

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