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Cuomo Signs Away ‘LIPA As We Know It'

ALBANY-“Today marks a bright new day for residents and businesses on Long Island,” Gov. Andrew Cuomo said Monday after signing legislation to privatize utility operations on the island. At a ceremony in which he pasted a PSEG logo over the Long Island Power Authority sign on a utility truck, the governor proclaimed an end to “the tragedy of LIPA,” and said the legislation he signed “ends the LIPA as we know it,” creating a new utility system for Nassau and Suffolk residents. It was a change the governor had sought for some time.

 “LIPA has offered lackluster service for too long, and after its failure to perform during Superstorm Sandy, it was clear we needed a change,” Cuomo said Monday. “With today’s bill signing, ratepayers on Long Island are getting a utility whose operations will be run by PSEG with its award winning record of performance during disasters. This legislation also seeks to establish a rate freeze for this year and the next two years while adding, for the first time, real state oversight of Long Island’s utility operations to ensure continued service and accountability.”

A study commissioned by Cuomo after Sandy blamed a “dysfunctional bifurcated structure” for LIPA’s poor customer service, high rates, large debt load, insufficient and antiquated infrastructure and failure to perform during natural disasters, the governor’s office said Monday.  Consultants, rather than in-house utility managers, called the shots on resource/capital investment, the study concluded, and the power authority was not subjected to any state oversight. 

Under the legislation signed Monday by Cuomo, New Jersey-based PSEG will have full authority to manage daily operations as well as budgeting, operation and maintenance of the utility system; storm preparedness and response; infrastructure improvements; and energy efficiency and renewable activities. LIPA will be reduced to a holding company with a small board in order to remain government-owned and therefore eligible for FEMA and tax benefits.

LIPA’s $6.7-billion debt load has remained constant since the 1990s and accounts for nearly 10% of ratepayers’ bills, Cuomo’s office said in June. The debt will be pared down by refinancing about half of it under a lower interest rate.

 

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