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Cuomo Wants LI Utilities Privatized

ALBANY-The Long Island Power Authority‘s operations would be privatized under legislation introduced Monday by Gov. Andrew Cuomo. Public Service Enterprise Group Inc., which owns New Jersey’s largest utility, PSEG, would take control of Long Island operations in a plan that Cuomo said would “end LIPA as we know it.”

The move to bring in New Jersey-based PSEG as overseer of daily utility operations in New York City’s eastern suburbs had been in the works for some time. The slow pace of post-Sandy cleanup and utility restoration “made it undeniably clear that the LIPA status quo was unacceptable and that we needed to create a new Long Island utility system,” Cuomo said in a statement.

He said his plan would provide “a new structure that is designed to put ratepayers first by prioritizing better customer service, reducing the cost of debt, and placing the new utility under strong oversight. We are also pleased that the new utility company is seeking to freeze rates for three years, because Long Islanders have paid too much for too little for too long.”

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. 

If Cumomo’s legislation is approved, PSEG would 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, the governor’s office said Monday. The debt would be pared down by refinancing about half of it under a lower interest rate.

 

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