The Long Island Power Authority had announced that it will postpone its decision to October 27th on its structure with the possible awarding of a new long-term contract to manage its transmission and distribution system (more or less remain as is), privatize or transform itself into an accountable transparent full service municipality.
The Newsday editorial points to the decision of filling board vacancies and the chairman’s position should occur prior to the Board’s “decision making day”. This is an important first step however it is also critical that CEO slot also be filled shortly thereafter. All selections must be highly qualified industry experts and not just “friends of the family”
Sweeping and dramatic changes must occur to get LIPA in to a efficient, fully functional utility and having the right people to make these important decisions must be in place as soon as possible.
The LIPA ship has been rudderless for far too long and it is critical that we as ratepayers have a complete understanding of what’s “under the hood” and through the Governors move of ordering the Inspector General to audit LIPA’s operations this will offer critical and necessary insight. Would it not be prudent to have this audit available to the public prior to any board decision?
The existing contract with National Grid does not expire for 27 months and by delaying the board decisions by several months or even 6 months does not necessarily mean that an extension with National Grid has to take place, regardless of the choice of structure. Larger and certainly more complex business transactions have occurred in less time. Since LIPA is unregulated it makes the timetable all the more favorable.
With all the critical decisions that must be made and Inspector General audit that must be completed it becomes all the more obvious that we can not allow haste with the decision of LIPA’s new structure until all unfinished business is finalized. We cannot afford another mistake let alone more of the same.
Updated: September 25, 2011 9:32 PM
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.