In widely disseminated email from a LIPA Trustee last night it appears that the selection of the ServCo structure conveys a “fait accompli” without any real substantive meaningful reasons on why he believes the ServCo is the “clear choice”.
In fact, the basis of his decision hinges on targeted points relating to renewable and energy efficiency programs – and independent on broader issues that will likely eclipse any benefits that may be derived from even the best programs. We generally agree with significant investment in energy efficiency and renewable energy programs, effectively implemented.
In a broader context, the LIPA Oversight Committee has performed a detailed analysis of The Brattle Report and we do not see any clear distinction between the ServCo and Full Municiplization structures. In fact, the Brattle Group states:
“We found a “bright line” difference in cost and rate impacts between the Privatization option, on the one hand, and the Municipalization and ServCo options on the other. In contrast, we found that cost differences between Municipalization and ServCo are likely to be quite narrow”
From a purely statistical standpoint Brattel is essentially stating from a rate cost perspective it’s a toss-up on selecting either the Full Municiplization or ServCo type structures.
Throughout the 189 page Brattle report this point is substantiated many times in many different ways, so one has to ask is the “clear choice” with selecting the ServCo model that the LIPA Trustee refers to merely a clear choice that he wants?
The Trustee further speaks to complications with bringing employees into the State’s retirement system. Specifically what complications is he referring to? The existing Labor work force, approximately 1400 workers, has a contract that is in effect until February 2015; so what is the complication? Exactly what Legislative approval is required and what are the suggested difficulties when weighed in context to the economic stability and viability of Long Island? LIPA already is a partial municipal authority.
The Trustee further states “developing very expensive computer systems” as a reason why ServCo has an advantage. Isn’t a new system going to be delivered regardless of the model selected? Under what scenario is this necessarily a complicated feat?
The existing structure with National Grid has proven itself wanting on all fronts, whether it is cost associated to storms, customer satisfaction, or the total lack of transparency relating to the $600 million in outstanding pension debt. A deliberate change in course is not only appropriate, it is necessary for our mutual benefit. On behalf of the utility and its ratepayers, the LIPA Board should forestall a decision on this issue. Until information already presented to the Board is clarified in the proper context any decision would be inherently flawed.