New State Legislation To Provide oversight For LIPA Is A Necessary Compromise


The new state legislation to provide oversight for LIPA is a necessary compromise to gain the Governor’s approval of such a measure. In this regard it is a good initial step to control somewhat the unbridled authority of LIPA to do whatever it wants and perhaps something is better than nothing. However, there are still some aspects of the bill which raise concerns.

The most troubling of these is that the legislation allows LIPA to disregard management audit findings if it feels they are inconsistent with sound fiscal operating practices, existing contracts or its ability to provide safe and adequate service. In a nutshell, unless LIPA elects to play fair in the spirit of complete transparency, it can persist in operating as it always has, for example continuing to raise rates to keep Wall Street happy.

Other concerns with the bill include a murky complaint process for customer complaints, but for the most part the major problem is that it relies on LIPA voluntarily cooperating with an agency having no formal regulatory authority over it. Hopefully, public pressure will overcome this deficiency and make it difficult for LIPA to ignore what the new legislation is attempting to accomplish.

 S T A T E   O F   N E W   Y O R K        ________________________________________________________________________

           S. 6136                                                  A. 8957

                             S E N A T E - A S S E M B L Y

                                      (PREFILED)

                                    January 4, 2012
                                      ___________

       IN  SENATE  -- Introduced by Sens. LAVALLE, FLANAGAN, FUSCHILLO, HANNON,
         JOHNSON, MARCELLINO, MARTINS, SKELOS, ZELDIN -- read twice and ordered
         printed, and when printed to be committed to the Committee  on  Energy
         and Telecommunications

       IN ASSEMBLY -- Introduced by M. of A. SWEENEY, WEISENBERG, LAVINE, SCHI-
         MEL,  ENGLEBRIGHT,  THIELE,  MURRAY,  RAIA, CONTE, SALADINO, McKEVITT,
         McDONOUGH, MONTESANO -- read once and referred  to  the  Committee  on
         Corporations, Authorities and Commissions

       AN ACT to amend the public service law, in relation to the department of
         public  service;  to  amend the public authorities law, in relation to
         the Long Island power  authority;  to  amend  the  executive  law,  in
         relation  to  the  department of state; and to repeal a chapter of the
         laws of 2011 amending the public service  law  relating  to  the  Long
         Island  power  authority,  as  proposed in legislative bill numbers S.
         2581 and A. 3614

         THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
       BLY, DO ENACT AS FOLLOWS:

    1    Section  1.  This  act  shall  be  known and may be cited as the "Long
    2  Island power authority oversight and accountability act".
    3    S 2. Section 3 of the public service law, as amended by chapter 155 of
    4  the laws of 1970, is amended to read as follows:
    5    S 3. Department of public service. 1. There  shall  be  in  the  state
    6  government  a  department  of public service. The chairman of the public
    7  service commission shall be the chief executive officer of  the  depart-
    8  ment.  He  OR  SHE  shall  appoint  and  shall have the power to remove,
    9  subject to the provisions  of  the  civil  service  law,  all  officers,
   10  clerks,  inspectors,  experts  and  employees  of the department, and to
   11  approve all contracts for special service.  The chairman shall designate
   12  one of the commissioners in the department or an officer of the  depart-
   13  ment  to  act as deputy chairman during the absence or disability of the
   14  chairman and during such times such deputy chairman  shall  possess  all
   15  the powers of the chairman as chief executive officer of the department.

        EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                             [ ] is old law to be omitted.
       SA                                                         LBD02907-02-2
       S. 6136                             2                            A. 8957

    1    2.  THE  DEPARTMENT  SHALL, UPON NOTIFICATION TO THE LONG ISLAND POWER
    2  AUTHORITY, UNDERTAKE A COMPREHENSIVE AND REGULAR  MANAGEMENT  AND  OPER-
    3  ATIONS  AUDIT  OF SAID AUTHORITY PURSUANT TO SUBDIVISION (BB) OF SECTION
    4  ONE THOUSAND TWENTY-F OF THE  PUBLIC  AUTHORITIES  LAW.  THE  DEPARTMENT
    5  SHALL  HAVE  DISCRETION TO HAVE SUCH AN AUDIT PERFORMED BY ITS STAFF, OR
    6  BY AN INDEPENDENT CONTRACTOR.  IN  EVERY  CASE  IN  WHICH  AN  AUDIT  IS
    7  REQUIRED  PURSUANT  TO SUBDIVISION (BB) OF SECTION ONE THOUSAND TWENTY-F
    8  OF THE PUBLIC AUTHORITIES LAW PERFORMED BY AN INDEPENDENT  AUDITOR,  THE
    9  DEPARTMENT  SHALL  HAVE  THE  AUTHORITY  TO  SELECT  THE AUDITOR, AND TO
   10  REQUIRE THE LONG ISLAND POWER AUTHORITY TO ENTER INTO  A  CONTRACT  WITH
   11  THE AUDITOR THAT IS CONSISTENT WITH THE CONTRACTING-RELATED REQUIREMENTS
   12  SPECIFIED  IN  SUBDIVISION NINETEEN OF SECTION SIXTY-SIX OF THIS CHAPTER
   13  AND THE REQUIREMENTS OF SUBDIVISION (BB) OF SECTION ONE  THOUSAND  TWEN-
   14  TY-F  OF THE PUBLIC AUTHORITIES LAW. SUCH CONTRACT SHALL PROVIDE FURTHER
   15  THAT THE AUDITOR SHALL WORK FOR AND UNDER THE DIRECTION OF  THE  DEPART-
   16  MENT  ACCORDING TO SUCH TERMS AS THE DEPARTMENT MAY DETERMINE ARE NECES-
   17  SARY AND REASONABLE.
   18    S 3. Section 1020-f of the public authorities law, as added by chapter
   19  517 of the laws of 1986, is amended by adding a new subdivision (bb)  to
   20  read as follows:
   21    (BB)  COMPREHENSIVE  AND REGULAR MANAGEMENT AND OPERATIONS AUDITS.  1.
   22  THE AUTHORITY SHALL COOPERATE IN THE UNDERTAKING  AND  COMPLETION  OF  A
   23  REGULAR  AND  COMPREHENSIVE  MANAGEMENT  AND  OPERATIONS AUDIT CONDUCTED
   24  PURSUANT TO THE REQUIREMENTS OF THIS SUBDIVISION AND SUBDIVISION TWO  OF
   25  SECTION  THREE  OF  THE  PUBLIC SERVICE LAW. SUCH AUDIT SHALL REVIEW AND
   26  EVALUATE THE AUTHORITY'S OVERALL OPERATIONS  AND  MANAGEMENT,  INCLUDING
   27  THE  AUTHORITY'S OPERATIONS AND MANAGEMENT IN THE CONTEXT OF ITS DUTY TO
   28  SET RATES AT THE LOWEST LEVEL CONSISTENT WITH STANDARDS  AND  PROCEDURES
   29  PROVIDED  IN  SUBDIVISION  (U)  OF THIS SECTION, AND INCLUDE, BUT NOT BE
   30  LIMITED TO: (I) THE AUTHORITY'S CONSTRUCTION AND CAPITAL  PROGRAM  PLAN-
   31  NING  IN  RELATION  TO  THE NEEDS OF ITS CUSTOMERS FOR RELIABLE SERVICE;
   32  (II) THE OVERALL EFFICIENCY OF THE  AUTHORITY'S  OPERATIONS;  (III)  THE
   33  MANNER  IN  WHICH THE AUTHORITY IS MEETING ITS DEBT SERVICE OBLIGATIONS;
   34  (IV) THE AUTHORITY'S FUEL AND PURCHASED POWER COST ADJUSTMENT CLAUSE AND
   35  RECOVERY OF COSTS ASSOCIATED WITH SUCH CLAUSE; (V) THE AUTHORITY'S ANNU-
   36  AL BUDGETING PROCEDURES AND PROCESS; AND (VI) THE AUTHORITY'S COMPLIANCE
   37  WITH DEBT COVENANTS.
   38    2. THE DEPARTMENT OF PUBLIC SERVICE SHALL NOTIFY  THE  AUTHORITY  THAT
   39  SAID  DEPARTMENT IS IN THE PROCESS OF INITIATING A COMPREHENSIVE MANAGE-
   40  MENT AND OPERATIONS AUDIT AS DESCRIBED IN PARAGRAPH ONE OF THIS SUBDIVI-
   41  SION IN A MANNER THAT ENSURES THE  TIMELINESS  OF  SUCH  AUDIT,  AND  IN
   42  ACCORDANCE WITH THE FOLLOWING TIMEFRAME: THE FIRST COMPREHENSIVE MANAGE-
   43  MENT AND OPERATIONS AUDIT SHALL BE INITIATED AS OF THE EFFECTIVE DATE OF
   44  THIS  SUBDIVISION  AND  UNDERTAKEN  IN A MANNER AND TO AN EXTENT THAT IS
   45  PRACTICABLE IN THE CONTEXT  OF  THE  AUTHORITY'S  TRANSITION  TO  A  NEW
   46  MANAGEMENT  SERVICE  STRUCTURE;  THE SECOND COMPREHENSIVE MANAGEMENT AND
   47  OPERATIONS AUDIT SHALL BE INITIATED NO LATER  THAN  DECEMBER  FIFTEENTH,
   48  TWO  THOUSAND  FIFTEEN;  AND ALL ADDITIONAL COMPREHENSIVE MANAGEMENT AND
   49  OPERATIONS AUDITS SHALL BE INITIATED AT  LEAST  ONCE  EVERY  FIVE  YEARS
   50  THEREAFTER.  WITHIN  A  REASONABLE  TIME  AFTER SUCH NOTIFICATION TO THE
   51  AUTHORITY, SAID DEPARTMENT OR THE INDEPENDENT AUDITOR  RETAINED  BY  THE
   52  AUTHORITY  TO UNDERTAKE SUCH AUDIT SHALL HOLD PUBLIC STATEMENT HEARINGS,
   53  WITH PROPER NOTICE, IN BOTH NASSAU AND SUFFOLK COUNTIES FOR THE  PURPOSE
   54  OF  RECEIVING  BOTH ORAL AND WRITTEN COMMENTS FROM THE PUBLIC ON MATTERS
   55  RELATED TO SUCH AUDIT AS DESCRIBED IN PARAGRAPH ONE OF THIS SUBDIVISION.
       S. 6136                             3                            A. 8957

    1    3. EACH SUCH AUDIT SHALL BE COMPLETED WITHIN EIGHTEEN MONTHS OF INITI-
    2  ATION ABSENT AN EXTENSION FOR GOOD CAUSE  SHOWN  BY  THE  DEPARTMENT  OF
    3  PUBLIC  SERVICE  OR  THE  INDEPENDENT  AUDITOR  UNDER  CONTRACT WITH THE
    4  AUTHORITY WITH NOTICE OF SUCH EXTENSION TO THE GOVERNOR,  THE  TEMPORARY
    5  PRESIDENT  OF THE SENATE, THE SPEAKER OF THE ASSEMBLY, AND THE CHAIRS OF
    6  THE AUTHORITY AND THE DEPARTMENT OF PUBLIC SERVICE. SUCH AUDIT SHALL  BE
    7  PROVIDED  TO THE BOARD OF THE AUTHORITY IMMEDIATELY UPON ITS COMPLETION.
    8  THE DEPARTMENT OF PUBLIC SERVICE SHALL PROVIDE NOTICE OF  COMPLETION  OF
    9  SUCH  AUDIT  TO THE GOVERNOR, THE TEMPORARY PRESIDENT OF THE SENATE, THE
   10  SPEAKER OF THE ASSEMBLY, AND THE MINORITY  LEADERS  OF  THE  SENATE  AND
   11  ASSEMBLY,  AND  THE  AUTHORITY, UPON RECEIPT OF SUCH AUDIT, SHALL POST A
   12  COPY OF SUCH AUDIT,  INCLUDING  FINDINGS  AND  RECOMMENDATIONS,  ON  ITS
   13  WEBSITE.  UNLESS THE BOARD OF THE AUTHORITY MAKES A PRELIMINARY DETERMI-
   14  NATION THAT ANY PARTICULAR FINDING OR RECOMMENDATION CONTAINED  IN  SUCH
   15  AUDIT  IS INCONSISTENT WITH THE AUTHORITY'S SOUND FISCAL OPERATING PRAC-
   16  TICES,  ANY  EXISTING  CONTRACTUAL  OR  OPERATING  OBLIGATION,  OR   THE
   17  PROVISION  FOR SAFE AND ADEQUATE SERVICE, THE BOARD SHALL IMPLEMENT SUCH
   18  FINDINGS AND RECOMMENDATIONS IN ACCORDANCE WITH THE TIMEFRAME  SPECIFIED
   19  UNDER SUCH AUDIT.
   20    4. THE BOARD OF THE AUTHORITY SHALL MAKE ANY PRELIMINARY DETERMINATION
   21  OF  INCONSISTENCY  WITH  RESPECT  TO  ANY SUCH FINDING OR RECOMMENDATION
   22  WITHIN THIRTY DAYS OF RECEIPT OF THE AUDIT, WITH NOTICE AND THE BASIS OF
   23  SUCH DETERMINATION BEING PROVIDED TO THE DEPARTMENT OF  PUBLIC  SERVICE.
   24  SUCH  NOTICE AND BASIS SHALL BE POSTED CONTEMPORANEOUSLY ON THE AUTHORI-
   25  TY'S WEBSITE AND THE BOARD SHALL, WITHIN THIRTY DAYS OF SUCH POSTING AND
   26  WITH DUE ADVANCE NOTICE TO  THE  PUBLIC,  HOLD  A  PUBLIC  HEARING  WITH
   27  RESPECT TO ITS PRELIMINARY DETERMINATION OF INCONSISTENCY. AT SUCH HEAR-
   28  ING  THE DEPARTMENT OF PUBLIC SERVICE OR THE INDEPENDENT AUDITOR RESPON-
   29  SIBLE FOR UNDERTAKING SUCH AUDIT SHALL PRESENT THE BASIS FOR  ITS  FIND-
   30  INGS  AND  RECOMMENDATIONS AND THE BOARD SHALL PRESENT THE BASIS FOR ITS
   31  DETERMINATION OF INCONSISTENCY. THE AUTHORITY AND AUDITOR MAY DURING THE
   32  TIME PERIOD PRIOR TO SUCH PUBLIC HEARING  REACH  AGREEMENT  ON  DISPUTED
   33  ISSUES.  WITHIN  THIRTY DAYS AFTER SUCH PUBLIC HEARING, THE BOARD OF THE
   34  AUTHORITY SHALL ANNOUNCE ITS FINAL DETERMINATION AND PLANNED IMPLEMENTA-
   35  TIONS WITH RESPECT TO ANY  SUCH  FINDINGS  AND/OR  RECOMMENDATIONS.  THE
   36  BOARD'S  FINAL  DETERMINATION  OF  INCONSISTENCY SHALL BE SUBJECT TO ANY
   37  APPLICABLE JUDICIAL REVIEW PROCEEDING, INCLUDING REVIEW AVAILABLE  UNDER
   38  ARTICLE SEVENTY-EIGHT OF THE CIVIL PRACTICE LAW AND RULES.
   39    S  4.  Paragraph (b) of subdivision 4 of section 94-a of the executive
   40  law, as added by section 21 of part A of chapter 62 of the laws of 2011,
   41  is amended to read as follows:
   42    (b) The utility intervention unit shall have the power and duty to:
   43    (i) on behalf of the secretary, initiate, intervene in, or participate
   44  in any proceedings before the public service commission, to  the  extent
   45  authorized  by sections twenty-four-a, seventy-one, eighty-four or nine-
   46  ty-six of the public service law or any other  applicable  provision  of
   47  law,  where  he  or  she  deems such initiation, intervention or partic-
   48  ipation to be necessary or appropriate; [and]
   49    (ii) represent the interests of consumers of the state before federal,
   50  state and local administrative and regulatory agencies  engaged  in  the
   51  regulation of energy services[.]; AND
   52    (III)  ACCEPT  AND INVESTIGATE COMPLAINTS OF ANY KIND FROM LONG ISLAND
   53  POWER AUTHORITY CONSUMERS, ATTEMPT  TO  MEDIATE  SUCH  COMPLAINTS  WHERE
   54  APPROPRIATE  DIRECTLY  WITH  SUCH  AUTHORITY AND REFER COMPLAINTS TO THE
   55  APPROPRIATE STATE OR LOCAL AGENCY AUTHORIZED BY LAW TO TAKE ACTION  WITH
   56  RESPECT TO SUCH COMPLAINTS.
       S. 6136                             4                            A. 8957

    1    S  5.  A  chapter  of the laws of 2011 amending the public service law
    2  relating to the Long Island power authority, as proposed in  legislative
    3  bill numbers S. 2581 and A. 3614, is REPEALED.
    4    S  6.  This  act  shall take effect immediately; provided that section
    5  five of this act shall take effect on the same date as a chapter of  the
    6  laws of 2011 amending the public service law relating to the Long Island
    7  power  authority, as proposed in legislative bill numbers S. 2581 and A.
    8  3614, takes effect.
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About lipaoversight

LIPA Oversight Committee was created to analyze the rates and practices to determine if it is working in the best interests of the Suffolk County ratepayers
This entry was posted in audit, lipa, long island power authority, Oversight, Uncategorized. Bookmark the permalink.

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