LIPA claims it held a hearing on the delivery charge rate increase but no one showed up. Could it be that happened because LIPA never publicized the hearing on its calendar of events? With no oversight and absolute authority to do whatever they want, you would think LIPA would at least make every effort to give customers a chance to express views. In this case with a secret public hearing ratepayers were not given that opportunity.
March 1, 2012 8:59 PM
By MARK HARRINGTON Newsday
“Clearly, we’re looking at a downward fuel adjustment in the April time frame,” Michael Hervey, LIPA’s chief operating officer, seen here in September, told authority trustees at a regularly scheduled meeting on Jan. 26, 2012.
It may be the shortest-lived rate hike in LIPA history.
Long Island Power Authority trustees Thursday voted to approve a 1.5 percent bill increase starting this month. The hike, which amounts to around $2.25 a month for average residential customers, is largely due to a $51-million hike in LIPA’s annual tax bill, LIPA said.
But at the same trustees meeting, LIPA chief operating officer Michael Hervey said falling natural gas prices would, in all likelihood, wipe out the increase, and then some, come April.
“We do expect a drop in rates that will at least wipe out the increase that we’re asking for today,” Hervey said. If natural gas prices remain low by the end of next month, Hervey said, a rate cut could go even deeper.
Lower natural gas prices resulted in $22 million in savings for LIPA as of the end of February, and warm weather has reduced usage. Most plants that supply power to LIPA have dual fuel capability — gas or oil — allowing LIPA to switch to all natural gas when oil price spikes occur.
LIPA’s fuel and purchased-power costs were $32 million lower than budgeted thus far this year, with around $22 million of that the result of lower-than-expected natural gas prices, LIPA said.
This month’s increase will appear in the fixed service-charge portion of bills and was previously approved by trustees in the 2012 budget. LIPA had additional hearings on it last month.
At the meeting, trustees also approved a change to LIPA rules that would allow it to waive a $5-per-pole fee to attach items such as American flags to utility poles. LIPA last year ignited a firestorm when Newsday reported the agency was charging Shelter Island to attach American flags to poles during its ceremony to honor fallen soldier Joseph Theinert.
Trustees also approved a measure that will allow customers in two- and three-family dwellings with a single electric meter to receive a residential rate rather than a more costly, and taxed, commercial rate. Groups of LIPA customers last year raised the issue following Newsday reports of a Patchogue woman who was billed for a decade as a commercial customer though her house was clearly residential. LIPA credited her for the years of usage, but other customers who say they were similarly improperly billed have been told multiple-family dwellings under LIPA’s old rules must be billed commercial. The new measure lets them get the cheaper rate but doesn’t address past overbillings, customers have said.
LIPA also said it expects later this month to begin receiving regulatory approvals of its contract with PSEG to take over the management of the local electric grid. PSEG takes over from current contractor National Grid in January 2014. Hervey said the transition is on target.
by Claude Solnik Published: March 1, 2012
The Long Island Power Authority today approved a 1.5 percent previously announced rate hike, but said it expects to wipe that away and possibly bring rates down over the next few months.
LIPA Chief Operating Officer Michael Hervey at the board’s March meeting said lower than anticipated natural gas fuel costs likely will soon eradicate the hike and possibly reduce rates. Fuel accounts for half of the authority’s budget.
Residential customers in March will see average rates rise slightly less than 1.5 percent due to the previously announced hike, while commercial customers on average will see their
The authority approved that hike today in its delivery charge, although it already had been included in its budget, approved on Dec. 15.
“We do expect a drop in rates in the April adjustment that will at least wipe out the increase we’re asking for today,” Hervey said. “We see this overall at least neutral to customers for the year. We’d like to bring better news than that to the customers next month when we meet.”
LIPA’s fuel and purchased power expenses for January came in at about $130.8 million, about 20 percent lower than the roughly $163 million budgeted.
Even storm restoration costs came in 63 percent below budget at about $1.6 million compared to the $4.3 million anticipated, due to better than expected weather.
Due to lower demand, LIPA generated $270.7 million in revenue, 6 percent lower than anticipated.
Hervey said a warm winter contributed to lower demand, pushing fuel prices down. And new sources of natural gas in the Northeast increased supply, creating a perfect storm (in a good sense) for prices to fall.
“These conditions are making it possible to pass these savings on to our customers,” Hervey said.
He added that LIPA has hedging and price fueling strategies, but doesn’t control the market, which generated savings.
But Hervey added that LIPA’s ability to rely more heavily on natural gas than oil, when that’s preferable, let the authority benefit when gas prices fell as oil prices spiraled out of control.
LIPA Board Chairman Howard Steinberg said the authority is limited in its ability to reduce rates.
“The portion of our budget that we can control is 1 or 2 percent,” he said. “We don’t control the weather, fuel prices, taxes or our debt burden. And we’re bound to a long-term operating contract with National Grid and, going forward, with PSEG. The portion of our costs that are controllable is quite tiny.”
But he said LIPA is taking other steps to hold rates flat and potentially reduce them, seeking to cut its more than $500 million tax bill, including money the authority pays related to power plants owned by National Grid.
That amount, however, could rise above $600 million next year, if tax increases continue.
“We have to loosen that noose from around our neck,” Hervey said. “Challenging taxes is not only feasible, but the responsible thing to do, going forward.”