On October 24th Hurricane Sandy was formed with all-weather forecasting models showing its tracking to have a major effect on Long Island with in several days.
On October 25th the LIPA Board of Trustees was notified by Mike Hervey that on November 5, 2012 the National Grid financial computer system would be replaced in its entirety.
The new computer system included all financial computer systems that allow management of LIPA’s financial and business activities including Pay Roll, Inventory Management and Purchasing activities.
As scheduled the new system was placed in to use which resulted in numerous failings of the new payroll, inventory management and purchasing systems, which consequently had direct and indirect effect on LIPA’s/National Grid Restoration Performance and subsequent reporting of costs. These failings will cost the ratepayer millions of dollars.
To date, this new system has cost approximately $400 Million to replace the existing 7-year-old computer system that had performed flawlessly for LIPA’s financial requirements.
Additionally, for the cost of this new computer system LIPA is responsible for O&M pass-through costs, a large portion of the $400 Million investment and an annual $1.625 million fee with the right to replicate the system for an additional $26.5 million.
Why would the LIPA Board of Trustees authorize the replacement of any major computer system, let alone the backbone financial system, with full knowledge that a severe storm event was about to affect the service territory dramatically?
Why would LIPA agree to invest millions of dollars in replacing a relatively new 6-year-old financial system that offered no additional process, financial or management benefit or any return on investment?
Should the money been more wisely spent on a new outage management system?
In 2006 an audit recommended that LIPA replace its 20 year outage Management computer system which LIPA did not take any action until 2012.
Lack of communication has been cited as the primary driven for LIPA’s/National Grid failings with restoration efforts. These communication failings are directly related to not having a modern outage management computer system.
Therefore, Logic would dictate that the money the LIPA expended on a new “broken” financial system should have been allocated towards a new outage management system thereby the restoration effort would have been managed correctly, cost effectively with ratepayer the communication the ratepayer deserves.
Something is just not right…..