The Future of the Long Island Power Authority

Carl L Marcellino

February 27, 2013

Senator Carl L. Marcellino and Senator Michael Ranzenhofer convened a joint hearing to investigate the future of the Long Island Power Authority (LIPA)

On November 13, 2012, Governor Cuomo established a Moreland Commission to investigate New York’s power utilities’ preparation and response to major storms that have devastated parts of State over the past two years; mainly Tropical Storm Irene and super storm Sandy.  On January 7, 2013, The Commission released a preliminary report on Utility Storm Preparation and Response. The Commission considered three options: an investor-owned utility, LIPA assuming authority to manage system and operations, or having an existing public authority assumes the responsibility of running the system.  The Commission favored privatizing LIPA as the best option.  On January 9, 2013, Governor Cuomo concurred with the Commission’s assessment, recommending the privatization of LIPA in his Annual State of the State Address.

“The residents of Long Island must know that any changes we make to LIPA will fully be vetted and will lead to the  improvements necessary to better equip our vital infrastructure for the benefit of  the ratepayer.  That is why a constructive examination of LIPA’s structure and the best way it can serve the residents is imperative,” said Senator Marcellino

"It is imperative to examine the operations of State Authorities from time to time so that the best interests of customers and state taxpayers are constantly being served.  The purpose of today's hearing is to listen to various stakeholders of the Long Island Power Authority so that its appropriate future can be determined, ensuring its 1.1 million ratepayers receive affordable electricity and first-rate customer service for the foreseeable future.  I commend Chairman Marcellino for jointly convening this hearing and for his efforts on behalf of Long Island residents," said Senator Ranzenhofer. 

LIPA currently provides electricity to more than 1.1 million customers in Nassau, Suffolk and Queens Counties.  As a non-profit municipal electric provider, LIPA owns the electric transmission and distribution system on Long Island.  National Grid USA maintains LIPAs transmission and distribution system under a management services agreement.

LIPA’s inability to provide its customers with respectable and responsible service in a timely manner has come under serious questioning.  Furthermore, the utilities ability to continue servicing its customers is in doubt and proposals are being developed for the future after LIPA.

Testifying at the hearing was Regina Calcaterra, Executive Director, NYS Moreland Commission on Utility Storm Preparation and Response; Gil C. Quiniones, President & CEO New York Power Authority; David Daly, Vice President heading LIPA Transition, PSEG; Neal M. Lewis Board of Trustees, LIPA;  Donald J. Daley Jr., Business Manager, International Brotherhood of Electrical Workers, Local 1049; Shelly Sackstein, Chairman & CEO, Action Long Island Chairman, Suffolk County  LIPA Oversight Committee and a former LIPA  Board of Trustee; Tom Rumsey, Vice President of External Affairs, New York Independent System Operator; Cynthia Kouril, Esq., Former Counsel, Inspector General for New York City Department of Environmental Protection, Former Special Assistant, US Attorney General, Southern District of New York; Charles Bell, Programs Director, Consumer Union and  William Ferris, NYS Legislative Representative for AARP NY

 The Long Island Power Authority (LIPA) was created in 1986 to acquire selected stock, assets, and debt from the Long Island Lighting Company (“LILCO”), to facilitate the decommissioning of LILCO's failed Shoreham nuclear power plant and to reduce electric rates on Long Island.  In 1998, LIPA became a non-profit electric service provider when it acquired LILCO’s electric generation and transmission and distribution (“T&D”) system including lines, sub-stations and various properties.  During this LILCO/LIPA merger, LIPA acquired an eighteen percent ownership in LILCO’s Nine Mile Point Nuclear generating station, which LIPA still retains. National Grid owns and operates the electric power plants operating on Long Island, and LIPA purchases power from Grid through long-term power purchase agreements due to expire in 2014.

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