PSEG asks for nearly $2.5 million bonus for 2020 performance; LIPA says it's not deserved

Mark Harrington for Newsday

March 31, 2021

Originally published in Newsday on March 31, 2021.

PSEG Long Island has filed paperwork to receive nearly $2.5 million in incentive compensation for its performance in 2020, despite grid-owner LIPA’s repeated assertions that the company doesn’t deserve a bonus.

The company, however, suggested it might not "retain" the bonus, depending on the outcome of contract talks with LIPA and the state. LIPA has sued PSEG for $70 million, alleging breach of contract following PSEG's widely publicized failures around Tropical Storm Isaias.

PSEG’s contract with LIPA allows it to receive upward of $9 million a year in bonus pay for meeting a list of 27 performance targets. After the storm that saw over 645,000 outages, PSEG said it would forgo the majority of the bonus so that the money could fund a reimbursement program for customers who lost food and medicine after the storm.

The filing with LIPA is in the form of an invoice for a "total amount due" to PSEG from LIPA for $2,487,796.33. The invoice notes that PSEG paid out some $6.6 million in storm reimbursements. A PSEG metrics score card included in the invoice shows PSEG met 21 of the 27 targets, including meeting acceptable performance for cost management (100%), customer satisfaction (86.11%), financial performance (104%) and technical and regulatory performance (87.5%). PSEG missed targets on average speed of answer, customer complaints to the state and first-call resolution, among others, according to the report card.

One critic of PSEG's handling of the storm expressed outrage that the company filed for the remaining money, even if only as a bargaining chip. "The fact that they're even asking for a bonus will stick in the craw of every Long Islander who suffered through Isaias," said State Sen. Todd Kaminsky (D-Long Beach).

"It shows they don't realize how much damage they caused. To the extent they get a dime it should go back to the ratepayers who endured" outages and communications failures after the storm.

In a statement, PSEG spokeswoman Ashley Chauvin said it made the incentive pay filing "as required" by its contract with LIPA, and suggested that the company does not intend to "retain" it, at least not at the present time.

"Notwithstanding its entitlement to the remainder of the 2020 incentive compensation, it is not PSEG Long Island’s current intention to retain any of those funds, which are a subject of our ongoing discussions with LIPA and the Department of Public Service," she said.

Those discussions are negotiations to determine whether or not PSEG will even continue to operate the electric system. The state has recommended that LIPA consider terminating the long-term PSEG contract, which is set to expire in 2025, because of the storm failures and other findings by a LIPA storm task force. LIPA is in the midst of an analysis to determine whether becoming a fully public utility to operate the system itself, or allowing a different outside contractor to run the system, are more suitable.

PSEG, which Newsday has reported is seeking a 15% to 20% pay raise as part of the contract talks, has said the current public-private partnership is the best way to run the system, even while acknowledging its widespread storm-related failures.