LIPA staff recommends Quanta Services to manage the electric grid, documents say
Electric power lines along the North Shore Rail Trail in Mount Sinai on Nov. 17, 2023. Credit: Newsday / Steve Pfost
A special committee consisting of top LIPA officials has "strongly recommended" that Houston-based Quanta Services be named as the next company to run the Long Island electric grid, according to documents filed late Tuesday.
The Long Island Power Authority's board is meeting in a special session on Wednesday to vote on the recommendation, but it remains uncertain whether the board would vote to accept it. PSEG Long Island, which has operated the grid for the past decade and fought hard to keep the contract, was the only other finalist.
"Based on the final submissions, the selection committee determined that the [proposal] submitted by Quanta was the best value to the LIPA customers," according to the board document. Quanta's contract terms are "materially better for customers than the other finalist’s proposal and than the current" contract with PSEG, the LIPA document states.
If accepted LIPA would enter into a contract with a new entity called Power Long Island (unrelated to the utility super PAC of the same name to which PSEG contributes), and the new contract would be effective Jan. 1. Quanta would effectively take over management of the approximately 2,700 employees who run the utility now, as well as equipment and systems. There also would be a transition period managed by a separate agreement, the documents state.
The LIPA committee found Quanta's bid "demonstrated experience and qualifications across the required range of operations services, as well as experienced leadership with a strong track record of operating and financial discipline," according to the document. Quanta's plan offered the "best position to reduce risk and deliver the strongest performance on storm preparation and restoration, reliability, and minimized electric rates and bills," the document said.
Quanta's cost also was deemed "competitive," but Quanta also agreed to discount its management service fee by 15%, 13% and 12% for the first three years of the contract, starting in 2026, the papers said.
How LIPA moves forward with the recommendation could be fraught, particularly if the board decides to take the unprecedented action of voting against the recommendation of the LIPA staff, as observers have said was possible.
Whatever LIPA decides Wednesday will be scrutinized by the state comptroller and the state attorney general, as both of those agencies review all LIPA contracts over a certain dollar threshold.
The LIPA board also has scheduled another closed-door session for Wednesday — its fourth in recent weeks — for its governance, planning and personnel committee to meet. LIPA has operated in the past year with former state Public Service Commission Chairman John Rhodes as its acting chief executive.
Rhodes was among those on the committee that selected Quanta, which operates globally and has more than 62,000 employees, including 2,000 already in New York. LIPA is also considering a narrowed list of candidates to replace Rhodes, including a top official at the state Department of Public Service, the agency that has review and recommend authority over LIPA.
One Quanta critic, real estate executive X. Cristofer Damianos, in a recent business column, questioned Quanta’s service record based on recent reports from Puerto Rico, where the bankrupt, government-owned electric grid has been beset by power outages in recent months. Quanta and another company operate the Puerto Rican grid in a joint venture called Luma. Damianos received help with his column from PSEG consultant Gary Lewi, Newsday reported.
A Quanta official countered to Newsday that the company helped build back the Puerto Rico grid "from decades of mismanagement, decades of underfunding."
At the same time, LIPA has been complaining about years of declining service levels by PSEG, including a recent PSEG internal report showing it missed 2024 service targets for reliability, employee safety, computer systems and customer call centers. In the report obtained by Newsday from the Department of Public Service, the New Jersey-based company showed it achieved under 50% of the potential $4.95 million bonus it could have received for customer services performance.
If LIPA or its trustees had concerns about Quanta, they were not reflected in LIPA's awarding last month of prospective utility consulting contracts to a group of companies that included a Quanta subsidiary known as Quanta Technology LLC. Quanta Technology is listed among six firms that LIPA can now call on for "utility operations oversight" should LIPA or PSEG require it in the coming five years, according to the LIPA resolution.
Former LIPA acting Chairman Mark Fischl, in an interview last week, said the prospect of the LIPA board not following the recommendation of a LIPA staff review would be unprecedented.
"It never would have happened, and certainly didn’t in my 10 years as a board member," Fischl said.
A special committee consisting of top LIPA officials has "strongly recommended" that Houston-based Quanta Services be named as the next company to run the Long Island electric grid, according to documents filed late Tuesday.
The Long Island Power Authority's board is meeting in a special session on Wednesday to vote on the recommendation, but it remains uncertain whether the board would vote to accept it. PSEG Long Island, which has operated the grid for the past decade and fought hard to keep the contract, was the only other finalist.
"Based on the final submissions, the selection committee determined that the [proposal] submitted by Quanta was the best value to the LIPA customers," according to the board document. Quanta's contract terms are "materially better for customers than the other finalist’s proposal and than the current" contract with PSEG, the LIPA document states.
If accepted LIPA would enter into a contract with a new entity called Power Long Island (unrelated to the utility super PAC of the same name to which PSEG contributes), and the new contract would be effective Jan. 1. Quanta would effectively take over management of the approximately 2,700 employees who run the utility now, as well as equipment and systems. There also would be a transition period managed by a separate agreement, the documents state.
WHAT NEWSDAY FOUND
- A LIPA committee recommended Quanta Services to manage the Long Island electric grid, citing better contract terms and operational experience compared with PSEG Long Island, the current operator.
- The LIPA board is set to vote on the recommendation Wednesday. The state comptroller and attorney general also will review the contract.
- Quanta agreed to a management fee discount for the initial contract years, and LIPA has already engaged a Quanta subsidiary for utility consulting, documents say.
The LIPA committee found Quanta's bid "demonstrated experience and qualifications across the required range of operations services, as well as experienced leadership with a strong track record of operating and financial discipline," according to the document. Quanta's plan offered the "best position to reduce risk and deliver the strongest performance on storm preparation and restoration, reliability, and minimized electric rates and bills," the document said.
Quanta's cost also was deemed "competitive," but Quanta also agreed to discount its management service fee by 15%, 13% and 12% for the first three years of the contract, starting in 2026, the papers said.
How LIPA moves forward with the recommendation could be fraught, particularly if the board decides to take the unprecedented action of voting against the recommendation of the LIPA staff, as observers have said was possible.
Whatever LIPA decides Wednesday will be scrutinized by the state comptroller and the state attorney general, as both of those agencies review all LIPA contracts over a certain dollar threshold.
The LIPA board also has scheduled another closed-door session for Wednesday — its fourth in recent weeks — for its governance, planning and personnel committee to meet. LIPA has operated in the past year with former state Public Service Commission Chairman John Rhodes as its acting chief executive.
Rhodes was among those on the committee that selected Quanta, which operates globally and has more than 62,000 employees, including 2,000 already in New York. LIPA is also considering a narrowed list of candidates to replace Rhodes, including a top official at the state Department of Public Service, the agency that has review and recommend authority over LIPA.
One Quanta critic, real estate executive X. Cristofer Damianos, in a recent business column, questioned Quanta’s service record based on recent reports from Puerto Rico, where the bankrupt, government-owned electric grid has been beset by power outages in recent months. Quanta and another company operate the Puerto Rican grid in a joint venture called Luma. Damianos received help with his column from PSEG consultant Gary Lewi, Newsday reported.
A Quanta official countered to Newsday that the company helped build back the Puerto Rico grid "from decades of mismanagement, decades of underfunding."
At the same time, LIPA has been complaining about years of declining service levels by PSEG, including a recent PSEG internal report showing it missed 2024 service targets for reliability, employee safety, computer systems and customer call centers. In the report obtained by Newsday from the Department of Public Service, the New Jersey-based company showed it achieved under 50% of the potential $4.95 million bonus it could have received for customer services performance.
If LIPA or its trustees had concerns about Quanta, they were not reflected in LIPA's awarding last month of prospective utility consulting contracts to a group of companies that included a Quanta subsidiary known as Quanta Technology LLC. Quanta Technology is listed among six firms that LIPA can now call on for "utility operations oversight" should LIPA or PSEG require it in the coming five years, according to the LIPA resolution.
Former LIPA acting Chairman Mark Fischl, in an interview last week, said the prospect of the LIPA board not following the recommendation of a LIPA staff review would be unprecedented.
"It never would have happened, and certainly didn’t in my 10 years as a board member," Fischl said.
Mark Harrington, a Newsday reporter since 1999, covers energy, wineries, Indian affairs and fisheries.
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