LIPA postpones decision on selecting manager for the electric grid

LIPA has delayed until next month a final decision about which entity will manage the Long Island electric grid once PSEG’s contract expires at year's end.

The latest delay follows years of uncertainty as the PSEG Long Island contract runs out and the Long Island Power Authority has pursued a series of alternatives to its current public-private operation.

In the latest twist, three people familiar with the process say the utility received a second bid to manage the grid, by Houston-based energy infrastructure giant Quanta Services.

Quanta, a $21 billion company with 50,000 employees around the world, didn't respond to multiple requests for comment and LIPA wouldn’t comment on its "open procurement." Last year, interim LIPA chief John Rhodes said PSEG "could well be" awarded the contract.

LIPA on Friday removed the anticipated announcement of the contract award from a published agenda for its trustees meeting Wednesday, and added a nonpublic meeting of its trustees in "executive session" to discuss the matter.

Awarding the grid contract is "of the utmost importance to the LIPA board of trustees," the authority said in a statement. "As such, the March 26 meeting agenda has been updated to include an executive session dedicated to this critical matter."

Longtime LIPA observers say the change reflects deeper — and some say welcome — consideration of the matter.

"It sounds like they’re having trouble making a decision," said former LIPA board member Peter Gollon. "It sounds to me like it’s a difficult choice and if politics is playing a role, that’s not helpful for the ratepayer."

A PSEG spokeswoman didn’t respond to a request for comment.

PSEG, based in Newark, has been managing LIPA’s grid since winning the contract over former manager National Grid in 2014. But PSEG’s acknowledged failures during Tropical Storm Isaias in 2020 led to new scrutiny of the company, followed by a LIPA lawsuit encouraged by the state Department of Public Service, and a tougher contract negotiated at the urging of former Gov. Andrew M. Cuomo.

The failures also were part of the inspiration for state legislative effort to transition LIPA to a fully public utility running the grid on its own. PSEG spent hundreds of thousands of dollars lobbying against the bill, which ultimately was successful. PSEG has said the current model of operating LIPA is best for ratepayers. Not all agree.

"PSEG has proven time and time again that it is incapable of properly managing the LIPA electric grid," said Ryan Madden, a director of an activist group, the Long Island Progressive Coalition, in a statement Monday.

Madden said he brought his concerns about PSEG’s lobbying and other matters to the state Attorney General’s Office.

The Attorney General’s Office didn’t return messages seeking comment.

While Madden’s group still wants a fully public LIPA, he said the prospect of a company other than PSEG operating it is "worth strong consideration."

Time is of the essence in finalizing a contract, say LIPA observers, who note that any final board vote still will require the contract to be vetted by the attorney general and the state comptroller. Were a new bidder to win the contract, they say, the period for a transition would be short — from August to December.

In the weeks leading up to Wednesday’s board meeting, numerous people following the LIPA bid said there were strong indications the board would award the contract to PSEG.

Mitch Pally, who is a member of LIPA's community advisory board, said he’d heard from those outside of LIPA weeks ago that there was a second bidder in the LIPA contract, but he did not know the name of the company. Even with that he'd heard indications the contract would go to PSEG.

"People have said it looks like PSEG is going to continue," he said. "It is what it is. As long as the lights stay on."

LIPA in January announced that it had awarded a separate contract for fuel and power management previously held by PSEG to an outside bidder, The Energy Authority.

Last month, board member Drew Biondo resigned his position after he learned of his replacement on the LIPA board. His spot remains vacant. Earlier this month, LIPA announced Mary Ellen Mendelsohn, a former chief of staff for U.S. Rep. Carolyn McCarthy, would take over a board seat vacated by Laureen Harris.

Biondo in his resignation letter took issue with what he called PSEG’s "undue influence" at LIPA.

On Monday, Biondo said, "It’s encouraging to hear there is another bidder" for the LIPA contract. "I’ll be convinced when there’s signatures on the dotted line and it’s not PSEG."

The delay of the contract vote comes as LIPA has yet to make a final decision on a permanent chief executive, since Rhodes is serving as interim CEO. Sources have said the candidates have been narrowed to two, and Newsday has reported that one of them is Carrie Meek Gallagher, the director of the Long Island office of the Department of Public Service.

LIPA declined to comment on the search, and DPS didn’t respond.

Editor's Note -- An earlier version of this story misspelled the name of Houston-based energy infrastructure giant Quanta Services.

By Mark Harrington

mark.harrington@newsday.comMHarringtonNews

Mark Harrington, a Newsday reporter since 1999, covers energy, wineries, Indian affairs and fisheries.