As state weighs creating a fully public LIPA, PSEG defends its role

The first public hearing on the prospect of converting LIPA to a fully public utility was nearly as notable for PSEG Long Island's spirited defense of keeping its job of manager of the electric grid.

As state lawmakers from across Long Island gathered at the hearing of the LIPA commission at Hofstra University on Tuesday to chart a course for the utility beyond 2025, a top PSEG took the floor to make the case for maintaining the current public-private partnership between LIPA and PSEG.

“We believe it is a proven tested model for PSEG Long Island to continue to provide the people of Long Island and the Rockaways the outstanding electric service they expect and deserve,” said PSEG’s senior director/vice president Christopher Hahn, adding that PSEG and LIPA provide each other a critical “check and balance.”

Hahn blamed PSEG’s high rates, which he tied in part to a “mountain” of LIPA debt, for PSEG’s declining customer satisfaction scores in J.D. Power surveys, saying high rates acted like a “lead weight” to keep scores low. And he said were it not for PSEG’s recommendation to not go ahead with building a large new plant, Long Island ratepayers would have been saddled with another $2.5 billion in debt.

Hahn also raised questions about the $80 million that LIPA studies have shown could be saved annually were LIPA to operate the grid on its own.

“One bad decision,” he said, “and any theoretical savings could quickly turn to losses.”

But commission co-chairman Assemb. Fred Thiele (D-Sag Harbor), who co-authored the commission bill, took issue with Hahn’s characterizations, reminding Hahn that PSEG’s customer satisfaction ratings were increasing until Tropical Storm Isaias led them to plummet as hundreds of thousands of ratepayers were left in the dark.

“It wasn’t just your lack of performance” during Isaias, Thiele said. “It was the fact that you didn’t tell the truth to LIPA." when LIPA was investigating PSEG's failures. "And you didn’t tell the truth to the public. And maybe the reason your performance ratings are so low is that people don’t like being lied to.”

LIPA chief Tom Falcone, after the meeting, said the decisions that led to LIPA forgoing certain power plants were based not just on PSEG’s analysis but on a national trend of declining electric use.

“There was a change in load forecast coming out of the Great Recession,” Falcone said. “That was not a LIPA thing, it was a national trend. Any professionals looking at it would have reached the same conclusion,” including the state, an outside agency and LIPA itself, Falcone said.

Most of the people who spoke at the morning session of the committee meeting spoke in favor of a fully public LIPA.

“Privatization failed us, PSEG is failing us, and now is the time for the public to lead us in a new direction," said Ryan Madden, sustainability organizer for the Long Island Progressive Coalition, an activist group. "Across the country and here in New York, public power is cheaper, more reliable and better able to transition to renewables.”

Most in the audience were members of the International Brotherhood of Electrical Workers, who comprise the bulk of PSEG’s current 2,500-person work force. Rick Fridell, assistant business manager of IBEW Local 1049, said the current public-private structure is working and he expressed “concerns” about LIPA converting to a fully public model.

“If it went to just the state, we’re not comfortable with what is going on out there with just the state,” Fridell said, citing concerns about pensions and medical benefit plans.

But Falcone during the presentation emphasized that the existing plans must carry over to any new LIPA utility just as they are with PSEG.

More information about the commission, its recently appointed advisory committee and public hearings can be found at https://nylipa.gov/. 

By Mark Harrington

mark.harrington@newsday.comMHarringtonNews

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