Legislative work to begin on plans to form a fully public LIPA

The formation of a state legislative commission to plot the future of LIPA as a fully public power utility begins in earnest this week, the start of an effort that could be a vital turning point for the utility to get back to its founding vision. 

The Long Island Power Authority once characterized the measure — approved as part of the state's recent budget — as a “study bill.” But it is considerably more than that, with set timelines to form a commission and advisory council for a comprehensive review and to create legislation to turn LIPA into a fully public utility by the end of 2023 — if it's clear that's the best way to go.

The final language approved by Gov. Kathy Hochul notes the legislature "hereby creates a commission to provide the legislature with the specific actions, legislation, and timeline necessary to restructure LIPA into a true publicly owned power authority." The commission has a $2 million budget and a directive to produce a final report by April 1, 2023. 

With PSEG's contract to manage the electric grid expiring by the end of 2025, there's little time to waste, legislators said.

“We have a very aggressive time frame to do all this work so we need to get going and get going fast,” said State Assemb. Fred Thiele (I-Sag Harbor). He’s been in contact with the Assembly Ways and Means committee to get the commission staffed and members appointed, with work on that beginning this week, Thiele said.

The commission’s goal is to set up a fully public LIPA, not just study it, and not to dwell on models Thiele said have failed.

“We have plenty of experience with the private model and the third-party manager model" not working, he said, noting the Long Island Lighting Co. operated as a private company before LIPA bought its assets in the late 1990s. “The focus of this is that at the end of the process we have the legislation and all the other questions answered so we can move ahead with municipalization.”

Wording in the legislation itself takes issue with the past performance of LIPA as it has been managed by outside companies, and notes that model has produced “unsatisfactory results.”

“Consequently, it is the purpose of this section to implement the original vision for LIPA intended by the [1986 law that created LIPA] as a publicly owned power company,” the new law states.

Under the fully public model, LIPA itself would hire a team of top managers to run the utility rather than pay PSEG to do it. The move would save LIPA $80 million a year or more in management fees and take the profit motive out of the equation. More than 2,000 unionized workers and middle managers would report to LIPA top brass, who would directly control the truck fleets, power source decisions and budgeting.

Not all legislators are convinced it's the way to go — yet. Outgoing State Sen. Todd Kaminsky (D-Long Beach) has said he had "great reservations" about a fully public LIPA from "past iterations of when it ran as a state-owned utility. I don't think the performance was all that great." 

Reminded that the LIPA name on the trucks was actually National Grid behind the scenes operating LIPA, Kaminsky said he'd nevertheless "like to see the study" before deciding.

"All over the county, there are very good arguments for [municipal utilities, but] it's not entirely overwhelming and I want to see what the study says." 

Business groups led by the Association for a Better Long Island and the Long Island Association had requested the commission conduct a broader study of LIPA’s options, including sale of the utility to a private company. But LIPA and the legislative sponsors rejected the idea.

In a statement, LIA Chief Executive Matt Cohen said the LIA “continues to evaluate the electric utility model that would offer residential and business ratepayers the most reliability, accountability and affordability. That is why all options should be on the table: municipalization, an improved public-private model and privatization.”

The bill calls for the commission, after public hearings and consultations with an advisory council, to determine the new power utility’s method of governance, lay out its plan to improve transparency, accountability and public involvement, improve reliability and storm response, and to determine the impact on electric rates.

It will also determine what role, if any, the state Department of Public Service and the Public Service Commission will have over the new LIPA and examine LIPA's swelling debtload and long-term planning, its tax structure, its plan to increase renewables and “any other matter relevant to the establishment of a public power model” for LIPA.

“We have to look at it with fresh eyes,” said the bill's co-author, State Sen. Jim Gaughran (D-Northport), who has been critical of both PSEG and LIPA’s performance. He suggested the commission presents an opportunity to do more than change LIPA's operating model. 

“Part of this is really looking at rewriting the LIPA Act,” he said. “In reality, LIPA is a municipal entity right now, it’s just not being operated as one normally would.” The plan, he said, should be to determine how to “once and for all restore the intent of the original creation of LIPA to be a municipal authority that gives the people of Long Island and Queens transparency, reliable service and the lowest cost.”

Thiele and Gaughran said they also want to make sure that changes implemented at LIPA are in tune with state climate mandates and protect unionized workers. “We need to have the unions at the table,” Gaughran said.

Patrick Guidice, business manager for Local 1049 of the International Brotherhood of Electrical Workers, which represents some 2,000 PSEG employees, said he's eager for a seat at the table. The union has supported keeping PSEG as the system operator. 

"We want to make sure municipalization is the right thing to do," he said. "Whenever there are changes made to how the system is managed, we want to be able to give our input to make sure it's a workable plan." 

Guidice said he's opposed to any prospect of making unionized workers state employees, as one past study contemplated. "It would be too much of a burden on the state system and it's not an easy transition," he said. "Our issue is, how would that affect our ability to bargain for wages and working conditions, retirement issues?" 

The law calls for a commission of eight members, three to be appointed by the Senate majority leader, three by the Assembly speaker, and one each by the minority leaders of the Senate and Assembly.

The commission will then appoint an advisory committee of 15, including representatives from business, labor, local government, Native tribes, economic development and environmental groups, energy, social justice, school districts and others. It’s authorized to draw information, assistance and data from agencies such as the Department of Public Service and the utility to complete its work.

LIPA, in a statement, said it looked forward to “both working with and supporting the legislative commission in the best interests of our customers.” Meanwhile, LIPA said its new contract with PSEG will “deliver meaningful improvements” while the commission completes its work.

PSEG spokeswoman Ashley Chauvin said the company "will cooperate with all appropriate requests" from the commission, but stressed PSEG "remains committed to being the service provider for Long Island and the Rockaways, and maintains that a public-private partnership is the best option for customers."

LIPA criticized PSEG last month for lobbying to have the state LIPA bill include studies of both privatization and the public-private model. LIPA's board, noting that such studies in the past locked LIPA out of the bond market for a period, passed a resolution calling for PSEG to cease such lobbying and report future advocacy.

LIPA ratepayers also will have input into the commission's work and findings. Before issuing a draft report by year's end, the commission must hold at least one public hearing with a public comment period in each county on the establishment of public power by Sept. 13. It must then hold a public hearing on the draft report.

By next Feb. 1, the commission can turn the draft report over to the state comptroller for review and recommendations, with a final report due next April 1. The report also will “provide any legislation required to implement the public power model.”

By Mark Harrington

mark.harrington@newsday.comMHarringtonNews

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