LIPA postpones moving most customers to time-of-use electric rate

LIPA on Wednesday cited back-office delays in postponing the mass migration of customers to a new time-of-use rate plan until 2025, although it still expects to start a slower migration next year.

LIPA previously planned to shift hundreds of thousands of customers in 2024 to the plan, which offers discounts to customers to shift usage away from the peak hours.

The time-of-use rate offers discounts for those who shift their power use from the peak period of 3 to 7 p.m. PSEG, which operates the grid under contract to LIPA, has been managing the transition to the new rate.

During a presentation to its board of trustees Wednesday, officials said it now expects only a few thousand customers who sign up for new service to be assigned the new rate starting in January. Those seeking to voluntarily shift would be able to do so when the rate becomes available before the end of the year.

In a report released Wednesday, LIPA cited ongoing delays in several computer-related projects by PSEG in explaining the postponement of the time-of-day rates and several other information technology (IT) projects, including a vital asset-management system.

"Project management deficiencies [by PSEG] persist, particularly in IT-related projects, several of which have experienced significant delays in 2023," LIPA staff wrote in a quarterly report on PSEG metrics. It's led to schedule and budget overruns. PSEG needs "much more sophisticated project management, better control and oversight of vendors, better cost management and better quality control,” the report said.

Under the original time-of-day plan outlined by LIPA earlier this year, all customers would eventually be shifted automatically to the new rate but have the option to return to a fixed rate if they choose. LIPA also plans to offer a guarantee that would compensate customers for the difference if the new rate ultimately costs customers more than the fixed rate after the first year.

LIPA’s plan includes several tiers of time-of-day rates, including greater discounts for night use, which can be attractive to those with electric vehicles.

LIPA officials Wednesday said a smaller number of customers would be shifted to the rate by June, rather than an originally planned 20,000 by February and another 40,000 in May.

But LIPA’s bigger plan to make the time-of-day rate its standard rate and automatically begin shifting nearly all customers to it would have to wait until 2025, the same year that PSEG’s contract is scheduled to expire by the end of that year. LIPA had expected to have between 300,000 and 400,000 converted to the new rate by the end of 2024, LIPA chief executive Tom Falcone said. The number now could reach upward of 100,000.

“Getting it right the first time is very important,” PSEG Long Island acting president Dave Lyons told the board. “We’re going to get it right.”

LIPA vice chairman Mark Fischl noted, “We need to get this right because we’re not going to get a second shot at it.”

Separately on Wednesday, trustees extended an agreement to buy energy from an upstate nuclear power plant, even as LIPA enters the home stretch in paying off the balance of the mothballed Shoreham nuke plant costs.

LIPA has been buying energy from the upstate FitzPatrick nuclear power plant since 1975, with a total of about 6% of its energy coming from that plant. The contract was set to expire at the year's end.

Trustees authorized LIPA to enter into a contract extension through Dec. 31, 2026. Total payments to plant owner Constellation Energy will be about $97 million during the three-year term, a savings of about $16.6 million from the prior contract based on new terms, said Gary Stephenson, LIPA's newly named vice president of power supply. LIPA buys around 160 megawatts of energy from the plant during summers and 124 megawatts in the winters. Each megawatt powers between 800 and 1,000 homes.

During a presentation at a public hearing on LIPA’s future as a fully public power entity earlier this month, Falcone said the complex transaction under which LIPA purchased the mothballed Shoreham nuclear plant — by assuming debt of about $6 billion and the Long Island Lighting Co.'s grid assets — has a remaining balance of about $400 million. Falcone said the balance is projected to be paid off by 2027.

LIPA separately owns around 18% of a second Constellation-owned nuclear power plant, called Nine Mile Point II, located near the FitzPatrick plant in upstate Oswego. LIPA derives around 8% of its energy from that plant. In all, according to a 2016 review of LIPA’s energy resources, LIPA gets about 15% of its energy from nuclear power.

By Mark Harrington

mark.harrington@newsday.comMHarringtonNews

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