Legislators seek closer LIPA scrutiny

Amid questions of whether the Long Island Power Authority manipulated an imminent rate increase to avoid a regulatory review, lawmakers are calling anew for immediate scrutiny of LIPA's books and greater outside oversight.

Assemb. Robert Sweeney (D-Lindenhurst) said Friday he was crafting a letter asking Gov. Andrew M. Cuomo to demand a Public Service Commission review of LIPA's books now. Assemb. Fred Thiele (I-Sag Harbor) said he would push again to have LIPA trustees elected, rather than appointed by Albany politicians.

Thiele called "unacceptable" recent revelations of LIPA overcharges from "lost" power and a three-year plan to pay it back, saying it amounts to "larceny of public funds."

Both were responding to questions this month about LIPA's discovery of $231 million in over-collections tied to unmetered energy lost on the system. New questions raised Thursday about LIPA's 1.9 percent delivery charge increase, set to go into effect next week, come atop the over-collections, the subject of State Senate hearings.

When LIPA trustees Thursday prepared to vote on a change in LIPA bylaws allowing the 1.9 percent rate hike in the fixed service portion of bills, trustee Neal Lewis asked whether LIPA kept the amount at less than 2.5 percent to avoid a mandated Public Service Commission review. One LIPA staffer first denied that was the case. But chief operating officer Michael Hervey clarified that "of course in our process . . . we have an eye on that 2.5 percent."

He acknowledged the new service charge "still does not reflect our fixed costs" but added the 1.9 percent figure "is exactly the percentage we came out [in] the budget."

Because the service portion of bills does not fluctuate with usage, Hervey said it's a good way for LIPA to "balance" the utility's desire for higher sales against the moderated usage that comes with efficiency programs.

LIPA's resolution for the increase said the delivery charge, if it fully reflected LIPA's costs, would be more than $15 rather than the $8.25 it was just increased to.

In an interview Thursday, LIPA chairman Howard Steinberg said there were certain "cost benefits" to moderating the delivery charge. "The reality is we never have" collected the full costs in the delivery charge, Steinberg said. "The reason is rate stability."

In an open letter he sent to LIPA trustees and officials on Friday, Lewis, who heads the Sustainability Institute at Molloy College and favors PSC oversight of LIPA, asked why LIPA was not recovering all costs for energy delivery.

Sweeney on Friday said, "There are enough questions here about whether rates are being rigged to require auditors and the PSC to step in to audit LIPA, and in fact that's what I'm going to ask for." He said he would also send a letter to State Comptroller Thomas DiNapoli, who said he favors a bill bringing LIPA under the PSC.

Another issue Lewis raised Friday was why LIPA decided to return only a portion of the $231 million in over-collections over three years instead of immediately.

Lewis said he was told, "We don't have the cash reserves to give that [money] back now."

Another trustee on LIPA's finance committee confirmed that assessment. "That is my understanding," trustee Michael Fragin said.

Stability or not, Thiele said he too had had enough.

"It's just one thing after another with LIPA," he said, adding he expects his new bill seeking to force election of LIPA trustees to get greater reception this year. "We've been clamoring for some type of oversight for the past two years. No agency should be without any type of oversight, and LIPA has been for too long."

"All LIPA board members are Long Island residents and LIPA ratepayers with a diversity of business and civic backgrounds who operate in the best interest of LIPA ratepayers," she said.