DiNapoli sees no obstacles to fully public LIPA, but officials are eyeing backup plan

State Comptroller Thomas DiNapoli has released an analysis that raised no serious obstacles to the future of LIPA as a fully public power utility, but uncertainty remains about whether lawmakers can pass legislation required for the transition in the current legislative session, officials said.

Commission members are slated to meet in Albany on Tuesday and are expected to decide then whether to continue pushing for legislation this session or wait until next year. 

DiNapoli, in a letter and 10-page report to legislators and the state commission formed to lay the groundwork for a fully public LIPA, offered a series of recommendations and observations for the commission’s final report, drawing on assertions contained in a draft report filed in April.

For instance, DiNapoli’s report noted the commission’s finding that the new structure could save ratepayers from $45 million to $75 million a year if PSEG were to be eliminated as the service provider, and he called for greater levels of transparency and accountability to make sure the utility followed through on its promises.

“LIPA will have to operate under a greater level of transparency, with clearer lines of accountability, and with enhanced local engagement and responsiveness,” DiNapoli wrote. “Both progress toward long-term goals and information on routine operations should clearly and regularly be communicated, with the LIPA board held directly accountable for successes or failures.”

Legislation is being drawn up that would begin the process of transitioning to a fully public LIPA, said commission executive director Rory Lancman, but unresolved issues such as governance and labor are still being finalized. DiNapoli’s office indicated that “if there is a desire to [transition LIPA] during this legislative session,” it would be best to include all needed legislation in the final commission report.

But whether the commission can hold required public hearings and complete a final report and legislation before the June 8 end of the current legislative session remains an open question.

LIPA itself at a board of trustee meeting on Wednesday indicated that it may have to make preparations to put a contract to manage the electric system out to bid if the legislature hasn’t resolved whether to make LIPA fully public by year's-end or even earlier. PSEG’s contract expires at the end of 2025.

“Either way, by the fourth quarter of this year, we need to go in one direction or another,” LIPA chief Tom Falcone told trustees, noting the decision is ultimately the governor and the legislature’s to make.

“If the commission does not change our business model, then we will proceed, in the fourth quarter or some time before that, with a new contract solicitation,” Falcone said. He explained LIPA would need time to draw up a new solicitation and review bidders, among a long list of to-dos.

“We have to have a contract approved by this board, the state comptroller, the attorney general, and then begin a transition. All the work leading up to that takes at least a year,” Falcone said. “And then you should try to leave a year for transition.”

Lancman said the commission is still working out whether all its work can get done by June 8, but he also noted that there’s also the possibility of passing a comprehensive LIPA package early in the 2024 session and still completing the process.

“It’s really in everyone’s interest to resolve this in, if not this legislative session, then as early as possible in the next session,” Lancman said.

He added that DiNapoli’s analysis provided “very interesting and worthwhile ideas to explore,” and noted that the comptroller "took no issue with our data, methodology or analysis," indicating that the draft report's findings about the benefits for LIPA ratepayers are "solid." 

PSEG, which had been advocating for LIPA to keep the current operating structure in which it manages the grid under contract, in a statement said "it’s clear" from DiNapoli’s report that the commission has “failed to resolve many critical questions before it can be considered for legislation.”

Last week, some business groups raised questions about the draft report after one of the report’s consultants disrobed during a commission advisory committee Zoom meeting last month.

DiNapoli recommended that the commission address the question about how the new LIPA board would be comprised, whether an appointed or elected board, and how “independence and accountability would be insured.” He suggested, “A more thorough review and analysis” of appointed or elected boards may be in order.

Lancman said the final report would address that as well as questions about the union workforce, making sure that 2,500 unionized employees keep their status, benefits and job protections. “I think there’s an understanding that you need to have an appointed board, at least to be able to protect the labor issues,” Lancman said.

DiNapoli also recommended the new LIPA leverage other state agencies and their expertise to operate and advise the utility, including the New York Power Authority and the Department of Public Service, and even suggested including the chair of the Public Service Commission and the president of NYPA on the LIPA board.

He suggested the commission provide more specificity as to how LIPA will guarantee that the new entity’s employees “retain all their existing terms and conditions of employment,” and that LIPA “fully identify how ratepayers would be protected” in the case of future rate increases.

And he urged LIPA not to roll back a review by the comptroller’s office of LIPA contracts over $50,000, as it remains an “important deterrent to waste, fraud and abuse.” 

The comptroller indicated that the new LIPA “must commit to operating under a greater level of transparency” than it has in the past, with provisions to regularly publish performance metrics, communicate with customers in emergencies and hold itself more accountable.

Whether the state DPS would have the same “advisory” role it now has at LIPA also remains an open question, but DiNapoli’s office suggested, “At a minimum, provisions should be included to ensure that LIPA provides the same level of information and public access that was provided by DPS, and that regular management and operational audits performed by an outside, independent entity continue to be required.”

By Mark Harrington

mark.harrington@newsday.comMHarringtonNews

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