PSEG Long Island out millions of dollars for missing performance targets, state says

PSEG Long Island qualified for only $14.8 million of a potential $21 million in bonus compensation for 2022 after failing to meet 23 performance targets for the year, the state Department of Public Service found.

PSEG had disputed previous assertions by LIPA that it had missed eight of the 2022 performance targets, saying it was eligible for $16.8 million.

Overall, PSEG missed performance targets such as call center answer times and minimum scores for customer satisfaction in a JD Power survey that are required in a contract the PSEG and LIPA signed in 2021.

PSEG still gets $56.7 million in fixed compensation under the contract. 

The contract came after a lawsuit by LIPA alleging performance and management failures by PSEG during Tropical Storm Isaias in 2020, which left more than 500,000 Long Island customers in the dark, some for up to a week.

PSEG, headquartered in New Jersey, operates the electric grid under a contract with LIPA that expires in 2025. A state commission is exploring the prospect of making LIPA a fully public utility, ending its reliance on a big outside service provider such as PSEG. The effort stalled at the end of the state legislative session this year.

PSEG met 73 of the 96 new performance targets LIPA required.

PSEG spokeswoman Kathryn Tatzel said the company was reviewing the LIPA and Public Service Department reports. The company called itself the top utility with overhead lines in the state and "one of the most reliable utilities in the nation." 

"It is unfortunate that LIPA and others are framing the metrics as anything other than a stretch target and continue to ignore and denigrate the hard work our 2,500 employees do every day on behalf of our customers," Tatzel said.

In its own 90-page report on PSEG’s performance released last month, LIPA found PSEG’s performance scores “would have been significantly worse if LIPA had not granted PSEG considerable flexibility.”

LIPA found PSEG performed well in areas such as grid reliability, but said “poor planning hampered many projects, resulting in delayed starts and schedule adjustments, further aggravated by weak project controls and management.”

Lisa Tyson, executive director of the Long Island Progressive Coalition and co-chair of an advisory committee to the commission on LIPA's future, said the state's and LIPA'S findings were worrisome.

"It reconfirms that they [PSEG] are doing a poor job and they do not deserve this contract and are not a qualified contractor to be running this system," Tyson said. "It's very disappointing and scary. It most definitely justifies the need for a fully public LIPA."

LIPA in its report said PSEG needed “much more sophisticated project management, better control and oversight of vendors, better cost management, and better control and assurance processes.”

Of five categories, PSEG scored worst in information technology performance, at 29% of metrics fully met, while transmission and distribution performance was best, at 85%. Also, PSEG fully met 47% of customer service metrics, the report found.

PSEG met 34 of 40 metrics for transmission and distribution work last year, LIPA said.

In information technology, PSEG fully met only two of seven metrics, LIPA said, asserting that “weak project management and organizational maturity significantly hampered” the effectiveness of the IT organization.

Also, LIPA said, disaster recovery plans submitted last year were “inadequate.”

PSEG met nine of 19 customer service metrics, LIPA reported. Well-documented issues with the PSEG call center, where customer wait times increased last year, were among the reasons PSEG missed the target. 

By Mark Harrington

mark.harrington@newsday.comMHarringtonNews

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