PSEG lobbies state officials as LIPA considers becoming a public utility

Despite sharp pushback from LIPA and its trustees last year over its lobbying activity, PSEG Long Island and outside entities have continued to heavily lobby state government as a state commission prepared legislation to make LIPA a fully public utility.

State records indicate that a top PSEG Long Island official and at least two outside lobbying firms met with legislators and the governor's office as the state approved a commission on LIPA’s future that would focus on transitioning the utility to a fully public model. PSEG’s contract with LIPA ends in 2025. If LIPA moves to a public model, it would put PSEG Long Island out of the job of managing the Long Island electric system.

The activity comes as Gov. Kathy Hochul’s office is said to be moving to engage more fully on LIPA issues, and could start with new appointments for the governor’s five seats on the LIPA board as soon as this summer. The governor's office effectively controls the LIPA board with five trustees appointments. All current governor appointees are holdovers from former Gov. Andrew M. Cuomo and are operating on expired terms.

Hochul’s press office didn’t respond to a request for comment.

LIPA and its trustees were in open confrontation about PSEG’s lobbying efforts in 2022, when a state law took effect requiring the utility to report on advertising and lobbying activity. Trustees and officials at a March 2022 LIPA board meeting accused PSEG of lobbying for studies on LIPA’s future, which included selling the utility to a private entity — studies that LIPA said could have limited its access to the bond market.

Trustees told PSEG officials their efforts weren’t in the best interests of ratepayers. PSEG said it had been advocating instead for a full review of all options for LIPA, including keeping the public-private model in which PSEG currently manages the electric grid.

PSEG exec met with state legislative staff members

A report submitted by PSEG at the end of March shows that Christopher Hahn, PSEG vice president of external affairs, met with state Assembly and Senate staff members on seven occasions in February for “updates on PSEG Long Island activities.”

Hahn also met with Nassau County Executive Bruce Blakeman for the same reason that month as the state commission was finalizing a report on so-called municipalization and considering legislation that would convert LIPA to a fully public utility, managing all operations and a force of some 2,500 employees.

“We are talking to key stakeholders and other groups about the successes we’ve had, about the benefits of keeping this model,” Hahn told Newsday’s editorial board in February.

At the same time, two lobbying firms were working behind the scenes on PSEG and LIPA matters, according to a separate state lobbying database. Tonio Burgos & Associates, the firm that previously employed Hahn, was paid $82,500 to lobby for PSEG in 2022, on issues including “PSEG updates” and “increasing utility prices.” At the same time, Mercury Interactive was paid about $120,000 to lobby the governor’s office and more than a dozen state legislators with PSEG listed as the client, according to state lobbying records.

Mercury for 2023 was paid $10,000 a month, the records show, to lobby on “issues related to energy.” The Burgos firm has been paid $30,000 from January to the end of May, records show.

Mercury in its January through June filings for 2023, reported “direct lobbying” six state legislators, four of whom are members of the LIPA commission, on “utility regulation.” It billed PSEG $60,000 thus far for 2023, and $120,000 for all of 2022. By comparison, Mercury billed PSEG $50,000 for all of 2019 and $60,000 for 2020, state records show. Its fee increased to $10,000 a month in 2021.

A separate entity, PSEG Services, lobbied for PSEG Long Island on “updates on PSEG Long Island activities,” according to the state database, with Hahn listed as lobbyist for the January-February 2023 period.

PSEG declined to say how much or even whether its lobbying included advocating for its widely stated position that PSEG should continue as LIPA’s service contractor, but in a statement it said, “PSEG Long Island does not use customer dollars for purposes other than providing services covered under its agreement with LIPA.”

LIPA resolution bars PSEG from lobbying on privatization

A resolution passed by LIPA trustees last year specifically required PSEG to “immediately cease and desist all lobbying and advocacy activities with elected officials, public officials, customers and, other stakeholders related to privatization.” The resolution also required PSEG to “provide LIPA prior written notice of all lobbying and advocacy positions and activities by senior managers” and staff to “determine whether those lobbying and advocacy positions and activities are at all times in the best interests of LIPA and LIPA’s customers, as determined by LIPA, and are not in furtherance of any conflicting interests.”

LIPA in a statement said PSEG has not provided prior-notice reports on planned lobbying activities.

PSEG is a member of the Long Island Association, which has released a report on privatization by financial firm Lazard, which found the prospect feasible. LIPA then prepared a critique of that report, which found while there could be rate freezes for several years, rates would skyrocket after a half decade.

Assemb. Fred Thiele (D-Sag Harbor), who co-chairs the state commission on the future of LIPA, said that while he believes PSEG has “given up on lobbying me,” he has seen the company working “behind the scenes” in Albany and elsewhere to advocate for its position relative to LIPA.

“Their footprints are hard to miss,” Thiele said of PSEG. “It’s an inside baseball strategy. They’re not trying to convince the public that PSEG is the best option … They’re trying to lobby members of the Senate, the Assembly and the governor’s office."

A decade ago, Thiele said, PSEG met with him and other lawmakers on Long Island to discuss the company’s eventual interest in buying the LIPA system, which Cuomo had supported at the time.

“They met with us in Bridgehampton and they were then lobbying for full privatization,” Thiele said.

In a letter to LIPA chief Tom Falcone last year, former PSEG Long Island president Dan Eichhorn pointed to LIPA’s own previous studies on privatization in saying that it would be “appropriate for the legislation to consider privatization as a possible structuring option,” along with other options.

PSEG Long Island spokeswoman Katy Tatzel declined to say whether PSEG has an interest in buying the LIPA system, referring questions on the matter to PSEG corporate.

Marijke Shugrue, a spokesperson for PSEG’s corporate parent, said the company “does not comment on rumors or speculation, including past, present or future business plans.”

Edison Electric Institute lobbied public for PSEG

It’s not just local and statewide firms that have been working on PSEG’s behalf. The Washington, D.C.-based Edison Electric Institute, of which PSEG is a member, in a campaign on Facebook urged Long Island readers to “Stop Albany’s Latest Power Grab.” At a page linked to that message, by an EEI-affiliated group called We Stand for Power, readers were urged to: “Tell your legislator to oppose a full government takeover of LIPA!”

Brian Reil, a spokesman for the Edison Electric Institute, said campaigns like the one it ran on behalf of PSEG are “part of EEI's regular activities, which include efforts to explain how electric companies deliver benefits to customers on a variety of issues across the country.”

Fred Harrison, a Merrick ratepayer and an advocate for a fully public LIPA, found the campaigns and questions about how they are being paid for “very concerning.”

“It has to be concerning to anybody who follows this topic and wants to see improvement” by the utility, Harrison said.

The LIPA commission has set four public hearings on the future of LIPA for September.

By Mark Harrington

mark.harrington@newsday.comMHarringtonNews

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