LIPA commission is already a fiasco

What do you call a legislatively-mandated commission that does no work for months and ignores its statutory deadline for holding public hearings? 

If it’s not yet a failure, the commission to revamp the Long Island Power Authority is at least already a fiasco. 

A state law enacted in May authorized the commission and charged it with crafting a plan to restructure LIPA into a true publicly owned utility. Currently, LIPA owns most of the Long Island electrical grid but contracts out day-to-day management and operations to PSEG, a private utility. 

The commission is supposed to complete a draft plan by the end of the year. But the Democratic leaders in the Assembly and State Senate dawdled for two months before appointing commission members in late July. Another two months have gone by, and the commission has yet to meet.

Worst of all, the commission was required by law to hold public hearings before the end of September in each of the counties LIPA serves. Not a single hearing took place, so the commission is already in violation of its enabling law.

With elections only weeks away and members in campaign mode, it’s unlikely to do much work this month, either. 

That leaves two months — November and December — to hold public hearings and create a plan for the complex process of reforming a major public agency.

This doesn’t inspire confidence that the commission will have the time to craft a well-thought-out plan.

It’s hard to predict what will come of this proposal. Public power advocates clearly want to eliminate any role for a private utility in operating LIPA’s grid. They don’t have evidence that LIPA could improve upon PSEG’s management; they seem to think the word “public” is a magical incantation that will make everything better. 

But PSEG workers’ unions are unlikely to want to become public employees after paying into their own pension plans for years, and they’re a potent political force.

Long Islanders have long paid too much for power; proponents of municipalization hope to reduce costs by eliminating operating fees LIPA pays PSEG.

But expertise is often worth the cost. When LIPA mistakenly predicted increased power demand and was about to repower shuttered power plants and authorize the building of the Caithness II plant, PSEG showed those costly projects were unnecessary, saving LIPA about 25 times what it pays PSEG annually.

Granted, PSEG responded poorly after Tropical Storm Isaias. But LIPA has already responded by cutting PSEG’s guaranteed payments by 40% and making the remainder performance-based. PSEG must perform well or lose tens of millions of dollars. LIPA also gave itself more authority to unilaterally cancel PSEG’s contract in case of deficient performance.

This is what good oversight looks like. And this new agreement just took effect this year, so it should be given time to prove itself. That makes more sense than rushing to cobble together an untested new model in a matter of weeks.

A utility should focus on reliably providing affordable energy to households and businesses. But power is so politicized in New York that a revamped LIPA will probably be required to attend to the demands of multiple interest groups, all represented on the board of trustees. 

Who likely won’t be well-represented? Ordinary ratepayers, because they’re not as well-organized. 

If the commission ever gets moving and, belatedly, holds public hearings, Long Islanders need to pay attention and speak up to make their voices heard.

This guest essay reflects the views of James Hanley, a fellow with the Empire Center for Public Policy.