Audit: LIPA’s ‘longstanding issues’ have not been dealt with

07/24/2015 2:08 PM |

After a lengthy effort to reduce costs for Long Island Power Authority customers, State Comptroller Thomas DiNapoli said that the utility has been ineffective after he discovered that costs have not been reduced and debt levels continued to rise. In an audit released on Friday, Mr. DiNapoli blasted the electricity utility, noting that, “Despite repeated reform efforts, LIPA’s longstanding issues continue to plague both residential and commercial customers.”

After what was widely considered a failed response to Superstorm Sandy in 2012, the following year the LIPA Reform Act was put in place in an effort to stabilize rates, improve service and increase accountability for LIPA customers.

In 2014, New Jersey-based Public Service Energy Group signed on to take control of the electrical grid for LIPA, though LIPA still owns the infrastructure.

According to the comptroller, however, that hasn’t changed much.

“Costs for ratepayers remain too high and an increasing debt load will burden customers well into the future,” Mr. DiNapoli said in a press release. “Both the LIPA board and state policymakers should consider further action to improve oversight and accountability, strengthen consumer protections and provide much needed relief for customers.”

In March, close to 85 residents flooded the Riverhead Free Library to protest a three-year rate hike proposed by PSEG. The proposal also drew the ire of elected officials, including south fork Assemblyman Fred Thiele (I-Sag Harbor).

“LIPA’s answer to everything is ‘We need more money,’” Mr. Thiele wrote at the time. “We do not have any more money. You can’t keep putting your hands in the pocket of ratepayers. That’s not the answer. The answer is use the money you have better.”

The legislator said on Friday that he would be working on legislation to address concerns raised in the audit.

The 34-page audit released on Friday said that Long Island utility customers pay some of the highest electricity prices in the country. It said that LIPA’s average retail price for residential electricity is over 22 percent higher than the state median and 78 percent above the nationwide median for 2013. Their commercial average retail price was almost 92 percent higher than the nationwide median.

In addition to higher prices, LIPA was reportedly almost $7.6 billion in debt in 2014, a burden that falls on customers to pay. The company is expected to be $8 billion in debt by 2018, according to the comptroller.

This number comes after the 2013 legislation authorized a one-time restructuring of the company’s debt. However, the state budget approved this spring removed that limitation, instead capping the total debt issued at $4.5 billion.

According to the statement, the 2013 LIPA Reform Act created a new Long Island office of the Department of Public Service, which oversees utilities throughout New York State, but it was given limited review and recommendation powers regarding LIPA and PSEG. Because of this, customers “do not benefit from regulatory oversight, access to information and cost control mechanisms that other New York utility customers have,” the report read.

Mr. DiNapoli proposed strengthening the power of the DPS to include more consumer protection and advocacy provisions, suggesting an increase of local discussion and participation, and urged DPS to require annual reporting by LIPA and PSEG, review all financial records and inspect LIPA and PSEG facilities.

A spokesperson for PSEG declined to comment on the audit having not yet received a copy of the report.

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