How do you feel about the Long Island Power Authority throwing out the for-profit PSEG-LI and running our power as a public utility rather than the public-private hybrid? The Commission on the Future of the Long Island Power Authority wants to know and is holding its second and final round of hearings in Suffolk, the Rockaways and Nassau (dates to be announced; written comments can also be accepted online.)
A report just issued by the Commission on the Future of the Long Island Power Authority suggests that the path to making our utility more reliable, affordable and democratic goes through eliminating the for-profit middleman, PSEG.
“LIPA, a public authority, pays a for-profit utility nearly $80 million a year to manage LIPA’s electric grid, which our most conservative analysis tells us would cost LIPA no more than $15 million annually to hire its own managers to operate the system itself,” commented Rory Lancman, executive director, NYS Legislative Commission on the Future of LIPA.
“More than that, a unified electric grid – one that LIPA both owns and operates – will make it easier for LIPA to meet the state’s ambitious green energy goals, improve reliability and resiliency, and respond to community needs across Long Island and the Rockaways,” he said. “There is a reason no other utility in the country employs LIPA’s existing bifurcated model, whereby one entity owns the grid’s infrastructure and another entity operates it: It’s costly, inefficient, and unaccountable.”
Converting LIPA to a fully public model would save from $48 million to $78 million annually. There would be a one-time transition cost of $16 million to $59 million, with the payback time over three to 16 months, according to the report.
“The findings only reconfirm what many have pointed out for years: Long Island and Rockaway ratepayers will be better off without PSEG,” said Ryan Madden, sustainability organizer of the Long Island Progressive Coalition, one of the organizations behind the Reimagine LIPA campaign advocating for turning LIPA into a fully public utility.
“A fully public LIPA will lower rates and provide more transparency and accountability, with more opportunities for local input,” he wrote in response to emailed questions.
“The Reimagine LIPA campaign is calling for a representative multi-stakeholder Board of Trustees where local voices help determine the composition by appointment; a new Community Board that actively engages with communities in the LIPA service territory to set goals and makes major decisions for the utility like rate structure; and an independent Energy Observatory to help monitor and advise the utility, engage ratepayers, conduct independent research, and support the community board in their efforts for resilience and energy justice,” Madden said.
Significantly, going fully public will allow LIPA to better and more fairly manage the transition to 100% renewable energy in order to meet New York State climate mandates under the Climate Leadership and Community Protection Act.
While LIPA owns the transmission infrastructure, LIPA currently purchases the power generated by plants currently owned by private entities, mostly National Grid, which operate gas-powered plants. Many of those contracts are up before 2030 and the fate of those sites remains unclear in terms of transitioning to renewables or battery storage.
Unless LIPA chose to develop its own renewable energy projects, it would still rely on private developers to build offshore wind or solar or storage, which then would enter into an agreement with LIPA to utilize the grid.
That is already happening. For example, Sunrise Wind, a $4.2 billion project being developed by Orsted of Denmark and Eversource Energy of New England, will bring 924 megawatts of offshore wind power to Long Island, enough to power 600,000 homes (half of LIPA’s 1.2 million customer base) by 2035. (https://www.newsday.com/long-island/sunrise-wind-haugland-wind-farm-cable-orsted-eversource-energy-holbrook-smith-poibt-t9ltqb3t)
“Technically LIPA has the ability to own and operate its own renewable energy projects but it does not currently do that. We think it should,” Madden wrote in reply to emailed questions.
“LIPA has determined it has enough capacity based on current projects in the works to supply all the electric needs of their customers through 2031 as demand rises due to electrification,” Madden stated. “As wind farms come online, one as soon as 2025, we will be using cleaner energy. Keep in mind solar and wind power have no fuel costs. There will be no fuel price spikes that raise electricity costs.”
There is no organized opposition to moving to a fully public utility and no support for privatization, not even from Republicans. Too many Long islanders still bitterly remember LILCO (Long Island Lighting Company) – its fiscal mismanagement, the Shoreham nuclear fiasco and near-bankruptcy. The not-for-profit Long Island Power Authority was created to take on LILCO’s $6 billion debt. Returning to privatization would necessitate refinancing of LIPA’s $10 billion of existing debt at higher interest rates, causing rates to spike. What is more, private utilities are ineligible to receive FEMA funding, while LIPA has already received FEMA grants to harden our electric grid.
Converting LIPA to a fully public model would require special legislation and amendments to the original LIPA Act.
Essentially, all that would change would be the elimination of the PSEG-LI management – not the workers who actually run and maintain the system. PSEG’s role seems superfluous – it does not contribute anything. The management and operations expertise can be assumed by LIPA.
The only significant stumbling block appears to be how the 1,500 PSEG workers would be transitioned from a private entity represented by a IBEW Local 1049 subsidiary, ServCo. The workers have said they do not want to join a public employees union, so there would be no change to jobs, salaries or benefits.
So the only real question is over whether we continue this public-private hybrid or throw out PSEG-LI when its contract is up and become a fully public utility. But the devil is in the details, which the public hearings will help flesh out.
To learn more about the Reimagine LIPA proposals, see its guide: https://docs.google.com/document/d/1R27V7owVPPO1mX46sdRbaHgRHuSdjY_v2X3VD9oSrsU/edit.
Written comments can be submitted on the LIPA Commission website: https://nylipa.gov/public-input.