Post Sandy Commision Recommends Privatizing ‘Dysfunctional’ LIPA

Originally published: January 7, 2013
Updated: December 29, 2014 at 11:10 am

Hicksville, N.Y. (MorichesDaily) – New York Gov. Cuomo’s Moreland Commission has recommended eliminating the Long Island Power Authority and replacing it with a private company after it left thousands powerless weeks after Sandy.

The commission said LIPA was unprepared for Superstorm Sandy, then inept in its response.

Superstorm Sandy devastated much of the northeastern seaboard on October 29, 2012. While most utilities had restored electricity to nearly all their customers, LIPA still reported tens of thousands of customers in the dark.

LIPA is overseen by the state but contracts with National Grid to provide service.

The Moreland Commission, hand picked by Gov. Andrew M. Cuomo to review utilities storm performance, said LIPA had a “fundamental dysfunctional management structure” that hampered power restoration and led to poor communication with the public about outages and restorations.

The best resolution, the panel concluded, was to scrap LIPA.

“It’s highly questionable whether LIPA customers will ever regain confidence in LIPA,” Benjamin Lawsky, panel co-chairman and head of the state Department of Financial Services, said at a State Capitol news conference.

“What we realized was the heart of where they went wrong and the key to many, if not all of their problems, was a fundamental dysfunctional management structure,” said Lawsky.

Cuomo said utilities appeared woefully unprepared for the storm, saying they even lacked a stockpile of power poles to replace those broken by falling trees. The governor had threatened the utilities’ licenses because of their performances.

The governor said under current regulations, there is no incentive for utilities to do the right thing.

“There has to be a possibility that you can revoke the franchise without going to court for 20 years,” said Cuomo.

In response LIPA spokesman Mark Gross said, “We are reviewing the report and will continue to cooperate with the State and the Moreland Commission to do what is in the best interest of Long Island’s ratepayers.”

The commission had studied a range of options such as placing LIPA under the oversight of the New York Power Authority and expanding LIPA to allow it to run the Island power grid.

But after hurricane Sandy LIPA was widely criticized for its slow response and inconsistent communications during the storm.

Ironically, LIPA was created by former Gov. Mario Cuomo – the current governor’s father – to take over from a private company, Long Island Lighting Co. (LILCO), that had a history of service problems.

Moreland Commission officials said privatizing LIPA now wasn’t necessarily a return to the past.

“Just because something didn’t work years ago doesn’t mean it won’t work this time,” Calcaterra said. “Maybe LILCO didn’t succeed, but many private power companies do.”

A state report criticized LIPA in June for poor customer communications after Irene last year and for insufficient tree trimming. The Department of Public Service noted major problems in telling customers estimated power-restoration times, faulting its computer system, which a consultant had found deficient back in 2006.

The commission also recommended several measures to increase state oversight of the utilities, allowing the state’s public service commission to levy fines up to $2 million for performance failures, up from the current fine of $100,000. The commission also recommended lowering the burden of proof required to show a utility failed to do properly.

Mr. Cuomo said the problem underlying the ineptitude of utilities’ storm-response is “the failure of the regulation of power companies.” He said the Commission’s work would be “ongoing” but that he planned to fold some of its preliminary recommendations into his State of the State address Jan. 9th, during which he will set goals for the next year.

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One Response to Post Sandy Commision Recommends Privatizing ‘Dysfunctional’ LIPA

  1. […] governor said he would eliminate the Long Island Power Authority as part of measures to better protect New York City and Long Island and would “harden” […]

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