Cuomo Announces Proposal For LIPA’s Future

Andrew Cuomo
Gov. Andrew Cuomo announces LIPA proposal on Monday, May 13.

The Long Island Power Authority could be hit with a severe power downgrade if New York Gov. Andrew Cuomo gets his way.

The governor laid out a proposal Monday that would shift the embattled utility company’s day-to-day operation to PSEG, the New Jersey-based company slated to replace National Grid next year, and would freeze rates for three years, slash LIPA’s staff considerably and reduce LIPA’s debt load.

Essentially, LIPA would become a holding company, but would remain under government ownership for tax purposes and to ensure reimbursement from the Federal Emergency Management Agency (FEMA), the governor said.

“Simply put, LIPA is broken,” Cuomo said at the afternoon briefing.

The governor’s long-awaited announcement regarding the utility’s future comes more than six months after Superstorm Sandy pummeled LI, knocking out power to more than 90 percent of the 1.1 million homes and business that LIPA serves. LIPA came under intense pressure amid the storm’s aftermath from local and state officials, including Cuomo, who at his state-of-the-state address in January said “the time has come to abolish LIPA. Period.”

The governor didn’t go that far Monday, nor did he call for LIPA to be privatized, which he suggested early on after the Oct. 29 storm. But he made clear that the utility’s power would be diminished considerably.

“I think the storm was the straw that broke the camel’s back,” Cuomo said, joined in Albany with Nassau County Executive Ed Mangano and Suffolk County Executive Steve Bellone. “It is the status quo and it has failed.”

Cuomo is seeking to privatize much of the utility’s operation by transferring duties to PSEG come January, improve customer service during storm response and stabilize rates—partly by instituting a rate freeze through 2015. He’s also calling for more government oversight of the utility.

“Getting rates down is essential,” Cuomo said, “getting the cost of power down is essential.”

He decided against privatizing the LIPA altogether, noting that doing so could endanger future reimbursement from FEMA. Sandy aid has already been allocated to cover the cost of raising or relocating LIPA’s power lines so property owners don’t have to foot the bill as they continue construction of their storm-ravaged homes.

The proposal would also impact LIPA’s staff, cutting it from 90 to 20, the governor said, and would slash the number of board members from 15 to five.

Cuomo is looking to push the proposal through this legislative session, which ends at the end of June. The top leaders in the state Senate and Assembly gave no indication that they would pass the bill through their respective chambers.

Dean Skelos (R-Rockville Centre), co-leader of the state Senate, said he “will closely review this plan,” and added that officials are moving the in “right direction.”

“I think this is a thoughtful plan that has many great ideas,” said Assembly Speaker Sheldon Silver (D-Manhattan). “It’s an important step in the right direction.”

Both Mangano and Bellone accepted the governor’s recommendations.

“I think we have a critical moment to be responsive to this issue,” Cuomo said.“There is no alternative because the status quo is dangerous for Long Island.”