PSEG Gains A Rate Hike

The Long Island Power Authority approved a $325 million, three-year rate increase for PSEG Long Island after what State Assemblyman Fred W. Thiele Jr. described as a “contentious” meeting of the LIPA board last week.

For the average residential customer paying $154 each month for electricity, the increase would work out to $2.85 each month starting on January 1, 2016, and rise to $3.10 on January 1, 2018, according to PSEG. The increase will be included in the “delivery” charge, which accounts for roughly half of each total monthly electric bill, and make that portion rise by 3 percent in 2016, 3.2 percent in 2017, and 3.4 percent in 2018, according to PSEG.

PSEG is the New Jersey-based, for-profit energy company that operates LIPA’s electric transmission and distribution system under its subsidiary PSEG Long Island, which serves about 1.1 million customers on Long Island and in the Rockaways. The vast majority are residential customers, according to Jeffrey Weir, the company’s director of communications. Business customers’ bills tend to be higher, as they use more power.

On its website, PSEG says the increase is needed to guarantee reliable service by investing in infrastructure, to enhance customer service with new digital technology, to improve storm preparedness and response programs for events like Hurricane Sandy, and to step up tree-trimming to prevent power outages.

Mr. Weir said several of these areas had been neglected before PSEG took over LIPA’s distribution, which was evident when many customers lost power during Sandy. The rate hike would “pay for improvements that we believe are necessary to give our customers the service they deserve,” he said this week.

Mr. Thiele, however, lashed out this week in response to the LIPA board’s decision. Noting in a press release that LIPA had increased the delivery charge only twice over the last 16 years, in both cases by less than 2 percent, he said the proposed hike is the largest in LIPA’s history.

“PSEG-LI should have been subject to the same cap as local government and school districts face for property taxes, which would be less than 1 percent this year,” Mr. Thiele said in the release. “PSEG-LI should have been required to live with the same fiscal discipline as the state and local government.”

The assemblyman also said the proposal would increase LIPA’s indebtedness to its highest level ever—more than $8 billion by the end of 2018—leaving ratepayers liable for that debt.

Originally, the proposed rate increase was $387 million, but that was cut back to $325.4 million at the recommendation of the State Department of Public Service, which has only “review and recommend” powers when it comes to PSEG rate hikes. With last week’s approval in place, Mr. Thiele said, LIPA now needs only to include the increase in its budget later this year.

When the 2013 LIPA Reform Act put the day-to-day operations of LIPA, which is a nonprofit entity, into the hands of PSEG, some of the goals were to improve Long Island’s electric operations and emergency preparedness, reduce the cost of debt and freeze rates through 2015. At last week’s LIPA board meeting, several trustees objected to the increase, saying it would hurt ratepayers and Long Island’s economy, but could vote only on “inconsistencies” in the proposal, according to Mr. Thiele.

“They were very critical that the LIPA Reform Act was so narrowly drafted that it did not include the reasons that they were opposed,” he said. “I agree with them … that’s why I voted ‘no’ on it originally.

“This law has no oversight that protects ratepayers,” he added.