Paying the Price

As the New York State Legislative Commission on the Future of the Long Island Power Authority “reset” its schedule for additional public hearings and the issuance of its final report later this year, Newsday last month revealed that “compensation packages for the top PSEG Long Island executives ranged from $442,000 to nearly $700,000.”

That, noted the Newsday article by Mark Harrington, “may provide fodder for some who say the public-private relationship … needs to be scrapped.”

This is what the commission is considering.

The Long Island Power Authority, established by the state in the 1980s, was originally envisioned as itself running Long Island’s electric grid. But that was altered and LIPA became “the only utility in the nation that is operated under a third-party management model,” with a private contractor running Long Island’s grid, notes State Assemblyman Fred W. Thiele Jr. of Sag Harbor, co-chair of the legislative commission. He charges that “this model has repeatedly failed its customers. There has been a lack of transparency, oversight and accountability.”

Currently, this “third party” is Newark, New Jersey-based PSEG (Public Service Enterprise Group). It has set up a branch, PSEG Long Island, to be a contractor for LIPA.

Newsday reported that PSEG Long Island’s “interim President and Chief Operating Officer Dave Lyons’s total compensation package for 2022 as filed with the state was $699,779, including $275,520 in salary and a bonus of $144,400. The value of his ‘other’ pay was $125,478. The ‘other pay’ category includes long-term incentive grants, special achievement awards, vehicle/housing/mobile phone stipends, relocation costs and a hiring bonus, the filing says.”

Said Newsday: “The PSEG bonuses and other perks [are] nearly double the compensation of LIPA employees.”

Further, Newsday also reported last month that PSEG Long Island “scored an overall 70 percent in fully meeting a list of 96 new LIPA performance metrics for 2022, with the lowest overall scores (47 percent) in customer services. Notably, PSEG did not meet J.D. Power Customer Satisfaction Survey metrics for the year.” And “PSEG also failed on all three call-center metrics.”

Meanwhile, a longtime public official from Long Island, State Comptroller Tom DiNapoli, previously a state assemblyman, released an analysis last month saying that there were no serious obstacles to LIPA becoming a full public utility, operating its grid and eliminating PSEG. The analysis by DiNapoli, of Great Neck Plaza, said this change could save ratepayers from $45 million to $75 million a year.

There’s a push, led by some business interests, to retain PSEG as LIPA’s contractor. If LIPA becomes a full public utility, wrote Ed Blumenfeld, president of BDG, a Syosset real estate development company, in Long Island Business News, “There will be a burgeoning bureaucracy tasked with managing the massive and expensive shift from fossil fuel to all electric … One can already hear LIPA’s insistence it will need more staff, for if there is one thing government agencies love more than anything else it is new mandated responsibilities.”

The commission issued a draft study in April concluding that having LIPA be a full public utility would result in an “overall positive benefit” for LIPA customers. This included “important financial benefits” — from $48 million to $78 million a year, nearly the same as the analysis by Comptroller DiNapoli.

There was overwhelming support at public hearings held by the commission over the past several months for LIPA to become a full public utility. There were supposed to be additional hearings and issuance of a final commission report in April, so the state legislature could vote on the issue before its 2023 session ended in June.

But the legislature got mired in redistricting and state budget matters in its 2023 session. Under the new schedule, additional hearings will be held in September and its final report issued in November, ready for the next legislative session starting in January 2024.

Lisa Tyson, executive director of the Long Island Progressive Coalition and co-chair of the commission’s advisory committee, says of the current LIPA-PSEG arrangement, “It’s insane.” The executives of PSEG have been “making so much money” while PSEG’s “performance is very bad,” as documented by, among other things, the metrics study and loss of electricity for days for most LIPA customers when Tropical Storm Isaias hit in 2020.

That blackout gave birth to “Reimagine LIPA,” which Tyson’s coalition created and staffs. “Reimagine LIPA” describes itself on its website, publicpowerlipa.org, as “a campaign of grassroots Long Island organizations that believe we must fully commit to a new paradigm of energy management on Long Island.”

These organizations include: Alliance for a Green Economy; Long Island Metro Business Action; Long Island Network for Change; Sierra Club Long Island; OLA of Eastern Long Island; Sustainability Department of the Sisters of St. Joseph, Brentwood; Progressive East End Reformers; Huntington Mobilization for Sustainability; Long Island chapter of Climate Reality Project; Environmental Action Coalition; Food & Water Action; NY Renews; Sunrise Long Island; and Together We Will LI.