Irene highlights LIPA’s identity crisis – By George J. Marlin

 The following appears in the September 9-15, 2011 issue of the Long Island Business News:

Now that Hurricane Irene is over and electric service has been restored to the Island, it is time for a sober review of the performance of those who run our electric system.

In the mid-1990s, I served on a review group for the Long Island Power Authority’s future, appointed as a conservative member of that team. I remember the commitment that LIPA would have no more than two dozen employees and would oversee a private sector utility hired to operate and maintain the electric system. All agreed that LIPA didn’t have the expertise, experience or background to provide electricity to 3 million people.

That approach was reflected in LIPA’s acquisition of LILCO’s transmission and distribution businesses back in 1998. LIPA’s role was merely to serve as a financing conduit that issued billions of dollars in tax-exempt debt to refinance the billions in Shoreham debt LILCO had fruitlessly incurred. Further, as a public entity, LIPA would not have to pay federal or state income taxes or provide returns to the stockholders of a privately owned company. Those three sources permitted a 20 percent rate cut. Ratepayers cheered.

But a now-forgotten, long-time LIPA official began a campaign to position LIPA as the actual provider of electric service on Long Island. LIPA’s profile was raised as the place to look for storm restoration, maintenance matters and all the small and large tasks incident to providing power in a post-industrial society. When storms threatened, it was LIPA that held the prime spot at press conferences and the public concluded, incorrectly, that LIPA ran the electric system on Long Island.

During LIPA’s 13-year existence, Long Island was fortunate and missed the horrors of a full-scale hurricane, last seen in 1985 when Hurricane Gloria knocked out the power of 750,000 Long Island electric customers. On Aug. 28, Long Island’s lucky streak ended. Irene struck, casting over 500,000 customers into darkness. Thankfully, no life was lost and injuries were few.

The inevitable public outrage arose slowly at first and then loudly against LIPA for not restoring power quickly. (Gov. Andrew Cuomo’s strong intervention as recovery lagged undoubtedly played a role in bringing Irene’s impact to an end,) Throughout the entire crisis, one thing was certain: LIPA’s communication with its customers was horrid. Tens of thousands of calls were dropped, customers who got through were told nothing about crew assignments and when power would be restored. Even LIPA’s COO conceded that customer communication was poor.

But in fact, Long Island electric consumers may be directing their ire at the wrong place. That’s because LIPA’s 100-plus employees include zero electric linemen and zero tree trimmers and zero substation operators. LIPA’s employees – accountants, lawyers and the politically connected – only monitor the company that actually runs the electric system on the Island. That company is National Grid, an international energy company based in London with significant operations in New York and Massachusetts. Grid is the successor to Keyspan, which acquired LILCO’s generation and gas businesses in 1998. I will leave it to post-mortem reviewers to determine whether Grid was up to the job of restoring power. My sense is that International Brotherhood of Electrical Workers employees workers from National Grid and states as far away as Michigan, Missouri and Tennessee worked long and hard to restore power and deserve our thanks.

Just as the Federal Emergency Management Agency was roundly criticized following Hurricane Katrina for its inadequate response caused in part by being perceived as a first responder rather than a federal coordinating bureaucracy, so, too, LIPA’s past communications have misled the public and have confused responsibility for restoration of service. It’s high time for LIPA to clarify what it is and isn’t, and who actually bears responsibility for electric service on our Island.

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4 Comments on “Irene highlights LIPA’s identity crisis – By George J. Marlin”

  1. farandaway Says:

    Beware, this is fertile territory for Ritchie Kessel to reappear and finish off the LIPA he messed up in the beginning.

  2. Thomas Bjurlof Says:

    This is an excellent piece.

    It should additionally be noted that National Grid owns approximately 74% of the generating capacity on Long Island. These plants are antiquated inefficient generators that have not been significantly upgraded for efficiency since they were built in the 1960’s.

    National Grid’s plants operate at an efficiency rating of 25-30% compared to modern combined cycle plants that operate at approximately 50% efficiency. This is the major reason (there are other contributing factors such real estate taxes and non-productive debt) why Long Island has among the highest rates for electricity in the US. It is like we were still driving 1960’s Ford Thunderbirds. Great collector’s items, but not so good for efficient daily transportation.

    LIPA needs reform, and so does the structure of the electrical industry on Long Island. It should not be too hard to see that a system that in effect gives control of generation, transmission, distribution, and supply of natural gas is not likely to benefit the rate payers.

    It is time for reform and effective competition!

  3. LIPA ratepayer Says:

    Mr. Marlin–you are right on with this piece. LIPA needs to be reformed. You may be the person to get it done.


  4. George,

    It is encouraging to know that at least one person out there is aware how LIPA has evoved to where it should not be. This is an excellent piece and hopefully it gets read by those who have some say in where LIPA goes from here.

    Matt


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