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Cuomo seeks to abolish LIPA in his state address

Gov. Andrew Cuomo will seek to privatize the Long Island Power Authority in 2013 after its poor post-hurricane performance. AP Photo/Mike Groll
TimesLedger Newspapers

After absorbing flak for the way it handled the post-Hurricane Sandy recovery process, the Long Island Power Authority must now accept the consequences.

During his State of the State address Wednesday, Gov. Andrew Cuomo recommended the privatization of LIPA, echoing the findings of a commission charged with investigating the power company’s widely criticized response to the storm.

“LIPA never worked and it never will and the time has come to abolish LIPA, period,” said the governor during his 2013 State of the State address Wednesday. “A privatized LIPA will service Long Island and do it in a way that protects rate payers.”

Cuomo said that a privately run utility company would be subject to oversight from the state’s Public Service Commission.

“A private service would be regulated by a new and empowered PSC that protects ratepayers and will look to freeze rates for a period of years,” he said.

More than 2.1 million people lost power during Sandy, including 1.1 million LIPA customers. In some places on Long Island and in Queens — especially in the Rockaways — power was not restored for as long as 21 days.

The Moreland Commission, a state panel formed by the governor, issued a preliminary report Monday recommending the privatization of LIPA, which has controlled power on Long Island since 1985, when then-Gov. Mario Cuomo created the company to manage the assets of the former Long Island Lighting Co.

“There is no question that LIPA could be operated much more efficiently than it is today, particularly if it was purchased by an existing electric utility company which could share staff, facilities and systems,” the commission said in a statement. “The commission has reached a clear consensus that fundamental structural change in Long Island’s electric utility is necessary. The existing management contract structure is unique in the U.S. retail power supply industry and is rarely used elsewhere in the world, save as an interim approach to restoring poorly managed utility systems.”

In a statement issued before the governor’s address, LIPA 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 Moreland Commission cited poor customer service, an archaic outage management system and lack of emergency planning as LIPA’s major post-hurricane missteps. The commission also recommended bigger fines for utilities that under-perform from $100,000 a day to as high as $2 million.

Reach reporter Steve Mosco by e-mail at smosco@cnglocal.com or by phone at 718-260-4546.

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Marion Denger from Iowa says:
Think cooperative. All of the 1.1 million people become members. You elect a board of members from your mix that are coop minded and they hire a CEO to run the company. You elected those people to serve you and if there is margin or to much is charged, which can happen in this day of age with all of the unexpected, you can receive those margin back right away or use those margins to improve lines and not borrow money. Private utilities in most state are garanatee a rate of return (12-15%). That could be yours. If you believe you can get a rate freeze today that is what we consider reseasonable. Dream on.
Jan. 10, 2013, 7:47 pm

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