As New Yorkers leave Long Island to less expensive places, the hand wringing often begins and ends with the cost of housing, while often ignored are the region’s high energy costs. Rarely does Long Island have an opportunity to address energy costs, but that opportunity has presented itself in the form of the New York State Legislative Commission on the Future of the Long Island Power Authority. It is critical for Long Island’s economy that the commission gets this right.
But sadly, the commission may be on the verge of presenting a plan to the New York State Legislature to convert the current Long Island Power Authority and PSEG public-private partnership to a public power entity. There is just too much at risk to toss the report into the political arena without having an independent review of the commission’s report methodology and its underlying budget assumptions based upon LIPA’s own financial data. It is time to stop the energy merry-go-round. It’s time for Governor Hochul to become involved and demand answers to the hard questions.
Aside from government’s struggle with delivering efficient services at the lowest cost to taxpayers and ratepayers – just look at the financial issues at the Metropolitan Transportation Authority, the governor needs to ask why there is no independent financial and organizational analysis of the three possible energy models that could evolve from LIPA. These include a public-private partnership, a municipal entity, or the current model. Surely saving $50 million to $80 million from a $3.6 billion budget is not worth scuttling the LIPA-PSEG public-private model. The savings will be further eroded by the between $16 million and $59 transition costs from PSEG to another energy utility model.
The governor needs to put in place appointees to the LIPA board that understand that investor-owned utilities loath bloated budgets, whereas public utilities that are funded by taxpayers and ratepayers lack the same fiscal discipline. Needed to be asked is why municipal power has been rejected by voters in Colorado, why cost-saving estimates failed to materialize in California, and be real about the $50 million to $80 million in savings that will disappear as rates increase and
new investments are made. The toughest question is why, after nearly three decades after decommissioning, does LIPA still carry $9 billion of debt from the shuttered Shoreham nuclear power plant.
While the commission’s report emphasizes transparency and accountability in delivering power to Long Islanders, a municipal entity faces no direct oversight from the New York Public Service Commission, while an investor-owned private entity does. This transparency and oversight are critical after energy disruptions. Long Islanders know all too well about energy disruptions and the never-ending political debate about what happened and whether another energy delivery utility would make power outages miraculously disappear. Toward that extent, municipalization requires attracting a utility management team with unique skill sets and expertise. This expertise costs more in salary than LIPA currently pays but which PSEG does. Utility management expertise for municipalization does not come cheap. And neither does the commission’s report which cost taxpayers $2 million.
Efficient power at reasonable costs is too critical for the Long Island economy. There is no need to rush the process. Governor Hochul has to get this right.
Martin Cantor is director of the Long Island Center for Socio-Economic Policy and a former Suffolk County economic development commissioner. He can be reached at [email protected].
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Opinion
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