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Cuomo Proposes PSEG Takeover for LIPA

May 28, 2013

Governor Andrew Cuomo of New York wants Public Service Electric & Gas Co. of New Jersey to take over for the Long Island Power Authority. “LIPA is broken. And LIPA has to go away,” Gov. Cuomo asserted in the wake of the well-known failures of the utility company in response to Hurricane Sandy. LIPA was sharply criticized for faults characterized by using an outdated system devoid of recent and necessary upgrades, under-budgeting for the response to the storm, and lacking alert and comprehensive maintenance. The utility failed to meet industry requirements, lagging behind technologically in its reliance on a twenty-five-year-old mainframe computer system or the storm’s recovery process. State, county, and local officials at every level as well as citizens in addition to Gov. Cuomo have castigated the utility for these errors. Cuomo labeled LIPA’s response that did not restore power in a timely manner for many Long Island residents as “incompetent” a Moreland Commission report lambasted the utility for not holding itself accountable.

Gov. Cuomo’s proposed legislation would decrease the size of LIPA dramatically in favor of PSEG: the board of directors would drop from 15 to 5 and the entire staff from 90 to 20. Cuomo’s plan favors a rate freeze for 2013-2015. It also lays out a pay-by-performance initiative for PSEG to emphasize the importance of competence and ensure that PSEG will serve customers well. Voting on the legislation could be finished by June 20.