In the wake of $231 million in rate overcharging by the Long Island Power Authority over the past few years, and what he views as a weak effort to address the problem, Assemblyman Fred W. Thiele Jr. signed on as a co-sponsor this week of legislation to replace LIPA’s appointed board with an elected one.
LIPA seems poised to resist the change.
At issue is an accounting error, as described by LIPA itself early this year, that led to customers being overcharged for “lost power,” or energy that is wasted between electric grids and consumers’ homes. LIPA’s board, currently composed in equal parts of appointees of the governor, Senate majority leader, and Assembly speaker, determined to resolve the issue by returning slightly more than half the money (or about $129 million) in rate cuts over a three-year period.
“LIPA overcharges its customers and then quietly tries to approve a plan that returns only half of the money over a three-year period through incremental rate cuts,” Assemblyman Thiele said in a release. “This is unacceptable and amounts to larceny of public funds. An elected board wouldn’t even attempt something so outrageous. LIPA is both incompetent and arrogant.”
Reached by phone on Friday, the assemblyman said, “LIPA needs accountability and oversight. It has been able to raise rates with no checks and balances, unlike any other government entity.” Though he acknowledged that some improvements could be made under current law, like subjecting LIPA to more rigorous enforcement, including the Public Service Commission’s scrutiny, he said that would not be enough, pointing to Long Island Lighting Company (acquired by LIPA in 1998) cost overruns in Shoreham despite the commission’s having had enforcement powers in that case.
In a telephone interview on Tuesday, LIPA’s communications director, Vanessa Baird-Streeter, defended the appointed board members as “extremely accomplished people, with backgrounds in a variety of positions, all of whom are Long Islanders and LIPA rate-payers.” She went on to suggest that electing LIPA’s board would politicize its decision-making. She defended LIPA’s decision to return only about half of the overcharges by identifying the need to hit income targets and remain financially viable.
As an example of incremental rate adjustments in the past, Ms. Baird-Streeter pointed to a 2003 incident in which LIPA realized it was collecting too little in rates and compensated by slowly increasing them over the subsequent 10-year period. The overcharges currently at issue, she said, stem from a 1991 LILCO accounting practice that “worked at first” only to eventually be identified as troublesome by outside auditors.
It is safe to say LIPA’s official position is that it does not support a change in the mechanism used to choose its board.
The legislation Mr. Thiele is advancing was introduced by Assemblyman Bob Sweeney of Babylon, and passed the Assembly last year only to die in the Senate, meaning it would need to pass in the Assembly again this session. Its prospects for short-term passage are not good, with the budget fight guaranteed to consume most of the oxygen in the capital until April at the earliest.