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Relevant Document:
Report/Resolution
The Long Island Power Authority, or
LIPA, will leave the door open to retaking control of its grid or switching private operators amid an impasse in ongoing contract renegotiations with PSEG Long Island, the utility’s board of trustees resolved during its regular monthly meeting on Wednesday.
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The vote on the resolution followed a presentation by LIPA CEO Thomas Falcone of a second phase report in an ongoing
evaluation, launched in the wake of Tropical Storm Isaias in August 2020, of options to improve the future management of LIPA’s assets.
Falcone’s second phase report states that LIPA and PSEG Long Island “have been unable to achieve” the board’s objectives in negotiations,” adding that PSEG Long Island’s latest April 13 offer is “modestly better” than the current operations support agreement, or OSA, in some areas and “worse” in other areas. “Overall, the offer does not fundamentally address the weaknesses of the current contract,” the report states, adding that “LIPA remains open to offers” that address the board’s concerns and will keep the trustees and public apprised “if a proposal warranting consideration becomes available.”
The report describes the benefits and considerations of outsourcing to a new service provider and the LIPA management model. The analysis recommends that LIPA staff should continue to “simultaneously advance” on three option fronts: resetting the PSEG Long Island relationship; contracting with a new service provider; and restoring “local” management by LIPA, or the “full municipalization” of the grid.
In approving the resolution, the board adopted the Phase 2 option analysis and directed LIPA’s CEO to pursue renegotiation of the OSA with PSEG Long Island “on terms that fundamentally address” the board’s concerns about the operator’s management.
At the same time, the resolution directs LIPA management to issue a request for information, in advance of a request for proposals, “to evaluate market options for replacing the current service provider.”
Finally, the resolution directs the CEO to continue diligence and planning for the LIPA management model and arrange public comment hearings to hear from members of the public on the future management of LIPA’s assets.
The resolution also reinforces the board’s earlier finding that privatization is too costly for customers to merit investing additional LIPA staff time and resources to further develop the alternative.