ALBANY-Utility operations on Long Island would be privatized under legislation that would effectively reduce the Long Island Power Authority to a holding company. As of late Thursday afternoon, both houses of the New York State Legislature had not signed off on the measure, the result of an agreement reached Wednesday between Gov. Andrew Cuomo and legislative leaders.

The legislation would bring in New Jersey-based Public Service Enterprise Group to oversee day-to-day utility operations on the island, via an entity to be known as PSEG Long Island. It would reduce LIPA staff to the minimum necessary to ensure that the authority is able to meet its core obligations, and with a new board reduced to nine members. This would maintain the LIPA's eligibility for FEMA and tax benefits, but would offer the benefits of PSEG Long Island's more efficient management structure as a private company, the governor's office said.

“Today's agreement will finally end LIPA as we know it and create a new utility company on Long Island that puts ratepayers first,” Cuomo said in a statement. “For years, LIPA has provided lackluster service while asking ratepayers to foot the bill for its financial problems. LIPA's failure during Superstorm Sandy was a wakeup call for action.”

This legislation, he added, “delivers on performance by privatizing utility operations under PSEG Long Island to ensure it is ready for future storms and accountable for its response. It also establishes real state oversight of Long Island's utility system for the first time and protects ratepayers from rate hikes in the immediate future.”

A study commissioned by Cuomo after Sandy blamed a “dysfunctional bifurcated structure” for LIPA's poor customer service, high rates, large debt load, insufficient and antiquated infrastructure and failure to perform during natural disasters, the governor's office said in May. Consultants, rather than in-house utility managers, called the shots on resource/capital investment, the study concluded, and the power authority was not subjected to any state oversight.

LIPA's $6.7-billion debt load has remained constant since the 1990s and accounts for nearly 10% of ratepayers' bills, the governor's office said last month. The debt would be pared down by refinancing about half of it under a lower interest rate.

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Cuomo: 'End LIPA As We Know It'

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