Assembly Passes the LIPA Oversight and Accountability Act

Measure would mandate regular audits of LIPA
January 20, 2012

Assemblyman Englebright (D-Setauket) announced unanimous passage in the Assembly this week of A.8957, the Long Island Power Authority Oversight and Accountability Act. The bill would require the Long Island Power Authority (LIPA) to undergo comprehensive and regular management and operations audits, and establishes a new way for consumers to file complaints against the utility

”This bill addresses a lot of the concerns Long Islanders have with regard to LIPA’s accountability to ratepayers and consumers,” Assemblyman Englebright said.

In addition to mandating comprehensive management and operations audits of LIPA, the bill calls for regular public hearings to shape and discuss findings from the audits, which would start immediately and be repeated at least every five years. It also allows consumers for the first time to take complaints about their electric service or bills to an outside agency – the state Consumer Protection Division under the Department of State.

The audits would focus on rate setting, annual operating and capital budgets, construction costs, efficiency, debt service obligations, fuel and purchased power costs.

“There is an ongoing need for the sunlight of public scrutiny to shine on LIPA's internal standards and procedures,” Englebright said. “By promoting transparency and accountability, this bill is a good start in making LIPA more responsive and cost-efficient.”

The Public Service Department would be charged with conducting the audits or assigning an outside firm to do them. The auditor will hold public hearings in Nassau and Suffolk counties to allow the public to comment on their scope. Once completed, the audit will be sent to the PSC, the Governor, and leaders of the Senate and Assembly, and be posted on LIPA's website.

The first audit of LIPA would be initiated upon enactment of the bill into law and would be undertaken in a manner that acknowledges that the Authority is currently transitioning to a new management service structure and entering into a new management service agreement - projected to be completed by January 1, 2014. Among other things, the bill is intended to ensure that the new structure is operated in an efficient and cost-effective manner.

In 2008, a measure that would have required Public Service Commission review of LIPA rate hikes over 2.5 percent in a year was vetoed by Governor David Patterson because of concerns that it would lower LIPA's bond rating by removing the utility's ability to raise rates at will to cover costs.

This bill would also give the Utility Intervention Unit (UIU), within the Department of State's Division of Consumer Protection, specific authority to investigate and mediate any complaints made by customers and to refer such complaints to appropriate state and local agencies for further review.

The bill is expected to be taken up by the Senate next week. Governor Cuomo’s office supports the measure, saying it would "better protect ratepayers and improve service."