Allowing the Long Island Power Authority to run its own electric grid without paying tens of millions of dollars annually “to a private, for-profit utility will save ratepayers at least half a billion dollars over ten years, improve efficiency and accountability and increase local control and community input,” according to the final report of the New York State Legislative Commission on the Future of the Long Island Power Authority
The Legislative Commission on the Future of LIPA was established by the New York State Legislature in 2022 to develop an action plan to the legislature for implementing a true public power model for residents of Long Island and the Rockaways, in which LIPA would directly provide electric service to the more than three million residents and thousands of businesses without contracting out that responsibility to an investor-owned, for-profit utility, which is currently PSEG-Long Island.
The legislation necessary to enact the Commission’s plan is included in the final report, and is expected be formally introduced by the Commission’s co-chairs at the start of the legislative session in January of 2024.
After nine public hearings from the Rockaways to the East End, the Commission has proposed the public utility be governed by a 13-Member Board of Trustees, including members appointed by governor, state legislative leaders, county executives, the New York City Mayor and labor representatives, along with a newly established 26-member Community Stakeholder Board.
The legislation is also designed to ensure protection of the wages, benefits and collective bargaining agreements with about 1,500 IBEW Local 1049 union members who currently work to maintain Long Island’s electric grid.
“The LIPA Commission was created by the New York State Legislature because of the repeated failures of the cumbersome ‘third party manager’ model — the only one in the country — to deliver cost effective and dependable service for its customers,” said South Fork State Assemblyman Fred Thiele, who co-chairs the Commission with State Senator Kevin Thomas. “LIPA has among the highest rates and lowest customer satisfaction in the country. The Commission’s report returns to the original vision of public power when LIPA was created by the Legislature in 1986. The report demonstrates the potential to save over $500 million over the next decade, while reforming the LIPA Board through the appointment of five members by local governments and the creation of a Community Stakeholder Board. Accountability, oversight and transparency will be enhanced, while eliminating costly outside management fees. These public benefits can be realized while still protecting the rights and benefits of our respected local workforce.”
The report lays out a sequence of events in which LIPA will assume operational control of its grid from PSEG-Long Island at the end of its existing contract, on Jan. 1, 2026. LIPA would then be governed by a 13-member Board of Trustees serving staggered, five-year terms, who can be reappointed. Eleven members would be appointed by state and county leaders, and two members will represent the union workforce and the Community Stakeholder Board, which would be appointed by state legislative leaders on the recommendation of local state legislators.
The report estimates LIPA will save between $50 and $80 million annually by eliminating the fee paid to PSEG-Long Island, which could be used to “lower rates or mitigate future rate increases, upgrade grid infrastructure, invest in climate-friendly green initiatives, or support struggling residents and businesses.”
The ownership of ServCo LLC, the entity established to employ the grid’s workforce, including IBEW union members, will transfer from PSEG to LIPA, and the legislation will “enshrine in state law the private-sector employee status and collective bargaining rights” of IBEW Local 1049 workers, according tot he report.
“Long Islanders pay some of the highest electric rates in the country. We as elected officials must do all we can to protect ratepayers, while at the same time ensuring that our system is storm hardened and help is accessible to customers,” agreed North Fork Assemblyman Anthony Palumbo, who also serves on the Commission. “This investigative process has allowed us to learn more about the issues we face with the current model and the challenges that lie ahead. My focus throughout this process has been to formulate a proposal that will lower costs for Long Island families and businesses, ensure reliable service, protect workers, and provide a governing model with local control and accountability. Now, we must continue to work together to achieve these critical goals.”