Public Service Enterprise to Run Long Island Power Authority

Public Service Enterprise Group Inc. (PEG) will take over operations of the Long Island Power Authority, leaving the state-owned utility without any day-to-day responsibilities after thousands of its customers were left without power for weeks by Hurricane Sandy.

Under the agreement, which needs legislative approval, the New York Department of Public Service would oversee PSE&G’s New York operations, New York Governor Andrew Cuomo said today at a press conference in Albany. Public Service, owner of New Jersey’s largest utility, was awarded a 10-year contract in 2011 to manage the authority’s power lines and distribution systems starting next year.

Cuomo’s plan to expand the role of Public Service, based in Newark, New Jersey, was revealed May 1 at a meeting of the governor’s cabinet. Cuomo criticized the authority’s response to Sandy, saying in November that its management failed. Chief Operating Officer Michael Hervey resigned from the authority two weeks after the storm, which caused the largest power-restoration effort in Long Island’s history.

“LIPA has been a problem for a very long time and it was on full display during Hurricane Sandy,” Cuomo said today. “We need a new and better way.”

The agreement will freeze electricity rates for LIPA customers through 2015, Cuomo said. The state-owned authority would be left as holder of $7 billion of debt. Refinancing as much as half of that at current lower rates will ease bills for customers, the governor said.

“This is a thoughtful plan that has many great ideas and certainly is an important step in the right direction,” Assembly Speaker Sheldon Silver, a Manhattan Democrat, said at today’s press conference. “We look forward to working with the governor to craft a law that would be passed this year.”

To contact the reporters on this story: Jim Polson in New York at jpolson@bloomberg.net; Freeman Klopott in Albany at fklopott@bloomberg.net

To contact the editor responsible for this story: Susan Warren at susanwarren@bloomberg.net

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