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Tuesday, July 7, 2015
LIPA's future remains uncertain
(Page 3 of 4)
David Weingrad/Herald
LIPA faced a barrage of criticism for its response to Hurricane Sandy.
“What they said to us is, look at the storm performance of PSEG as compared to National Grid and Con Edison,” McKevitt continued. “They believe the PSEG storm performance is the best.”

At a crossroads

According to McKevitt, both potential methods of restructuring LIPA — privatization and municipalization — come with complications. McKevitt said his ideal solution would be to privatize LIPA. However, he added that the biggest potential problem with privatization would be dealing with the authority’s $7 billion debt.

According to the Moreland Commission, LIPA’s assets are valued at $3.5 billion, meaning that LIPA ratepayers would be responsible for repaying the remaining $3.5 billion in “stranded debt” following any sale.

The debt, McKevitt explained, is directly attributable to the Long Island Lighting Company’s decision to build the Shoreham Nuclear Power Plant in the early 1970s, a facility that never became operational. “We are still paying for the sins of Shoreham today,” said McKevitt. “And we’re still going to be paying that for many years to come.”

In 1998, LIPA acquired LILCO’s electrical transmission and distribution system, as well as certain other assets, and inherited its billion-dollar debt.

McKevitt said that many members of the State Assembly feel that granting LIPA full municipalization would be the best option. But he disagrees, saying, “I don’t have the faith and the confidence that LIPA can do that job. Their past history has showed that they have failed and they have failed miserably.

“You have a group which shows they make mistakes and were unable to do something right,” McKevitt continued. “So now you’re going to give them even more resources to do it on a more massive scale?”

A third recommendation from the Moreland Commission called for the New York Power Authority to assume ownership of LIPA, which the commission said NYPA could accomplish by purchasing it for as little as $1 and maintaining it as its legal subsidiary. Electrical systems and revenues from Long Island would be kept separate from existing NYPA funds, and each entity would have separate classes of debt.

A NYPA spokesperson declined to comment on the Moreland Commission’s recommendation.

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pschlussler

Assemblyman McKevitt recognized that many members of the Assembly feel that granting LIPA Full Municipalization would be the best option. But he disagrees, saying, “I don’t have the faith and the confidence that LIPA can do that job. Their past history has showed that they have failed and they have failed miserably.

Assemblyman McKevitt has a flawed interpretation of what re-structuring LIPA into a full Municipalization utility really means to the ratepayer.

The basic facts are that there are over 2000 such utilities in the country who of which have demonstrated, over many years, better customer satisfaction and lower rates. This is accomplished by the Utility being run by engaged professional members of the community and not political appointees from Albany such is the existing LIPA structure. Additionally, Full Municipalization offers complete transparency, accountability and ownership to the people it serves…

Unfortunately for Assemblyman McKevitt fails to recognize that Full Municipalization is not a government waste land but more a utility owned and operated by the people it serves.

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