By Fred Harrison
Most Long Islanders are rightly confused about who is responsible for our ever-rising electricity bills. On TV we see PSEG commercials. On the streets we see PSEG trucks. We get our electric bills from PSEG. Yet there is also the Long Island Power Authority, as well as National Grid. Who does what? And how does this add up to unnecessarily high electric bills?
Long Island has a unique way of providing electricity to customers. The Long Island Power Authority, which most people know little about, owns the wires and substations. But this public authority hires private companies like PSEG to actually run the system. Nor does LIPA own any power plants. It purchases the electricity we use mostly from National Grid, the same company that sells natural gas on Long Island.
LIPA was created by New York state after the Long Island Lighting Company almost bankrupted ratepayers with its failed Shoreham nuclear power plant. LIPA brought in another for-profit utility, KeySpan, to manage and operate the system. KeySpan was later bought out by National Grid.
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After National Grid badly mismanaged the preparation for and aftermath of Hurricane Sandy, it was replaced by PSEG, a New Jersey-based utility. PSEG’s own management performance proved so terrible during Hurricane Isaias, in 2020, that LIPA sued it for “corporate mismanagement, misfeasance, incompetence and indifference.” The suit was withdrawn only after a new LIPA-PSEG contract was renegotiated last spring, imposing more controls over PSEG for the remaining three years of the agreement, through 2025.
Three for-profit utilities — LILCO, KeySpan/National Grid and PSEG — have made lots of money off Long Island ratepayers. Even though LIPA pays PSEG an $80-million-per-year management fee, LIPA has faced continual frustration. Most recently, PSEG has been taken to task for its dismal customer satisfaction ratings. LIPA board members past and present have voiced serious questions about continuing to “outsource” our electrical system.
State legislators from Long Island, working with ratepayers, community groups and the Reimagine LIPA campaign, created after Isaias, lobbied for the establishment of a state legislative commission to chart a future for LIPA without PSEG. The Legislative Commission on the Future of LIPA, created last spring, has been tasked with coming up with a plan for 2025 that would allow LIPA to run the electrical system directly, saving ratepayers lots of money.
This is neither a radical nor a fanciful idea. Nonprofit, publicly owned electric systems are common. In some of the most conservative states in the nation, like Nebraska and Mississippi, virtually every community is served by a nonprofit utility. These public power systems are a matter of civic pride and customer satisfaction. Like water service, electric power works best when not run by private interests.
Hundreds of businesses on Long Island have long sought the low-cost electricity made available by the New York Power Authority, the state’s nonprofit power supplier. The communities of Freeport and Rockville Centre have nonprofit municipal electric systems, and enjoy rates that are as much as 40 percent lower than what the rest of us PSEG customers pay.
How do they do it? They eliminate as much profit-making as possible from the cost of electricity. Getting rid of high salaries at PSEG and profits for its shareholders would mean major saving for ratepayers. Public ownership, through LIPA, of renewable electricity sources would dramatically reduce the cost of that electricity.
Eliminating the profit from the production of electricity is a sure-fire way of lowering rates. And it’s a tried-and-true idea. The New York Power Authority has been providing cheap electricity for over 60 years. LIPA and Long Island ratepayers need the same opportunity. Now is the time to move forward on the full municipalization of LIPA.
Fred Harrison, a retired history teacher at Calhoun High School in Merrick, is a ratepayer advocate working with Food and Water Watch, which is part of the Reimagine LIPA campaign.