Essential Oversight of LIPA

As a Long Islander, NYS Comptroller Thomas DiNapoli has unique insight into our power and electric issues. Using the authority of his office to perform thorough audits into LIPA, DiNapoli makes the case that greater oversight is required to protect ratepayers.

Comptroller DiNapoli LIPA oversightThe Long Island Power Authority’s (LIPA) rates continue to be among the highest in the nation.  At the same time, LIPA customers — businesses and families alike —  don’t have the kind of oversight and protection that utility customers in the rest of the state enjoy.   That’s why it’s soessential for LIPA to work to improve its methodologies for calculating costs and provide ratepayers with clear and understandable  information on how rates and rate increases are determined.  I live on Long Island.  I understand and I share the concerns of  all those families and businesses.

Long Islanders need and deserve more protection from exorbitant and unwarranted rate increases.  That’s why I am using the power of my office to shed light on LIPA’s operations.

In addition to the annual filing requirements imposed by Public Authorities Law, my office annually requests  additional information from LIPA.  This year, we sought  supplemental data related to  the disclosure of LIPA’s overbilling for energy losses and other issues.

Recently, LIPA proposed returning a portion of the overbilled funds to ratepayers over a three-year period in the form of rate relief.  Three years is too long; LIPA should return this money to Long Island families as quickly as possible.  My office will continue to monitor how LIPA proceeds on this issue.

Last year, in response to concerns raised by Long Island legislators, my office reviewed LIPA’s preparations for Hurricane Earl.  Our review found that while LIPA appeared to have adhered to established storm protocols in response to Hurricane Earl, there were opportunities to improve the authority’s policies and procedures by exploring alternatives to committing to out-of-area crews so far in advance of a storm. This could save millions of dollars in pre-storm staging costs.

An analysis by my office of budgeted and actual storm cost expenses found LIPA’s 2010 storm costs exceeded the budgeted amount by approximately 640 percent.  The authority’s costs were estimated to total $200 million, while the authority budgeted just $27 million for this expense.  LIPA should take several steps to improve the methodologies used to establish storm cost budgets to balance the need for a rapid and aggressive storm response with the need to contain costs ultimately borne by ratepayers.  In addition, LIPA must provide a detailed accounting and justification of actual costs incurred once these costs are finalized.

In July 2010 my office issued an audit on LIPA’s Oversight of Contracts with National Grid. Our audit found that improvements are needed in LIPA’s monitoring of National Grid’s sales of emission credits from its power plants.  Contrary to contract requirements, National Grid did not report some sales to LIPA, and as a result, LIPA did not receive its share of the proceeds from these sales until we made LIPA officials aware of the issue.

While the failure to report the sales appeared to be an oversight on the part of National Grid, LIPA needs to improve its monitoring to prevent these kind of  errors and ensure that it receives its full share of the proceeds from such sales.

In July 2009 we issued an audit on Internal Controls Over Fiscal Operations that  found LIPA’s annual procurement report for 2007 was not complete.  A number of important contracts were not included in the report and the audit also revealed that several members of LIPA’s Board of Trustees did not always attend Board meetings and others did not receive training as required by law.  The audit recommended that LIPA take action to strengthen its internal controls.  Copies of these audits can be found on our website at www.osc.state.ny.us/audits.

Long Islanders should be getting better service and better protection from their utility company.  LIPA may be not be subject to regulatory oversight by the Public Service Commission (although I support legislation to provide that kind of oversight), but I am committed to keeping the public informed of LIPA’s performance and ensuring that LIPA is providing its ratepayers with the utmost level of transparency and accountability.  Other lawmakers have also said they will hold LIPA accountable as well.

The people of Long Island deserve better.

Author: Thomas DiNapoli

State Comptroller Thomas P. DiNapoli was elected to a full four-year term as New York State Comptroller in November 2010. Since first taking the position in February 2007, DiNapoli has transformed the way his office does business, instilling reforms to make government more effective, efficient and ethical. He has pushed for increased transparency and accountability in government, and identified billions of dollars in waste, fraud, abuse and mismanagement. DiNapoli, New York’s chief fiscal officer, is responsible for auditing the operations of all State agencies and local governments, managing the State’s pension fund, overseeing the New York State and Local Retirement System, reviewing the State and New York City budgets, approving State contracts, and administering the State’s payroll and central accounting system. As Comptroller, DiNapoli is also the sole trustee for the $132.8 billion State pension fund, one of the largest institutional investors in the world. Previously, DiNapoli represented northwestern Nassau County in the State Assembly for 20 years. During his legislative career, he fought to restore fiscal responsibility in Nassau County, prevent fraud and mismanagement in school districts, and clean up the State’s water supply. A lifelong resident of Nassau County, DiNapoli first gained recognition in 1972 when he was elected to the Mineola Board of Education at the age of 18, becoming the youngest person in New York State to hold public office. He holds a bachelor’s degree in history from Hofstra University and a master’s degree in management and urban policy from The New School University. Prior to his election to the Assembly, DiNapoli was a manager in the telecommunications industry and served as an adjunct professor.

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